Managing uncertainty and updating parameters in electricity distribution asset condition based risk investment models

This paper draws on several years of experience of developing condition based risk models at Northern Powergrid, examining how actual experience has influenced further model development in particular with regard to forecasting techniques and the updating of model parameters. Of special interest are the following aspects of our experience: degradation forecast error; unforeseen effects on asset condition; parameter uncertainty. We conclude that, models developed at Northern Powergrid provide useful investment decision support in the production of robust business plans as long as the model limitations are fully understood and managed.