Asset Management

Asset lifecycle management is a key element in ensuring safe and reliable operations at our production and distribution sites. In practice, this means that we are consistent in all activities related to the asset lifecycle, i.e., from the acquisition of assets through their operation to their decommissioning and disposal. This is based on techno–economic studies, risk analyses, asset maintenance, cost optimization, and supply chain capacity. The purpose of asset management at CEZ Group is not only the sustainable and efficient use of operating resources, but also their renewal and the development of long–term value.

The basic pillar for asset lifecycle management in the Renewable and Traditional Energy Division is CEZ Group’s strategy, VISION 2030—Clean Energy of Tomorrow, which aims to:

• reduce coal–fired power generation: we will reduce the share of coal–fired electricity generation to 25% by 2025 and 12.5% by 2030,
• increase production from clean sources: we will build 6 GW of renewables by 2030

According to this strategy, further objectives and plans are developed into site concepts (strategic site assignments). The individual site concepts are based on the main risks and opportunities of the sites, the condition of key equipment, consideration of the availability of main inputs (fuel, water, etc.), personnel resources, legislation, and CEZ Group commitments and technical know–how. The site concepts divide specific sub–tasks and KPIs (key performance indicators) into annual and medium–term planning periods (5 years), including resource allocation, setting technical and economic indicators, priority setting, and assigning responsibility for task performance. We use the Design–To–Value methodology for the preparation of major projects.

An advisory body, the Resource Portfolio Management Commission, assists with the implementation of the site concepts. In particular, the Commission discusses:

• implementation of the long-term site concepts and the related medium-term plans
• annual site plans and evaluation of their ongoing execution the status of projects in the medium term
• evaluation of deviations and proposals for corrective measures
• the main risks and opportunities associated with asset management arising from external and internal incentives
• the length and nature of planned outages and relevant recommendations

CEZ Group’s asset and risk management system for Renewable and Traditional Energy is conceptually based on ISO 55000 and ISO 31000 standards.

From a risk management perspective, unified principles are set for all areas of the asset lifecycle. We have a continuous process of early identification of risks in place, their recording, expert determination of the size of risks including proposals for their mitigation (reduction, acceptance, monitoring, escalation, etc.).

All risks and opportunities are recorded in the Risk and Opportunity Register, which is used in the development of site concepts and subsequent annual and medium–term plans. If necessary, the risk overview is the basis for escalation to the management of ČEZ, a. s. Risk management is also reflected in the scope of routine maintenance and categorization of equipment, evaluation of specific activities, approach to spare parts management, and application of technical standards. Similarly, the identification of opportunities and their subsequent development is approached.

The asset and risk management system must consider a series of factors in terms of meeting the VISION 2030—Clean Energy of Tomorrow objectives and preparing site concepts. In the context of reducing coal–fired power generation, it is primarily a matter of appropriate timing, both in terms of achieving climate targets and ensuring security of energy supply in Czechia. This goes hand in hand with the replacement of coal–fired sources with emission–free (primarily photovoltaic), and low–emission (gas–fired) sources, the conversion of plant sites to new activities and the development of new systems and technologies (such as flexible sources, electricity storage, hydrogen technologies or heat storage).

The process of coal extraction is also tightly linked to the site concepts. Severočeské doly, part of CEZ Group, plans mining and subsequent reclamation within the operating horizon of its coal assets.

In the heating sector, we are preparing for the transition to low–emission heating from an asset and risk management perspective. In practice, this will mainly mean highly efficient combined heat and power units using biomass, municipal waste and natural gas, but also accumulation, electrode boilers and heat pumps.

Currently, we have in a high stage of development projects for the transformation of the heating sector in the localities of Mělník (Energotrans, a.s.), Dětmarovice, Prunéřov–Tušimice and Trmice. The transformation of the Dvůr Králové nad Labem heating plant is before completion (deadline spring 2024). In the next phase, the transformation will continue in Ledvice, Poříčí and Hodonín.

We evaluate all projects according to the requirements of the EU taxonomy, a new area of legislation that sets criteria for selected economic activities, which when met can be classified as "sustainable" and their corresponding financial indicators can be reported in the company's performance.

A practical example of asset management and the transformation to emission–free generation is the Prunéřov I power plant, which was shut down in 2020 after 53 years of operation. The demolition of the decommissioned power plant, which started in 2022, was completed by the end of 2023. The result is a cleaned–up area for further commercial use. In general, when decommissioning, we prefer the maximum possible use of dismantled components, both within and outside CEZ Group, and recycling of recoverable raw materials.

In terms of continuous professional development in the field of energy asset management and risk assessment, we have a system in place to obtain the necessary and up–to–date information. These include membership in various technical working groups (vgbe, EPRI – Electric Power Research Institute, and IERE – International Electric Research Exchange), participation in conferences and educational events, cooperation between the professional departments of CEZ Group, and other.

The CEZ Group’s strategy, VISION 2030—Clean Energy of Tomorrow, is fundamentally reflected in the life cycle management of our nuclear assets. In the strategy, we commit to:

• safely increasing generation from existing nuclear sources to over 32 TWh and achieving at least 60-year lifetime for nuclear units
• building a new nuclear unit at Dukovany
• preparing for the construction of small modular reactors (SMRs) with a total capacity of over 3,000 MW, with the aim of implementing the first modular reactor by 2032

The guiding principle is to manage assets and risks with safety and reliability in mind and to ensure that everything is done in accordance with the internal Nuclear Power Plant Safety Policy. CEZ Group’s strategic visions for nuclear power are further reflected in long–term site concepts and medium–term site plans. With the help of site concepts, we determine the way nuclear power plants are operated, set expectations over the horizon (and beyond) of expected operation and during asset decommissioning, and look at the potential for further site development. The main input for the development of the concepts is the risk and opportunity register of the site, the condition of important facilities, the restrictive conditions (water, discharges, etc.), and the applicable legislative framework.

Key areas of asset lifecycle management in our nuclear operations include:

• setting rules for the care of nuclear power plant equipment to ensure a high level of reliability
• planning for the long-term economically sustainable use of nuclear power plants
• securing the finances necessary for the long-term economically sustainable, safe, and reliable operation of nuclear power plants
• monitoring the situation, searching for causes, performing analyses, and continuous improvement

The entire asset management process is summarized in the following diagram of the annual PDCA cycle (Plan-Do-Check-Act):

As part of asset care, we improve maintenance processes in cooperation with internal departments and suppliers. Regular meetings are held to evaluate activities (ongoing and planned) and improve processes. Part of the process includes monitoring foreign nuclear operators and comparing their maintenance approaches. The aim is to ensure stable and high–quality maintenance of assets to secure high reliability in the long term.

When planning the economically sustainable use of nuclear power plants, we fulfill our role and proceed with due care and diligence. We coordinate activities in the operation of production facilities and look for and assess the potential for site utilization. To support good decision–making, we use techno–economic tools that provide a comprehensive view of the situation and search for optimal solutions, because the cheapest way does not always mean the best way.

Optimal and efficient allocation of resources is one of the basic premises for continuous improvement of safety and reliability in nuclear operations. The goal of long–term economically sustainable, safe, and reliable operation is thus reflected in realistic business plans and annual budgets. Economic management tools such as NPV (Net Present Value) are an integral part of management decision–making.

Asset lifecycle management places demanding requirements on our suppliers. We only work with suppliers who meet the rigorous requirements for the supply of materials, products, and services for nuclear power plants. To qualify for supply to nuclear power plants, a supplier must pass the relevant audit. All audit records are part of the qualified supplier database.

Thanks to employees with extensive experience in various fields from outside CEZ Group, we manage to maintain a high level of know–how in asset and risk management. We are mindful of the need for early transfer of knowledge and experience, and we reflect this in our staff training and development requirements, including basic staff training.

As the largest distribution system operator in Czechia, we have long been committed to the safe and reliable operation of the distribution system. The distribution system operated by our company ČEZ Distribuce includes power lines and stations covering high, medium, and low–voltage levels. In total, we supply and manage nearly 3.8 million consumption points.

According to the Energy Act (Act No. 458/2000 Coll.), one of the basic obligations of the distribution system operator is to plan the renewal and development of the distribution system. In addition to the traditional development, the distribution system needs to be transformed for what is now–called New Energy (PV and wind power plants, e–mobility, etc.), which is fully reflected in the CEZ Group's strategy, VISION 2030—Clean Energy of Tomorrow and especially in this particular commitment:

• invest in smart grids and decentralization to further develop a stable and digital distribution grid

In managing ČEZ Distribuce assets, we follow a systematic approach and coordinate activities and procedures in order to achieve optimal performance, assess the associated risks and costs over the asset life cycle, and achieve the highest possible efficiency.

The investment plan, which is approved by the management of ČEZ Distribuce, is the underlying basis for planning the renewal and development of distribution system assets. The investment plan is built upon the company’s strategy, which focuses on:

• asset renewal (according to key parameters – condition, age, failure rate, extent, safety, etc.)
• asset development enabling the connection of decentralized renewable energy sources, including smart technology deployment

The investment plan is broken down into the mid–term plan in detail (by region, type of asset, etc.) and implemented step by step.

Asset renewal is based on the requirements of the expert departments. The internal tool FMEA is used to manage and assess the condition and importance of the assets. At the same time, we started the implementation and testing of the new AMS system, based on the Maximo application, which will replace the FIMEA tool during 2024. Evaluation includes criteria such as supply interruptions and continuity of supply, voltage quality, distribution losses, OPEX (maintenance, malfunctions), connection capacity, asset condition, reinforcement of the distribution system due to decentralized generation, and risk elimination.

We invest in asset development based on strategic decisions preceded by thorough condition analyses including calculation studies. We have deployed a new application, Grizzly, for grid performance calculations, replacing the Bizon software previously used. The new application is more powerful and provides a better user experience. In the calculations, we consider scenarios for the development of electricity consumption and generation. As a result, the analyses comprehensively assess future conditions and possible scenarios for the development of the distribution system.

Smart technologies are a separate group of development investments. These include the installation of remote intelligent control elements, elements for U/Q management, fiber optic infrastructure, etc.