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Economical Goals of Life-extending Maintenance

7. Saving/ cost relation by different replacement strategies

7.1 Introduction

The replacement of an old transformer mostly represents only troubles. The direct (purchase price) undirect costs are relatively very high and the motivation to act is low, because the planned replacement is virtually fruitless. A new unit makes mostly the same job and its efficiency is usually only a bit higher than the old one (the iron and copper loss is usually only a bit lower) - therefore operational costs of a transformer cannot be markedly reduced.

Generally there exist three basic strategies for the replacement of an old transformer:

  • A NamePlate Strategy (NPS)- the transformer is replaced immediately after the expiration or its nameplate age
  • a Don't Care Strategy (DCS)- a careless manager accepts growing hazard conditions, makes nothing and hopes the best
  • a Flexible Response Strategy (FRS) - the manager analyses all existing conditions and risks and flexibly optimizes the approach by the comparising the existing and potential hazard levels versus savings / costs relation

The example of the economical effect of the different strategies is shown as a RTS (Relative Total Saving) in the following picture:

RTS Graph

Fig. 1 general comparison of economic effects of different strategies

7.2 NPS - NamePlate Strategy

The origin of the X-scale (Nameplate Point) is equivalent to the nameplate age of the transformer. Nameplate Point (t = 0) means the replacement of the old transformer and the installation of the new unit according to the nameplate strategy.

Let us suppose that the condition of our transformer is in a relatively good shape, no extremely deterioration symptoms are evident and therefore no special treatment is necessary.

The blue curve then shows a negative Relative Total Saving (1) in a time-period Nameplate Point - Decision Point

(1) RTS = -1 * [((1+i)n-1)-((ΔNLL + ΔFLL)*PP)/TRC)*((1 + i)n-1)/i]

  • RTS ... Relative Total Saving = Total Saving / TRC
  • TRC ... Total Replacement Cost = Purchace price (PP)
    • + removal cost of old transformer
    • + local conversion cost
    • + general logistic cost
  • Δ NLL ... cost decrement is equivalent to reduction of No-Load (iron) Losses as a % of Purchace price (PP) per year *
  • Δ FLL ... cost decrement is equivalent to reduction of Full Load (copper)Losses as a % of Purchace price (PP) per year *
  • I ... Interest rate
  • n ... years

Fig. 1 shows a RTS = RTS (t) relation for: TRS = PP, i = 0.15 , n = 3 ( time- period Nameplate Point - Decision Point), ΔNLL = 0.006 PP, Δ FLL = 0.02 PP

* See Transformer Life-Cycle Cost

In our example NPS means minimal loss 0.42 TRS for a time-period Nameplate Point - Decision Point

The new transformer is installed even though the old one has been working well. Strictly from the point of the cash flow, the responsible manager is not-our-company-man but a transformer-producer-man. A transformer producer benefits from the company potential saving achieved by the postponed purchase of a new unit.

7.3 DCS - Don't Care Strategy

Let us suppose that after exceeding the Nameplate age, aging symptoms of the transformer gradually increase and during the following 3 years the monitoring has shown an increased deterioration of the transformer - we should take measures. See Decision Point (Fig. 1).

The magenta curve then shows a positive Relative Total Saving (2) in a time-period Decision Point - Failure Point.

(2) RTS = ((1+i)n-1)-((ΔNLL + ΔFLL)*PP)/TRC)*((1 + i)n-1)/i

the equation is the same as a equation (1) only the sign is opposite.

DCS strategy is simple but stupid - the DCS manager does nothing and lets the transformer operate without any adequate maintenance until its failure - See Failure Point.

The owner then faces substantial replacing or refurbishing costs:

  • minimum cost of a transformer failure can be as five times the cost of the new unit
  • cost of a non-catastrophic failure can be as high as twenty times the price of the unit
  • cost of all collateral effects of a catastrophic failure can exceed hundred times the cost of the unit

The DCS manager has ponentialy saved 0.42 TRC from the Nameplate Point to the Decision point and another ca 0.4 TRC from the Decision Point to the Failure Point, but

the potential loss induced by the failure is always much higher than any potential savings

The DCS manager not-our-company but an insurance-man. In the event of a non- or catastrophic failure the insurance company will succesfully argue that the basic security criteria had been systematically neglected and refuse the indemnification.

It is evident that the both mentioned strategies (NPS) and (DCS) are principially wrong and expensive.

The responsible manager is always a FRS manager as clearly shows the Fig.1

7.4 FRS - Flexible Response Strategy

The Relative Total Saving (RTS) corresponding to FRS can be expressed as follows:

(3) RTS = (1-LEC/TRC) * ((1+i)n-1)-((OLEC+(ΔNLL + ΔFLL)*PP)/TRC)*((1 + i)n-1)/i - LEC/TRC


  • LEC ... Purchase price of all used Life-Extending Technologies
  • OLEC ... Operational cost of Life-Extending Technology

Fig. 1 shows that a well selected and properly operated life-extending technology ( yellow curve) can safely prolong the transformer life-span for another 7 years or more.

FRS potentialy saves 0.4 TRC from the Nameplate Point to Decision point, then the life-extending technology is bought and another ca. 0.9 TRC from the Decision Point to an expected Replacement Point can be saved but
in contrast to DCS

under determined, secured and fully controlled operational conditions.

(FRS) strategy shows potentially the highest gain, but is more sophisticated.

At first the manager must collect all neccessary information, not only about the given transformer, but also about all available life-extending methods.

For him it is most difficult to decide what life-extending technology should be used and what potential advatages could be achieved. The problem is that the manager is usually not a real professional in the life-extending area. The replacement of the old transformers is usually an occasional job for him, but

the optimized FRS conception always means a tailor-made solution for a specific transformer.

Therefore SINDRET (Savings INduced by Deferred REplacement of a Transformer) provides the first help for a FRS manager.