Property risk assessment for power plants: Methodology, validation and application

In this paper, a procedure for Risk Assessment, which makes use of two risk indices (PML – Probable Maximum Loss and MFL – Maximum Foreseeable Loss) is applied to power plants to evaluate potential economic losses due to risk exposure for two different loss scenarios (probable and worst-case).First, the procedure is presented in order to provide a prediction of probable and maximum loss as a function of power output.Second, the economic loss predicted through the risk assessment procedure is compared to real power plant loss values, taken from published data, to validate the methodology against field data.Finally, the procedure is applied to some combined-cycle power plants by also including the contribution of business interruption losses. In this manner, the most common sources of loss are identified. A sample analysis for risk/benefit evaluation is also carried out to estimate whether the adoption of risk assessment procedures allows an actual profit for plant owners. Customer feedback is also discussed.The results presented in this paper allow a practical and easy-to-use rule of thumb for loss estimation and a guideline for plant owners to evaluate the impact of risk assessment procedures on operational costs.

► The risk assessment procedure is general and considers the exposure of the entire power plant through a systemic approach.
► The risk assessment procedure mainly focuses on plant profitability and considers two different loss scenarios (probable and worst-case failure) to estimate plant overall monetary loss.
► The risk indices are compared to real power plant loss values, taken from published data, in order to validate economic loss prediction obtained through the risk assessment procedure.