Critical energy infrastructure at risk from boardroom disconnect new research finds

Source: press release, 5 March 2020

Managing Director of MIDEL, Barry Menzies
Managing Director of MIDEL, Barry Menzies (photo: MIDEL)

New research reveals a potential disconnect between the industry professionals that operate transformers and the boards to which they report. The disconnect could be unduly increasing the risk of failure, fatality or fire posed by transformers.

The findings, released by MIDEL, reveal that while safety is perceived to be a top boardroom concern, many transformer industry professionals lack confidence in their senior management team’s ability to properly mitigate transformer-related risk.

The Transformer Risk Report surveys the perception of, and interactions with, boardrooms that have a role to play in mitigating transformer-related risk.

Transformers play a critical role in ensuring the safe and efficient flow of electricity to every end-user, from commercial and industrial sites to homes and offices. As the world’s transformer fleet ages, and more demands are placed upon them by continued electrification, transformers are increasingly at risk from maintenance issues, overloading and winding failure. Indeed, six in ten respondents said that they had experienced transformer failure in the past 5 years.

Yet despite the significant risk of failure and its consequences, 44% of respondents are uncertain about how well equipped their senior management teams are to understand or plan for transformer-related risk.

Barry Menzies, Managing Director of MIDEL, says, “At the heart of every economy, transformers are operating efficiently, silently and seamlessly in the background and communities and businesses alike rely upon them. So, it is surprising and concerning that many respondents are not confident in the ability of senior decision makers to mitigate the risks posed by, and to, the transformers that they rely upon every day.”

Further, when asked about mitigating transformer-related risk, only 44% of respondents received approval for all of their recent recommendations. Of those that found it difficult to have changes approved, the majority (56%) cited cost as the main barrier.

Menzies adds, “It is even more concerning that many respondents face challenges in having their risk reduction recommendations fully implemented despite many experiencing failure in the past. The fact that cost is the number one barrier indicates the benefits of investing in risk mitigation may not be well understood. In fact, for many businesses, risk mitigation is a sensible cost to burden and the benefits should not be overlooked.”

“When factoring in reduced insurance and maintenance costs, as well as improvements to reliability, resiliency and sustainability, to base a decision only on capex, rather than the full suite of benefits that risk mitigation strategies can bring, will likely not realise the best outcome,” he continues.

Of note, few respondents said that risk register compliance (14%), CAPEX (19%) or insurance premiums (20%) are important factors for their senior management team when considering transformer risk.

Further, while nearly half of respondents (47%) consider environmental impact important when assessing transformer risk, fewer respondents (38%) perceive that their senior management team consider it important.

“Whether it’s a question of communication, education or trust, when dealing with transformers it’s important that everyone is on the same page in terms of risk, and the benefits of mitigation. Failures can be costly at best, and catastrophic at worst – but these factors may not always be front of mind for non-engineering decision makers,” Menzies concludes.

The survey, which attracted responses from transmission and distribution operators, original equipment manufacturers and commercial and industrial operators across EMEA, the Americas and APAC, aims to enhance decision maker’s understanding of transformer-related risk. The report assesses key concerns and risk mitigation trends as well as garnering opinion on decision maker awareness and priorities.