Kwantis is supporting a leading energy company in its Project Risk Management (PRM) process by conducting a comprehensive risk analysis for a pumped storage hydropower (PSP) project. This initiative aims to double the current energy generation capacity while significantly increasing storage, ensuring greater clean energy flexibility and security by 2030.
The risk analysis is divided into two distinct phases: a qualitative assessment to systematically identify potential risks and opportunities, followed by a quantitative evaluation using probabilistic modeling to inform CAPEX allocation effectively.
Project Context
Pumped storage hydropower systems are essential for achieving energy transition goals, offering reliable energy storage and grid flexibility to integrate wind and solar power. This project includes constructing new underground reservoirs and associated engineering works to enhance territorial compatibility. Additionally, existing reservoirs will be upgraded to improve functionality, safety, and storage capacity for public use and drought mitigation.
Given the complexity and lifecycle of the project, Project Risk Management (PRM) plays a crucial role in assessing uncertainties—both threats and opportunities—and their potential impact on key objectives such as schedule, costs, and production. A structured PRM approach strengthens stakeholder confidence by proactively managing risks, ensuring appropriate contingencies, and supporting the adoption of industry best practices.
Phase 1: Qualitative Risk Assessment
The qualitative phase focuses on systematically identifying and assessing risks and opportunities through expert judgment and analysis. A risk register is developed using workshops and brainstorming sessions to document potential risks. Each risk is evaluated based on its likelihood and potential impact and categorized accordingly.
This phase helps prioritize risks and opportunities without relying on numerical data, providing a clearer understanding of areas requiring further attention and mitigation strategies.
Phase 2: Quantitative Risk Analysis
The quantitative phase involves a detailed, data-driven analysis using probabilistic modeling to estimate the financial impact of identified risks. Risk factors are integrated into the cost estimation model, utilizing techniques such as Monte Carlo simulations to assess potential cost variations.
By quantifying the uncertainty surrounding project costs, this approach enables more precise CAPEX allocation, determining confidence intervals and contingency amounts. Ultimately, this data-driven methodology provides a solid foundation for informed decision-making and project optimization.
Conclusion
By implementing a structured PRM approach, the PSP project ensures greater resilience against uncertainties while optimizing resource allocation. This comprehensive risk analysis enhances decision-making processes, ultimately supporting the project’s successful execution and long-term sustainability.