Apr 2015
Gas Distribution
Network Outperformance Measure Risk Trading Methodology
Apr 2015
Dec 2016
National Grid Gas Distribution, Northern Gas Networks, SGN and Wales and West Utilities
NGGD Project Manager – John Madden, NGN Project Manager – Iain Foster, WWU Project Manager – Ian Dunstan, SGN Project Manager – Oliver Machan, SGN Technical Lead – Stephen Skipp
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Network Innovation Allowance
Gas Distribution Networks
The purpose of the project is to provide a new methodology for delivering the requirements for Ofgem reporting. The collaborative working across the GDNs will provide a consistent benchmark for reporting a complex solution in a pragmatic way. DNV GL and ICS will be looking to determine pioneering research into failure modes, probability of failure and consequence analysis using both GDN supplied failure, investment data and industrially published data to facilitate the development of the following Event Tree models:

  • Mains

  • Services

  • District Governor

  • LTS pipelines

  • Preheating systems

Ofgem’s ambition is that all asset groups should be modelled at an asset level. For Mains and Services there is sufficient asset data to facilitate modeling at an asset level. MRPS data will be fully utilized to enable analysis at an asset level although some aspect of the model will need to be defined at a sub group or population level, such as leakage, deterioration, gas ingress etc. A key part of the design phase will be to determine the optimum level of detail required for each Asset Group benefit/cost analysis is based current GDN data holdings and the cost/time needed for implementation.

It is recognised that GDNs may hold data at different levels of detail, but a consistent level of detail required for each Event Tree will be agreed by the SRWG. In principle analysis will be built up from asset-level data, where available, but the detail of reporting and analysis may be at an aggregated or population level.

The objective of this projects is to:

  • Develop Event Tree models to enable quantification of monitised risk for Mains, Services, District Governors, LTS pipelines and Preheaters
  • Provide a solution that must be readily accessible and easily incorporated into the asset management working activities of the GDNs.
Throughout the project there will be frequent meetings held by the SRWG and with the external company to update on project progress and keep within key milestones. Each stage will have its own deliverables and targets which the project will measure against the original scope. The project seeks to deliver:

  • Demonstrable models for deriving monitised risk for each of the 5 asset groups

  • Provide a solution that meets the needs of Ofgem namely
    • Assets Groups are modeled at an optimum level

    • Will enable risk trading and demonstrate this through multiple investment scenarios

  • Integration of the models into the businesses of the GDNs

  • Provide final project report detailing:
    • How the model have been developed and agreed including data sources and assumptions

    • Cost benefit of investment for each asset group through monitised risk analysis

    • Risk trading approach and the outputs of risk trading principles