Working Group C1.38, “Valuation as a comprehensive approach to asset management in view of emerging developments”.

The timely maintenance or replacement of assets in most electricity utilities is linked to the assessed probability and consequences of asset failure.  This is of great interest to industry investment decision makers and regulators in their assessment of the efficiency of utility expenditure.  To help ensure that expenditure is well targetted, utilities may monetise the asset risk and Australian and New Zealand utilities are quite advanced in this approach.  These utilities already use the monetary value of reliability, safety and environmental risks for investment decision making.  In addition, a majority of Australian and New Zealand utilities publish their approach to risk management.  Working Group C1.38 carried out a global survey on asset risk monetization practices amongst electricity industry utilities to identify the key approaches used within the industry. The results have recently been published in Technical Brochure 791. The convener of the Working Group was Graeme Ancell (past convener of AP C1, System Development and Economics).  The convener of the Working Group was Graeme Ancell (past convener of AP C1, System Development and Economics).

Modern asset management uses asset health and asset criticality to identify the need for and to prioritize the replacement and maintenance of power system assets. Asset health provides an indication of an asset’s remaining life and could be linked with the associated probability of failure. Asset criticality could be used as a measure of the consequences of an asset’s failure, for example on the level of uninterrupted supply of electricity. The consequences of asset failure may not only mean the end of the asset’s life but could also impact the power system and the environment where the asset is located.

Asset risk can be given a monetary value when the probability and consequence of asset failure can be quantified. This monetary value of different types of asset related risk allows these risks to be compared on a common basis and prioritization of investments to mitigate asset related risks.

Almost all respondents to the survey use asset age to determine asset health, supplemented with inspection results in most cases, demonstrating that age is a readily available parameter that is associated with asset health worldwide. Almost two thirds (62%) of respondents consider more than five factors when determining asset health.

70% of respondents with an Asset Management Plan (AMP) also have a numerical health index, meaning a company that documents its AMP is more likely to have a methodology to quantify asset condition than one which does not.

72% of organizations are using risk in the early stages of investment decision making to identify asset candidates for replacement or refurbishment. Organizations in the industry are most commonly using risk for budgeting and prioritizing capital projects.

Similarly, 21% of respondents reported full integration between their planning processes for capital and O&M investments. Of this subset, 83% have developed an AMP, meaning companies with an AMP are more likely to integrate their capital and O&M expenditures.

Almost all survey respondents (93%) consider asset criticality as part of their decision-making process, mainly considering risk in the context of the system, safety, financials, environment, and customers.

For 75% of survey respondents, the AMP was an internal document at their company, with only 25% indicating that the document was available to the regulator or the general public.

The following areas are suggested for future CIGRE work.

•            Quality, Quantity, and Availability of Asset Data

•            Refinement of Asset Condition Assessment Methodologies

•            Process Automation for Condition Assessment and Risk Analysis

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