The landscape of asset management is changing. As digital transformation is taking over the manufacturing industry, enhancing efficiency and monitoring the performance of assets becomes crucial. Increasingly organizations are investing in innovative technologies such as IoT, AI and ML to ensure live and continuous visibility for their physical assets. All this change leads to one major question: Is your EAM strategy competent enough to provide a competitive edge for your organisation?
Author Rohit Agarwal | Copperberg
At EAM NXT 2020, our new business platform dedicated to B2B enterprise asset management, we brought the experts from various fields to tackle this question from several angles, digital transformation, strategic asset management and competence development. We interviewed Elisabet V. R. Jørgensen, Asset Management Manager for Markets and Bioenergy at Ørsted. Elisabet shared her work of making the future of asset management sustainable in the energy sector. Enjoy.
As the Asset Manager at Ørsted, can you briefly describe what your role entails? What is your number one priority with this role? What is a typical day in your work week looks like?
At Ørsted, we have different business units. The one I’m working with is called Markets and Bioenergy and it’s focused on our power plant portfolio and waste recycling to gas units, as well as trading on the wholesale market. Ørsted is the largest producer of heat and power in Denmark. My job is that of portfolio manager of the Danish power plants portfolio – comprising of 9 different locations, multiple heat and power production units. My department is responsible for planning, administering and prioritizing the operations and maintenance budget for the entire portfolio including reinvestments in short and long term.
Our method of asset management is risk based and we work therefore closely with several other departments responsible for identifying technical risks, performance challenges, and market opportunities. Our focus is on compiling and assessing all these different inputs to ensure we are maximizing our commercial performance of assets through higher availability, improved performance and effectively handling costs within the financial framework and budget.
One of Ørsted’s main accomplishments is the contribution to reduce CO2 emissions and Ørsted will be coal free by 2023 – an important contribution given that Denmark currently aims to be independent of fossil fuels by 2050. We have done so by converting the assets from coal fuel based to biomass by utilizing the existing infrastructure to a high degree. Using the existing infrastructure both provides continued economical supply of heat and power by avoiding investments in new assets, but also demands that we be even more conscious of identifying and mitigating risks.
Parallel to this journey we have a strong focus on bringing down costs. We not only must operate within a new “green” regime but also do so while becoming more cost efficient & cost conscious to ensure EBIT positive results in a competitive power market This means that every time we make a decision regarding maintenance or investments, we have to be very aware of the asset condition, the pros and cons of our decisions – both for the individual asset and the entire portfolio, since budgets are constrained. It requires looking at different scenarios and analyzing which scenario will provide the best results. We have limited advanced technology to do this, so we are also focused on digitalization and using data to drive decisions.
My typical day is focused on taking the bird’s view to determine if the budgets for each asset are sufficient given current technical and commercial performance. Operational budgets are very dynamic. An outage caused by a breakdown can quickly mean that the total budget needs to be reprioritized to handle the costs of the breakdown. This means simultaneously that another asset budget can be minimized in order to ensure the total budget target. Producing heat and power efficiently is important, but we also have to make sure our asset data is correct at all times as this can have a major financial impact. Energy is not a physical product in traditional terms and our costs and revenues are based on the data we report for settlement with our customers, as well as government stakeholders. Overall my tasks are very portfolio oriented.
What are the challenges you face as a strategic Asset Manager? And how do you tackle them?
We are facing the challenge of becoming sustainable and reducing our environmental impact. Biomass is very different fuel with different risk parameters than traditional coal. For example, risks of fire and explosion change due to the nature of biomass dust particles. Biomass creates wear and tear on machinery not experienced to the same extent with coal. We are learning continuously throughout the green journey as we gain more experience.
Another challenge is the power market which has been impacted by the increase in renewables such as wind and solar, which typically have a much lower marginal cost. The market today is much more competitive, which requires us to be very focused.
Ørsted have gone through quite a transition as you briefly explained in your session summary. What used to be former coal and gas units are now turned to biomass-based fuel which is more environmentally sustainable. Can you explain how the transition occurred? What were the reasons behind such change? What was the most challenging part of that change?
The transition has been under implementation since 2009 with the conversion of the first asset in Herning. The green journey has been supported by national emission and local municipality goals, who in turn are largely the customers for district heating. In 2009 the company was named Danish Oil and Natural Gas (DONG) and in 2017 DONG, after becoming a publicly traded company in 2016, completed the divestment of its ownership in oil and gas fields and subsequently rebranded the company as Ørsted. This journey will continue until the beginning of 2023, at which time Ørsted will be 100% coal free.
How have these changes affected your asset management?
Changing from fossil fuels to biomass has increased our awareness of operational risks and risk mitigation. We became more aware of the risks in 2012 after we had incidents of fire at a major asset. This kick-started an intensive portfolio wide review of our process safety management and a reinforcement of risk-based asset management. We had to assess and prepare for the risks if we were going to continue this journey – risk based asset management, safety management, identifying risks that can happen and the prevention solutions that could be implemented. This is was extremely important as safety is our number one priority.
Becoming more cost effective meant reorganizing our responsibilities within the business unit operations into one common asset management in 2017 to create a stronger line of sight – ensuring decisions are based on and support current strategy. Budgets were centralized instead of being placed locally with the asset, and performance responsibilities were more clearly assigned and integrated into central decision processes. This has enabled us to better assess and meet both individual asset goals as well as portfolio goals by taking a centralized portfolio perspective.
In order to ensure that risk mitigation and budget frameworks are aligned we have worked intensely with visualizing line of sight. We do so by quantifying risks in monetary terms in order to be able to present for management the pallet of risks associated with different budget scenarios. This has given us the opportunity to ensure the right decisions which support the strategy through a dialogue with critical internal stakeholders. It is also a tool to ensure that daily maintenance is prioritized and performed in accordance with the established risk appetite.
What made you decide to speak at EAM NXT?
Ørsted is in my opinion a pioneer within the green transformation of the heat and power sector, and ultimately the reduction of fossil-fuel based emissions. It has not been without challenges but none the less a worthy endeavor and one which I am passionate about. It will be interesting to share our experiences with other companies looking to begin or continue their green journey.
What are your expectations from EAM NXT?
I expect and look forward to having an inspirational dialogue about the current challenges of asset management and possible solutions to help us continue meet our goals. Solutions that are not just technically awe-inspiring with complex functionalities, but solutions that actually promote conscious or data driven decision making.
Define your perfect conference.
It is a good mix of listening to speakers, group discussions, workshops and informal networking. Some of the best contacts I have made at conferences over the years have been the people sitting next to me at lunch. You don’t have time to process and digest all the knowledge being shared so I try to divide my focus on the discussions that either directly relate to current challenges or focus on something new we haven’t yet implemented. My perfect conference simply allows the sharing of great ideas, and the opportunity to “steal with pride” afterwards. Afterall, we do not need to reinvent the wheel every time.
Any message you want to share the participants of EAM NXT?
I am personally enthusiastic about the green ambition Ørsted has and the vision of creating a world that runs entirely on green energy. It is ambitious but possible and, in my opinion, a necessary transition that I hope to see more companies execute. It brings with it a new set of challenges and opportunities and it is critical to be aware of how fundamentally changing your strategy can and will impact daily business. It makes me proud to get up for work every morning and makes me feel as though I have truly contributed to something bigger at the end of the day.