Barry Menzies, managing director, MIDEL explains that when it comes to transformers lowering risk is important but remedial actions are not being implemented.
From the inconvenient to the catastrophic, a transformer failure can mean anything from a slight glitch, to months of business disruption. And those businesses with transformers insulated by mineral oil are particularly at risk. With a high calorific value, mineral oil transformer fires burn intensely and are notoriously difficult to control – posing significant health and safety risks. This is before the consequences of transformer failure are felt by the operator or owner in terms of downtime, business continuity, loss of revenue and site damage – all of which can extend into millions of dollars. With all that said, the importance of businesses having the ability to accurately assess and mitigate transformer risk cannot be overstated.
Rightly, senior managers are concerned about business continuity, and the safety of the operations that underpin it. However, are these business priorities being translated into action on the ground? Our research – The MIDEL Transformer Risk Report 2020 – highlights a gap.
Conducted to enhance the understanding of transformer-related risk, our research analysed key concerns and risk mitigation trends, as well as garnering opinion on board awareness and priorities. It revealed that while lowering risk is given universal priority and engineers are diligent in making recommendations to that end, many of those recommendations are not being implemented.
Recommending risk mitigation
From the results, engineers are making a good spread of recommendations to mitigate transformer-related risk. Switching to condition-based monitoring stood out as an emerging preference with nearly half of survey respondents (49 per cent) stating they had proposed it. Maintenance regime changes, asset replacement, asset repair and reconditioning, and substation upgrades were also prevalent. However, many of these recommendations are not being implemented fully, only 44 per cent are to be precise, with a further 41 per cent of businesses electing to take only some of the recommendations forward.
A combination of factors stand in the way of senior managers pursuing all relevant avenues to mitigate transformer-related risk. Indeed, CAPEX was cited as the most significant barrier (56 per cent). However, more pressing commercial (38 per cent) and engineering (36 per cent) priorities were also cited frequently.
Confident decision making
When considering the significant implications of leaving transformer risk unmitigated, it is important that engineers’ concerns are heard, and their recommendations considered, if not fully implemented. However, our research revealed that this may not always be the case.
Of those that we spoke to, just over half (56 per cent) said they felt confident in their senior management team’s awareness of the risks, and their ability to plan accordingly. That leaves just under half of engineers who were not confident or did not feel like they had enough insight to say either way.
Could one reason for the lack of action be because senior management do not fully understand the seriousness of mitigating transformer-related risk? It is quite possible. The links between failure and risk are intricate. From CAPEX, OPEX and safety, to insurance, environmental impacts and asset integrity, it is understandable if not everyone on the board is up to speed. But transformer failure can impact business continuity for months, so it is not something boards will want to leave unmitigated.
So, if the nuances of risk mitigation are getting lost in translation, engineers may need to more fully, round out the case to catch the ear of decision makers – and what seems obvious to an engineer may not be perceived the same way by others.
Improving the substation to boardroom connection
One way this can be accomplished is by ensuring transformers are placed on the risk register. Many businesses will already have some form of risk register in place to identify, assess, and manage risk but our survey revealed only 14 per cent thought it was being used by senior managers to mitigate risk. Having transformers included on this register provides them with more visibility at c-suite level as well as for the associated regulatory compliance.
At the same time, it may benefit decision makers to be more transparent in communicating the reasons to deny or delay recommendations. It is important that engineers feel like they have been listened to and can leave the room feeling confident in their senior management team’s understanding of the risks and the options available.
Strengthening the connection between the substation and the boardroom gives industry a focus for improvement. Businesses need to ask themselves, what actions need to be taken for confidence in these decisions to rise? Whether it is an issue with communication or education, or both, each scenario will require a tailored approach.
Considering new options
On a more practical note, the way assets in all industries are monitored and maintained is changing, encapsulated by a growing trend to consider asset management and safety more holistically. Transformers are no different. At the same time, engineers are increasingly faced with ageing fleets that are not only time consuming to maintain but can also increase risk. While condition-based monitoring stands to alleviate many of these concerns, physical improvements such as retrofilling will continue to be important, particularly for mitigating risk at scale.
When we spoke to industry colleagues about what transformer risk mitigation strategies their company uses, a noticeable swing is in effect. While time-based maintenance is still a common approach (58 per cent of respondents reported they use it), industry professionals predict this will change in the near future as engineers seek to maintain assets in the most cost-effective way.
This reflects a growing trend towards more holistic asset management approaches, in part, enabled by unprecedented levels of insight afforded by digitalisation. As infrastructure digitalises, assets can report their condition in real time, meaning engineers are no longer required on site in order to effectively manage asset risk. As such, the use of condition-based monitoring looks set to increase rapidly.
Physical mitigation techniques
However, not all risk can be mitigated by digital techniques, indeed condition-based monitoring is often more like the doctor that diagnoses the problem, rather than prescribing the cure itself. Then, it may be up to more physical solutions to hold the answer.
Retrofilling of transformers from mineral oil to fire-safe, readily biodegradable ester fluids is expected to increase in use. Not only is it a proven and cost-effective technique for reducing fire risk, it can also elongate the lifespan of the transformer and improve resilience to the implications of overloading. Indeed, our results suggest that its use as a risk mitigation technique is set to increase.
Ultimately, the safety goal for any company is to operate with as little risk as possible and the impact of failure on business continuity and reputation will always far outweigh the cost of mitigating transformer risk. That being so, it is in every senior management team’s interest to work with their engineers to get to grips with transformer-related risk. Together, businesses could substantially reduce the risk of failure, fatality or fire posed by transformers with just a few well-considered measures.