Case Study: Life Cycle Costing of Cable Tunnel Co-location

Case Study: Life Cycle Costing of Cable Tunnel Co-location

Executive Summary: Gnosys Ecometrics was approached to develop a method for assessing whole life costs of large infrastructure projects that would take into account economic cost as well as environmental cost and also take explicit account of risk. This method, and the tool developed to implement it, was then applied to a number of case studies as proof of concept. The project was carried out under the Innovation Funding Incentive scheme introduced by OFGEM to encourage network operators to invest in Research and Development (R&D) activities. Case studies were chosen to assess the application of the method and tool to quite routine decision making and also for new proposed schemes. This case study examines the opportunities for co-locating both transmission system operator s (TSO) 400kV cables and distribution network operator s (DNO) 132kV cables in the same tunnel. It examines the benefits or otherwise of doing this from the TSO and DNOs perspective as well as that of the regulator (OFGEM). It also examines the risks associated with this scheme as compared with current practice, of housing the two cable systems in separate tunnels.

Background: Life cycle costing (LCC), also commonly referred to as total cost assessment (TCA) is a decision support method for assessing the life cycle economic impacts of business process and infrastructure investments, product developments and operations. It is intended to provide life cycle based economic information required to inform and support decisions based on a thorough investigation of the costs. These can include costs of new processes or products, new technologies, asset investments, and current and new operations across the life cycle from cradle to grave or from concept to termination. In addition to assessing the economic costs of schemes, there is increasing awareness and desire to quantify the environmental impacts of schemes. Reporting on environmental performance and impact of new schemes is becoming increasingly important, especially climate change impacts, and there are also economic costs associated with these impacts. Life cycle costing can also take these into account and enable quantification of these impacts and comparison of different options to achieve a well balanced outcome. Along with these factors is the need to consider risk and the potential impact of schemes on their environment, be this geographical or social. Incorporating risk into LCC requires probabilities and the ability to examine the costs that may result should the risk be realised is a powerful feature of LCC. The overarching project was aimed at developing a methodology, and implementing it in software, to assess the economic and environmental costs of schemes and the risks associated with them, which can be used to examine options and inform decision making. Case studies were chosen from a range of existing new and ongoing schemes to prove both the application of the methods to existing schemes and more routine decision making and also its use in newly proposed and novel schemes.

Methodology Overview: The method considers different cost elements related to both Assets and Humans and these two streams are assessed within the method. The first stream is Asset based and includes investment and operation and other costs. The second stream is that associated with Humans, notably staff, Alliance Partners or contractors and the public. Each of these streams is split again into two, one representing actual costs, either direct or indirect, and the other representing the contingent and intangible costs. Figure 1, Basic method structure for conducting an LCC Hold for future review Issues not included in TCA Project Definition and Scoping Conduct Cost Inventory Impact Assessment Asset Stream Human Stream Direct/Indirect cost Contingent cost Direct/Indirect cost Contingent cost Identify uncertainty Identify risk or probability Identify uncertainty Identify risk or probability Document Results Feedback to company s main decision loop Direct and indirect costs represent those costs that will definitely occur. In terms of Assets, these costs might be capital cost of materials, spoil or waste disposal cost or the costs of insurance. They will have a value attached to them, but there may be some uncertainty associated with them as costs may range in value. In terms of Human cost elements, these costs might be those associated with general health and absenteeism and recruitment and training, which can be estimated before a project begins, based on historic trends or forecasted estimates. There is again a level of uncertainty here, as these costs might be given a range rather than a discreet value. For both Assets and Humans there are contingent costs associated with unexpected incidents that carry a cost burden. These costs arise as both Assets and Humans can be damaged (or injured) through an incident. This may involve company personnel, Alliance workers and contractors and members of the public. In this case there are a number of

elements of uncertainty associated with the cost. The top level of uncertainty lies in whether the incident will take place or not. An incident may be an explosion or a fire caused by a fault in an asset, it could also be due to vandalism or naturally occurring. If an incident occurs, one must consider the consequences of it and the associated costs, be these health and safety related, or those arising from damage to surrounding assets. Cost categories The costs identified for incorporation into the LCC are split into five cost categories: Type 1: Direct, these relate, for example, to capital investment and operational costs of a scheme or facility Type 2: Indirect, these relate to hidden corporate and operational or site overhead costs, for example corporate PR programmes Type 3: Contingent liabilities, these relate to costs associated with unexpected consequences these generally include probabilistic assessment to reflect asset failures and uncertainties Type 4: Intangibles, these relate to internal intangible costs; for example staff costs and maintenance of relationships, which can be difficult to quantify Type 5: External, these relate to external costs not paid by the company, for example, environmental emissions Goal The goal of this case study was to carry out an LCC to help inform decision-making on the potential life time costs and the benefits and disbenefits associated with co-location of 400kV and 132kV cable assets in comparison with current, single owner/occupier tunnel systems for single cable types. Functional Unit The functional unit adopted for the study was 10 km of tunnel and cable system of 2 x 400kV circuits and 3 x 132kV circuits (1 cable per phase in both cases) over 60 years of operation. ). The functional unit also contains one tunnel boring machine (TBM) and access shaft. The LCC-Leets models constructed include construction, operation and end-of-life cost impacts for two 3m tunnels for the hosting of the TSO 400kV circuits and the DNO 132kV circuits respectively and a single 4m tunnel to host both cable systems.

Figure 2, Simplified schematic of functional unit Unit cell Ground level 40 m Shaft Tunnel 10 km Approach The scenarios considered in the study: 1. 1 x 3m tunnel for 132kV cables ( a DNO perspective) 2. 1 x 3m tunnel for 400kV cables (TSO perspective) 3. A combination of the two 3m tunnels 4. 1 x 4m tunnel for co-location (Regulator encouraged position) The model was intended to include construction, operation and end-of-life cost impacts but the end of life costs have remained elusive and are not included in the current study. The study included consideration of operational factors such as fan cooling energy use and cable power losses. These have an influence on possible operational constraints as well as costs and environmental impacts. Tunnel construction aspects along with the management of tunnel boring spoil was also addressed. Carbon emissions were also explicitly considered as was the potential impact of the cost of carbon being realised as an internalised rather than an externalised cost. Similarly, the possible internalisation of energy costs associated with system losses was considered. In all phases there is the possibility of events occurring which will have different consequences, such as employee injury. Further, the potential impact of cable joint failure and cables fire in this category are considered. These cost elements will have a probability factor to calculate the likelihood of occurrence during each appropriate phase of the life cycle and associated cost and environmental impacts along with potential health and safety impacts.

Figure 3, Example of some of the cost elements considered in this case study Raw materials Energy CO 2 emissions Transport Construction Phase Transport Incident occurrence Probability factor Probability factor Operation Phase Spoil Fan operation Employee injury Cable losses Company reputation and market share End-of-life Phase Results: Essential conclusions include: 1. There is a short-term capital investment and long-term total life cost saving, and significant environmental benefits, from the adoption of a 4m co-located cable tunnel facility rather than individual 3m cable tunnels for the DNO and TSO cable circuit requirements considered here. 2. The economic benefit of the 4m co-location cable tunnel in regard to total Type I to III costs, covering all direct, indirect and contingent liability costs, is equivalent to a saving of between 26% and 36% over the combined 3m tunnel modal cost. When the intangible internal and external Type IV and V costs are also accounted for, the overall economic benefit of the 4m co-location cable tunnel spans a saving of 11% to 27% with respect to the combined 3m tunnel modal cost.

Figure 4, Comparison of scheme costs, split by cost category 3. The climate change benefit in greenhouse gas emission (GHG) terms for the 4m tunnel, with no account of avoided carbon credits, equates to a saving of around 25% of the GHG emissions for the combined 3m tunnels. There would also be a significant reduction in overall environmental impacts during construction. However, the likely impact on local people and organisations living and working close to a 4m tunnel construction will be higher than that of a similarly located 3m tunnel. 4. The potential saving to the TSO would be dependent on successful negotiation with the DNO. However, this would be facilitated by the potential benefit to the DNO. Considering the maximum lifetime cost to the DNO in order to meet the Type I to III costs, the DNO could obtain a benefit of approximately 35% saving on that of a single 132kV cable tunnel. This level of economic and environmental saving is likely to be attractive to the Electricity Regulator and UK government. 5. The level of additional risk must be carefully considered particularly in regard to operational cable circuit failures arising from potential cable joint failures and tunnel fires. 6. International experience of XLPE cable joint failures suggests the TSO will experience a 1.5 times larger risk of cable circuit outage in a co-located tunnel compared to a single occupancy 400kV cable tunnel due to cable joint failure. In contrast, the DNO could experience a risk which is 3 times larger than the risk of cable outage in comparison with a single occupancy 132kV cable. While the TSO and DNO would

accept a knock-for knock arrangement and would not make a claim against the other party when the tunnel is operational, the DNO might require some adjustment of their financial contribution to accept this increased risk. This report takes the line that a DNO, knowing in advance what the possible increase in risk might be, could seek a different position on its contribution to the investment or its share of the estimated financial benefits of co-location. 7. The risk of cable tunnel fires, assuming fire initiation is tunnel-condition controlled, is extremely small and the additional risks associated with co-location are considered to be very low so the overall risk in co-located tunnels is likely to be as small as those for single tunnel occupancy. If a major or catastrophic fire occurs the financial consequences are significant and are very sensitive to outage costs which may be significantly different for 132kV and 400kV cable circuits. It is possible to construct a variety of fire initiation and propagation scenarios, some of which may be biased towards cable and joint failure sources. Figure 5, Monte Carlo assessment of increasing year-on-year probability of fire (0.025% p.a.) The results of this assessment suggest that co-location of 132kV and 400kV cables in a shared tunnel is certainly economically and environmentally viable. There are other issues that are not discussed here such as negotiations between parties regarding ownership of the tunnel and any resulting charges on the non-owning party. In addition to this agreement would be required on the handling of liabilities.

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