Quantitative Risk Analysis For Cost Planning

Northern Gas Networks Requirements

Northern Gas Networks (NGN) is the gas distributor for the North East and parts of Cumbria and Yorkshire.

NGN have submitted to the UK Government, and the sector regulator Ofgem, ambitious and innovative proposals to develop the UK Hydrogen Economy. This will supply 2,000 homes in an area of Redcar with locally produced clean-burning hydrogen from 2025.

The government has highlighted that the UK’s hydrogen economy could be worth £900 million by 2030 and create as many as 12,000 jobs, so hydrogen could represent a great opportunity for Redcar and the local area.

As part of the complex £320m capital programme proposal NGN required sophisticated Quantitative Risk Analysis to be undertaken. The purpose was to assure the NGN Redcar Hydrogen Community board and funders of the likely risk envelop of early phase enabling works.

The Impact

The QRA work provided the following critical benefits to the NGN – Redcar Hydrogen Community project,

1. A clearly presented risk exposure – expressed as an envelope of commercial outcomes at three different key decision dates.
2. A sensitivity analysis on the most important risks at three different key decision dates – enabling effective mitigation.
3. A clear understanding of when decisions needed to be made to avoid or mitigate key risks.
4. An objective method of communicating risk to the funders (the UK Government).
5. Assurance that the right data-driven decisions were being made.