The world of electricity distribution network asset management has seen a significant advance in the UK in recent years, with the latest revenue model (RIIO-ED1), which runs from 1st April 2015 to 31st March 2023.
The regulator for electricity markets in Great Britain (Ofgem) has introduced regulatory requirements for Great Britain’s distribution network operators (DNOs) to report information relating to both asset health and criticality. The license condition required distribution system operators to jointly develop a Common Network Asset Indices Methodology (CNAIM).
In that context, a Common Network Asset Indices Methodology has been developed by the six DNO groups (Northern Powergrid, Scottish Power, Electricity North West, Western Power Distribution, UK Power Networks and Scottish and Southern Energy Power Distribution) and Ofgem representatives. CNAIM is a standard for assessing condition-based risk for electricity distribution and transmission assets.
The context of the creation of the CNAIM and its content demonstrate the desire of UK’s electricity network operators and their regulator Ofgem for alignment with the fundamental principles of ISO 55000.
First, the regulator overseeing the entire portfolio of distribution assets in Great Britain is demonstrating its leadership through this license condition. Ofgem, as an important stakeholder in the whole organization of the UK’s electricity networks, is expressing its needs and expectations for a common reference for the evaluation of present and future asset failure risks. It shows here a top-down approach. In another hand, before its implementation in each DNOs, the CNAIM was created and approved by all DNOs. By proceeding in this way, the UK regulator ensures that the CNAIM will be accepted by DNOs. This situation shows a bottom-up approach.
Secondly, the creation and implementation of this standard by the DNOs is also part of an approach that respects the fundamental principles of ISO 55000, namely:
Integrated system: This method integrates the 4 major stakes considered by the main stakeholders in asset management: financial, safety, environmental and service continuity. However, a failure may have an impact on all four stakes. In this circumstance, how can the importance of a failure be determined when the stakes are expressed in different units? How express uniformly the impacts of an asset breakdown on stakes of the organization? What would be the most convenient way to uniformly express the impacts of a transformer fault that leads to one hour of downtime in an industrial area, a minor injury of a field worker during the corrective intervention, the transformer oil leakage into the river and the replacement of a major spare part in emergency? All these impacts can happen because of the failure of one single asset.
The solution adopted by CNAIM was to monetize the impacts of each stake. This solution allowed the use of a common unit necessary for the aggregation of impacts. The cumulated cost of failure impacting each stake enables DNOs to obtain an integrated picture of the risks considered.
Systems-oriented: The common methodology is designed and implemented simultaneously by the 6 DNOs that manage the entire UK electricity distribution asset portfolio. In any good asset management system, this asset failure risk methodology evaluation is necessary for the DNOs to make consistent trade-offs across their asset portfolios. For the regulator, this situation allows to make sure the whole UK electricity network has the same reference of asset failure risk evaluation, that will guide their asset management decision-making.
Risk-based: The purpose of this methodology is to precisely estimate the levels of major failure risks that need to be managed to ensure sustainable asset management. According to the ISO 55 000 principles, risk control with the costs and the performance, takes an important part in value extraction from a good asset management system.
Optimal: The estimated risk of failure is monetized (expressed in £/year). This effort for risk monetization allows the risk of failure to be compared to other elements of the organization’s management such as the capital for investment, as well as OPEX and CAPEX sustaining budgets. In addition, risk monetization facilitates the calculation of life cycle costs (LCC) and the estimation of paybacks of maintenance interventions. It is therefore clear that the result of this method is an important input into the decision-making process, in the short, medium, and long term. The results of CNAIM provide inarguably important insights for informed decision making, whether for short-, medium- or long-term strategic planning.
Sustainable: CNAIM does not only include the current estimation of the failure risk, but it further offers a projection of the risk over time up to 150 years. It is understood that through this projection, the objective is to identify the best asset management strategy over the medium- and long-term.
As a conclusion, CNAIM marks the beginning of a process of aligning electrical distribution asset management with the fundamental principles of ISO 55000. This process aims to build a global organization that is robust, reliable, self-improving, and integrating all disciplines for achieving optimal results.
Let us hope for the sake of all stakeholders that this example can be followed by other governments and regulators.
Authors: Xavier Moreau, Infographic: Henriette Moreau – May 2021