Using a Systems Approach in Energy Risk Assessment
Dan Wilson
The Midlands Energy Graduate School II Annual Conference, 8th September 2011
SYSTEMS AND ENGINEERING TECHNOLOGY
Frazer-Nash Consultancy
Around 350 engineers across
eight offices
 Services across

Technical analysis
 Systems engineering
 Safety and environmental
analysis and management


Glasgow
Range of markets:





Defence
Civil and Military Nuclear
Conventional and Renewable
Energy
Transport
Oil and Gas
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Warrington
Burton-on-Trent
Bristol
Dorking
Dorchester
Plymouth
SYSTEMS AND ENGINEERING TECHNOLOGY
Agenda

What is risk assessment?

What is a Systems Approach?

Applying a Systems Approach to a Renewable Energy scheme

Benefits of a Systems Approach

Requirements and Acceptance within risk management
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Agenda

What is risk assessment?

What is a Systems Approach?

Applying a Systems Approach to a Renewable Energy scheme

Benefits of a Systems Approach

Requirements and Acceptance within risk management
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
What is risk assessment?

How likely is it that a project will deliver to:




Performance?
Time?
Cost?
Risk Assessments are conducted to:

Inform investment

Inform Project Management
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Systems Approach

A systems approach is about:

Taking a ‘wide view’ across the system

Taking a ‘long view’ through the project
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Agenda

What is risk assessment?

What is a Systems Approach?

Applying a Systems Approach to a Renewable Energy scheme

Benefits of a Systems Approach

Requirements and Acceptance within risk management
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach

An Investment Proposition:
www.tidalstream.co.uk (licensed under Creative Commons Attribution 2.5 Generic)
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View

Investment Considerations:

What is the return?

What is the risk?

Other considerations:
 Strategic
 Portfolio
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
positioning
balancing
SYSTEMS AND ENGINEERING TECHNOLOGY
What Does an Energy Scheme Need to Do?
Energy Markets
Sell Supply
Buy Supply
Buy Supply
Generators
Electricity
Transmission Network
Electricity Suppliers
Electricity
Electricity Consumer
Electricity
Notify
Agreements
Demand Output
Alteration
Balancing
Cost
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Check Power Balance
Network Operator
Energy Supply Industry
Notify
Agreements
Electricity
Demand Output
Alteration
PowerFuture
Value
Balancing
Cost
SYSTEMS AND ENGINEERING TECHNOLOGY
What Does an Energy Scheme Need to Do?
Energy Markets
Sell Supply
Buy Supply
Buy Supply
Generators
Electricity
Transmission Network
Electricity Suppliers
Electricity
Electricity Consumer
Electricity
Notify
Agreements
Demand Output
Alteration
Balancing
Cost



Check Power Balance
Network Operator
Energy Supply Industry
Notify
Agreements
Electricity
Demand Output
Alteration
PowerFuture
Value
Balancing
Cost
Provide Electrical Power
Trade in the Energy Market
Respond to output change demands
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View
Device
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View
Device Site
Device
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View
Device Site
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Grid
Connection
Device
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
Grid
Connection
Device Site
Resource
Monitoring
Resource
Prediction
Device
Control
Equipment
Operator
Control System
Estate
Electricity Trading Organisations
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
Device Site
Resource
Monitoring
Resource
Prediction
Grid
Connection
Device
Control
Equipment
Operator
Port
Maintenance
System
Support
Equipment
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Supply Chain
Maintenance
Crew
Control System
Estate
Electricity Trading Organisations
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: A Wide View
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
Device Site
Resource
Monitoring
Resource
Prediction
Grid
Connection
Device
Control
Equipment
Operator
Port
Maintenance
System
Support
Equipment
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Supply Chain
Maintenance
Crew
Control System
Estate
Electricity Trading Organisations
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: Long View
System of Interest
Frozen
Design
Concept
Design
System
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Artefact
Installation
System
Scrap/Waste
Disposal
System
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: Long View
Technical Risk
System of Interest
Frozen
Design
Concept
Design
System
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Artefact
Installation
System
Scrap/Waste
Disposal
System
SYSTEMS AND ENGINEERING TECHNOLOGY
Technology Risk

How much will it cost to get the technology ready for deployment?
Operation
Development
University of Edinburgh
Research
Pelamis Wave Power Ltd
1
2
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
3
4
5
6
7
8
9
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: Long View
System of Interest
Frozen
Design
Concept
Design
System
Artefact
Installation
System
Scrap/Waste
Disposal
System
Provider Risk
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Applying a Systems Approach: Long View
System of Interest
Frozen
Design
Concept
Design
System
Artefact
Installation
System
Scrap/Waste
Disposal
System
Technical Risk
Ongoing Liabilities
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Agenda

What is risk assessment?

What is a Systems Approach?

Applying a Systems Approach to a Renewable Energy scheme

Benefits of a Systems Approach

Requirements and Acceptance within risk management
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Benefits of a Systems Approach

Structured and auditable assessment method to ensure
everything is considered

Identify Dependencies

Target mitigation resources
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Structured Assessment
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
Device Site
Resource
Monitoring
Resource
Prediction
Grid
Connection
Device
Control
Equipment
Operator
Port
Maintenance
System
Support
Equipment
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Supply Chain
Maintenance
Crew
Control System
Estate
Electricity Trading Organisations
SYSTEMS AND ENGINEERING TECHNOLOGY
Identify Dependencies
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
Device Site
Resource
Monitoring
Resource
Prediction
Grid
Connection
Device
Control
Equipment
Operator
Port
Maintenance
System
Support
Equipment
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Supply Chain
Maintenance
Crew
Control System
Estate
Electricity Trading Organisations
SYSTEMS AND ENGINEERING TECHNOLOGY
Target Mitigation Effort
Electrical Power
Grid
Transmission
Point of Presence
(PoP)
Device Site
Resource
Monitoring
Resource
Prediction
Grid
Connection
Device
Control
Equipment
Operator
Port
Maintenance
System
Support
Equipment
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Supply Chain
Maintenance
Crew
Control System
Estate
Electricity Trading Organisations
SYSTEMS AND ENGINEERING TECHNOLOGY
Target Mitigation Effort
System of Interest
Frozen
Design
Concept
Design
System
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Artefact
Installation
System
Scrap/Waste
Disposal
System
SYSTEMS AND ENGINEERING TECHNOLOGY
Agenda

What is risk assessment?

What is a Systems Approach?

Applying a Systems Approach to a Renewable Energy scheme

Benefits of a Systems Approach

Managing risk with Requirements and Acceptance
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Ongoing Management of Risk

Risk assessment is about
Pe
an
Tim
e
rm
rfo
Performance
 Time
 Cost

ce
Cost

To deliver this:

Requirements define what is required from each element.

Acceptance ensures that the project is on track to meet those objectives.
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Requirements
Generate Electrical Power
Power to Breakeven
Device
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Monitor Resource
Accuracy
Sampling Rate
SYSTEMS AND ENGINEERING TECHNOLOGY
Requirements
Site
Resource Levels
Environmental Conditions
Shipping Lane Constraints
Generate Electrical Power
Power to Breakeven
Device
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Monitor Resource
Accuracy
Sampling Rate
SYSTEMS AND ENGINEERING TECHNOLOGY
Requirements
Site
Resource Levels
Environmental Conditions
Shipping Lane Constraints
Generate Electrical Power
Power to Breakeven
Grid Connection
Required Power
Quality
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
Device
Monitor Resource
Accuracy
Sampling Rate
SYSTEMS AND ENGINEERING TECHNOLOGY
Requirements
Site
Resource Levels
Environmental Conditions
Shipping Lane Constraints
Generate Electrical Power
Power to Breakeven
Grid Connection
Required Power
Quality
Device
Monitor Resource
Accuracy
Sampling Rate
Supportable Failure Rate
Maintenance
Systems
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Requirements


Requirements have identified:

What the system needs to be able to do to be a success

What constrains how it can be done
Requirements identify where risks may exist


Quantify risk
Mitigate the risk
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Acceptance
Consequence
Design
Manufacture
Installation
Time
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Acceptance
Risk Value =Probability x Consequence
Probability
Design
Consequence
Manufacture
Installation
Time
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Acceptance
Risk Value =Probability x Consequence
Probability
Consequence
Design Review
Factory Test
Commissioning
Design
Manufacture
Installation
Time
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
Summary

Application of a Systems Approach to Risk Assessment gives:




A structured approach to the identification of risks
A means to fully assess the consequence
Target mitigation effort
Application of a Requirements and Acceptance Process



Identifies what is needed into distinct elements
Identifies the constraints imposed by the environment and other
parts of the system
Mitigates the risks through progressive acceptance
© Frazer-Nash Consultancy Ltd 2011. All rights reserved.
SYSTEMS AND ENGINEERING TECHNOLOGY
For more information;
“Utilising a Risk-Based Systems Approach in Renewable
Energy Due Diligence”, Wilson, D.M., Rowley, P.R., Watson,
S.J., IEEE Systems Journal, Issue 5, Volume 2.
Dan Wilson
Email: d.wilson@fnc.co.uk
Tel: (0117) 922 62 42
www.fnc.co.uk
SYSTEMS AND ENGINEERING TECHNOLOGY