By Larry Freeman, Business Development Manager &
Justin Forbes, Marketing & Business Development
EDF Renewable Services
Asset management has been the process of organizing and maintaining projects. It was not a specific professional activity like it is today but a loosely organized set of best practices at a company. There were no job titles that reflected the term, nor were there educational programs or degrees for it. But times have changed.
One example of early adoption of asset management happened during the Korean War when the U.S. Air Force began using barrier analysis to probe the relationship between preventative maintenance and failure in the aviation industry. This slowly gave rise to a new way of thinking about important projects and assets.
Although the wind-power industry has different goals than the aviation sector, both industries stand to lose when assets are down. Any wind-farm owner can attest to the importance of a properly managed fleet of turbines. One broken turbine can cost thousands in repairs and lost production.
The wind industry learned early on about the value of managing assets, although this hasn’t always been an easy task to do well.
What is asset management exactly?
Asset management is the art and science of making the right decisions to optimize lifecycle performance and profitability of a project. Management of physical assets is key to long-term operational performance and profitability, as is the management of the financial, technical, contractual, and regulatory aspects of a project.
An Asset Manager balances costs, opportunities, and risks against desired performance of assets, to achieve organizational objectives. Two reasons this is more challenging than it sounds: Resource constraints and goals.
Most resources at a wind farm are devoted to high-capacity turbines. However, because a lot of money is on the line, it’s also worth maximizing the returns of those assets and leveraging the right technology to do so (such as predictive maintenance software and preventative maintenance visits, which both cost money). In this sense, asset management becomes a story of sorts told to decision makers in the form of a business case that leads to sound investments in operations, maintenance, and capital spending.
It’s also imperative to consider the company’s goal. All megawatt hours are created equal but no two projects are the same. Depending on who you are (finance company, turbine supplier, or wind-farm operator.), goals will vary and may have a short or long-term horizon.
Risk versus cost-centered strategy
Goals are imperative to good asset management, and will vary depending on company size and project expectations. Risk and cost scenarios are two common considerations as part of a project’s short or long-term goal.
In a risk-centered strategy, a company is likely to pay more for certainty but have greater exposure to potential market exits and failures (think Satcon or Clipper). If working with a smaller portfolio with fewer resources to spare, then choices are more limited and a risk-based approach is more common.
In a cost-centered strategy, reduced cost equates to increased risk but mitigation can occur through effective asset management. This is often seen in larger companies that have more diverse options where it’s possible to drive costs down by allocating risk. For example, a large-scale wind-farm owner might have the means to store four or five gearboxes for an 80-turbine wind farm just in case one goes down. Here, asset management might show that the cost of the gearboxes is worth the money and time saved in waiting for an order after a turbine goes down.
Physical asset management
Physical asset management is a system designed to minimize the cost of operating, maintaining, and renewing assets within resource constraints, while balancing an acceptable life of risk to an organization.
To balance risk, one must fully understand their asset, including:
- Performance demand,
- Condition and remaining useful life,
- Risk and consequence of failure,
- Potential repair or refurbishment options, and
- Cost of risk and repair options.
Imagine you have a 1.5-MW turbine and you’re thinking with some minor adjustments or enhanced methods of operation it’s possible to squeeze a little higher performance out of the machine and, therefore, greater production. Sounds great, but first compare this option to your vehicle. Sure, your car might run comfortably at 70 or 80 miles per hour for a brief period — but you don’t drive it that way every day, and you’re not wearing out the engine in the same way at 50 miles per hour.
Pushing a 1.5-MW turbine to its maximum wears bearings, generators, blades, and more. Proper asset management must account for potential long-term effects in this case. For instance, will the gearbox need replacing more than twice over the lifetime of a turbine, and what are those costs? Will the turbine shave three or four years off of its life because it was run above capacity?
Asset management involves balancing costs, opportunities, and risks against desired performance of assets to achieve organizational objectives, and this balancing must be considered over time.
An understanding of assets provides greater confidence that investment decisions are of the lowest lifecycle-cost strategies for sustained performance at an acceptable level of risk.
Case in point
On paper, asset management might sound simple enough. But the real life of an asset manager — especially of a wind company — is a strategic act of planning for and facing challenges, and finding answers that fit demands and budgets.
Here’s a snapshot of the day in the life of an asset manager based on real events.
A new wind farm was having a typical first six months of commercial operations, which (as most new wind-farm owners might attest) is to say, nothing was going according to plan. There were no show stoppers, just routine “emergencies,” including telemetry interruptions caused by a faulty fiber converter installed by the transmission operator.
The project’s energy settlement statement was off because of an issue with a scaling error on the meter agent’s end and an incorrect rollover value. Plus, there was a safety stand down during break-in maintenances because of some questionable documentation provided by the installer of the climb assist.
But these are all typical issues, especially at a new wind farm that an asset manager must manage as part of his or her job.
Among managing day-to-day operations, an upcoming plant outage was also planned at this wind farm to update relay software to meet a more aggressive seasonal voltage schedule. Coincident with this outage, a final points checkout was scheduled with all parties receiving data from the plant. This provided an ideal opportunity to audit the final list of data points to suit specific needs of the counterparties and memorialize the configuration in the plant engineering log.
The outage was scheduled for eight hours with a three-day window, when winds were forecast at their lowest. In preparation, notice was given to the transmission operator, the energy forecast was adjusted accordingly, and assurances were made that everyone would attend as necessary (including the offtaker, turbine OEM, balance-of-plant manager, and the project‘s control-room operator.).
At first, the shutdown went according to plan. The team ramped down the turbines, opened the feeder breakers to isolate the main power transformer from any load, and then proceeded to open the high side air-break switches. But one of the phases arced, resulting in visible damage to the contact jaws. A hole had burned right through the contact plate, and the entire assembly required replacement.
Unfortunately, no one on the EPC (engineering, procurement, and construction) side was available for repairs for another two days. Despite risking the warranty, the project’s asset manager had another high-voltage company onsite as soon as possible.
A call was also made to the transmission operator to ensure the project’s transmission line was disconnected from the substation, and to the OEM of the failed switch to find out how soon a replacement part could arrive on site. The parts were machined and awaiting heat treatment, but could be on route the next day (accompanied by a factory representative).
At this point, the project’s asset manager also had to: estimate the outage and return of service time, update the most recent wind forecasts, predict the production losses — and call the wind-farm owner with the news. A brief rundown of the event, damage, probable cause, solution, and a summary of the financial impact, and a schedule of activities over the next crucial hours.
Once the wind farm was back online (which successfully happened the next day), follow up reports, warranty claims, debriefings, and a “lessons learned” session would occur with the affected parties.
As we said, this a typical day in the life of a wind-farm asset manager. Imagine one in which more than a few problems crop up and good asset management becomes key to a wind-farm’s success or failure.
Filed Under: O&M