Fast-tracking the UK's Energy Transition
Empowering multi-stakeholder collaboration with AI-powered planning and delivery is one of the key factors for a successful energy transition. How will the sector prepare itself for this enormous challenge?
A comprehensive decision support tool is assisting planners of major wastewater companies build comprehensive business investment plans, re-design their network of assets and answer complex questions about current and future challenges.
The bioresources sector in the UK is managed by 11 major Water and Wastewater Companies (WaSCs). Their purpose is to treat 1.5 MtDS of sewage sludge every year. Whilst their priority remains the safe disposal of sludge, the focus has shifted towards the recovery of the resources within the biosolids. This objective must be achieved without increasing costs and whilst offsetting all operating carbon by 2030, as specified in the sectors NetZero Public Interest Commitment.
Over the course of a decade Business Modelling Associates have developed a Strategic Bioresource Decision Support Tool (DST), which combines manufacturing principles, detailed financial accounting and physical process modelling with an advanced optimisation engine. This DST has already helped 7 major utilities make more informed choices and significantly reduced the TotEx for their AMP business plan submissions.
Water companies in the UK submit strategic business plans to regulators on a 5-year cycle, known as the Price Review. This process involves a review of their past performance and a detailed explanation of the medium and long-term strategies with forecast expenditure. The next Price Review is scheduled for 2024 (PR24) and will require radical decisions from the various WaSCs on how they intend to provide bioresource services. Their plans must meet the commitment of NetZero operations, prove best possible utilisation of the existing assets and show understanding of the market potential. These multiple, but often competing, targets require an in-depth understanding of the trade-offs between the re-configuration of current operations, proposed investments, offsetting activities and the best possible utilisation of available incentives.
UK bioresources companies have seen a change in the regulatory structure over the last 5-year Asset Management Period (AMP). The wastewater and bioresource services have been split into two separate price controls. This means that WaSCs can no longer move money between these distinct services. Furthermore, the bioresource activities have been de-regulated to allow regulated WaSCs to enter into third party agreements for the provision of services. The UK water economic regulator (OFWAT) has also provided no guarantee on post-2020 Regulated Capital Value. This is to encourage trading activities where it results in more customer benefit than building additional assets. Therefore, WaSCs are required to generate business plans for PR24 that take into account dynamic changes in both supply and demand, the evolving regulatory environment, and the opportunities provided by new technology and innovation.
In summary, the key challenges that will require careful consideration when preparing PR24 business plans include:
The BMA Strategic Bioresources Decision Support Tool (DST) is delivered through Decisio, BMA’s proprietary software platform. The Decisio platform can be continuously updated at every business cycle, ensuring complete data integrity and interrelationship to the decision-making process. For these reasons UK Bioresources Companies have already started work for PR24 by updating their foundation models from the previous AMP. Updating the input with the latest available data and bolting on new functionality onto existing infrastructure, such as carbon reduction optimisation, impact of reducing landbank, adaptation to Industrial emissions directives and gate fees tipping point calculations will determine trading opportunities and ensures a company’s ability to respond to the most recent regulatory challenges.
This solution has already enabled 7 major UK WaSCs to increase their understanding of unit costs, highlight existing process bottlenecks, identify efficiency opportunities across the end to end of their bioresource value chain and provides insight into how best to tackle future strategic challenges. The tool blends physical process modelling with detailed financial accounting and its flexibility allows the representation of additional attributes for any activity, such as carbon emissions. Any material and financial flow can be subject to local or global constraints, which allows the capture of granular physical constraints with the same ease as company-wide budgetary constraints or performance commitments.
The ability to represent both a dynamic context and a changing environment, together with the built-in financial capabilities of the model, mean that the DST enables more focused, rational and timely investments. The modelling tools are then integrated with other automation software, which enables the user to run multiple scenarios, sensitivity analysis and stress tests. In turn, this gives planners the means to better understand risk and uncertainty, define tipping points for key parameters, carry out rapid optioneering and have more confidence in the decision-making process.
The platform is built to be easily scalable and fit with additional capabilities. It can be adapted to consider short to medium term decisions which are relevant in the context of budget setting and daily/weekly operational planning. The strategic objectives and constraints can be applied to production planning platforms, which are adapted to support different business processes and are utilised to continuously recalculate the “next best optimal plan”. This allows planners to make best use of the available assets, quickly react to unplanned events and disseminate information to all the relevant stakeholders in the organisation. The BMA Bioresources Production Planning Platform is now business as usual in a number of major UK WaSCs, realising savings identified at the strategic level. It has proven to increase the utilisation of most performing assets, increasing energy generation and driving down OpEx, with an estimated return of investment of circa 6 months.
Related Insights
Fast-tracking the UK's Energy Transition
Empowering multi-stakeholder collaboration with AI-powered planning and delivery is one of the key factors for a successful energy transition. How will the sector prepare itself for this enormous challenge?
BMA and AtkinsRéalis Collaborate to Drive Bioresources Excellence
BMA, a leading next-gen AI decision intelligence software company, and AtkinsRéalis, a world-leading design, engineering and project management organisation, are combining their expertise to create new value for clients.
BMA receives industry recognition for transformative collaboration
BMA has been selected as a finalist in 2 categories at the upcoming prestigious Utility Week Industry Awards 2024. Taking place on 3 December 2024, this recognition celebrates pushing the boundaries of collaborative innovation.