Strategic Critical Spares Management
The development of a critical spares management strategy is no longer nice to have, but rather a must have to avoid the risks associated with large power transformer failures… With aging infrastructure, threats of physical vandalism and extreme weather events utilities must assess their supply of critical spares. Utilities can no longer afford to take an internal approach and must focus on external collaboration to share both risks and costs associated with transformer failures. Due to long lead times and cost of these units, it only makes sense to adopt an industry wide spares program.
An updated report, “Large Power Transformers and the U.S. Electric Grid” has been published in April 2014, by the Infrastructure Security and Energy Restoration Office of Electricity Delivery and Energy Reliability U.S. Department of Energy. This report not only shows how critical Large Power Transformers are but also exposes the real risks of these units going down.
The 52-page report points out the critical role played by large power transformers (LPTs): “LPTs have long been a concern for the U.S. Electricity Sector, because the failure of a single unit can cause temporary service interruption and lead to collateral damage, and it could be difficult to quickly replace it. Key industry sources have identified the limited availability of spare LPTs as a potential issue for critical infrastructure resilience in the United States”. You can find the full report here.
“The limited availability of [spare] extra-high-voltage transformers in crisis situations presents potential supply chain vulnerability.” – A Framework for Establishing Critical Infrastructure Resilience Goals, National Infrastructure Advisory Council, 2010
9 key facts about LPTs:
- Large Power Transformers are custom-designed, with a wide magnitude of features:
- Manufacturing a LPT is a difficult, lengthy and costly process. “The procurement and manufacturing of LPTs is a complex process that includes prequalification of manufacturers, a competitive bidding process, the purchase of raw materials, and special modes of transportation due to its size and weight. The result is the possibility of an extended lead time that could stretch beyond 20 months if the manufacturer has difficulty obtaining certain key parts or materials.”
- Copper and steel for the electrical industry represent more than 50% of the cost of an LPT. Their increasing price negatively affects the manufacturing and the procurement process.
- LPTs are aging: “The average age of installed LPTs in the United States is approximately 38 to 40 years, with 70 percent of LPTs being 25 years or older. While the life expectancy of a power transformer varies depending on how it is used, aging power transformers are potentially subject to an increased risk of failure.”
- Less than 12 companies manufacture LPTs in North America and sourcing abroad brings bigger challenges: “the potential for an extended lead time due to unexpected global events or difficulty in transportation; the fluctuation of currency exchange rates and material prices; and cultural differences and communication barriers. The utility industry is also facing the challenge of maintaining an experienced in-house workforce that is able to address procurement and maintenance issues.”
- Redundancy helps, but is not enough: “although reliability and redundancy are built into the system, the electricity industry identified that the limited domestic manufacturing capacity of high-voltage power transformers could present a potential supply issue in the event that many LPTs failed simultaneously.”
- By 2040, China will be leading in terms of power generation.
- Electrical disturbances are the first cause of failures, followed by lightning and insulation defect.
- Physical attacks on LPTs are increasing. “On March 7 2014, the Federal Energy Regulatory Commission (FERC) directed NERC to develop mandatory physical security standards within 90 days in the wake of attacks on transmission facilities in the United States in 2013. Owners and operators are to first identify critical facilities, and then develop and implement plans to protect against physical attacks that may compromise the operability or recovery of such facilities.” Read more about the FERC study: http://ow.ly/ymsG5.
Critical Spares Programs will be progressively implemented: “EEI’s Spare Transformer Equipment Program and NERC’s Spare Equipment Database Program are designed to provide ways in which utilities may identify and share spare transformers across North America during an emergency. As this information becomes available, this will help decision makers understand what additional programs or incentives may be needed to increase the number of available spares.”
In this way, Veracity Asset Management Group has designed Veracity Connect, a cloud-based platform for utilities that consolidates spare inventories – especially transformers – of utilities, brokers, resellers, industry and Origin Equipment Manufacturers in North America. Distribution, transmission and generation companies can access available equipment and have a proactive approach to transformer failures. Veracity Connect helps utilities enhance risk mitigation strategies, sharing/pooling strategies, capital budgeting; and answers challenges highlighted by “Large Power Transformers and the U.S. Electric Grid” study by making critical spares available to its utility members.
Learn more about our Critical Spares Management Services: http://ow.ly/ymqFP and by clicking here: