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Pilot Diagnostics Project to increase the Operational Efficiency of Two Energy Assets

Situation

  • A large Russian energy corporation chose one of its electrical power generating companies and two of its assets – a thermal power plant and a hydroelectric power plant – for a pilot project conducting diagnostic analysis and identifying how to increase operational efficiency, evaluating the economic effect

Goal

  • To analyze equipment use, maintenance and repair processes, along with the pilot assets’ organizational structure, resource management processes and warehousing
  • To create a plan to increase the efficiency in business processes and to optimize the organizational structure of the company’s generating assets, measuring the economic effect of these initiatives

Our approach

  • Analysis was conducted with the use of a standard set of instruments: observing the results from implementation of key processes; interviewing those carrying out the work; and analysing historical and current data

Results

  • The following opportunities to increase efficiency in the pilot thermal power plant and hydroelectric power plant were identified:
    • Use of equipment: to improve control processes, a system of observation allowed for own-need energy consumption to be reduced by 4.8 million kWh, and for fuel consumption to be reduced
    • Capital repair processes that were slow and often poorly carried out by underutilized staff and contractors were identified. This allowed for a process optimization solution that increased the work load on staff by 40% and on contractors by 50% as well as improving the delivered maintenance work
    • The organizational structures at power stations were not unified, with different management and quality control norms. The potential from reducing the number of managerial, administrative, storekeeping and support staff was identified, while accounting, personnel and procurement departments were centralized
    • Up to 75% of stock and resources at the Thermal and Hydroelectric power stations were left unused for periods of 9 months or more. The volume of oil reserves exceeded the monthly maximum. Possibilities to release working capital and reduce costs at the expense of process improvements were identified
  • The yearly valuation of the economic effect deriving from the recommended improvements to the Thermal and Hydroelectric power stations was 119 million roubles. By replicating these changes in the other generational companies, the additional yearly economic impact will be around 157 million roubles.

 

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