Lightning Protection Cost-Benefit Analysis (IEC 62305-2)

Short answer

Protecting a structure against lightning costs money every year: you invest, amortize and maintain. IEC 62305-2 proposes a simple comparison for loss of economic value (loss L4): if the annual cost of loss without protection (CL) is greater than or equal to the annual cost of the residual loss (CRL) plus the annual cost of the protection measures (CPM), the measures can save money over the life of the structure. If CL is less than CRL + CPM, the standard indicates that protection may be considered not cost-effective. The result depends on the calculated risk, the exposed value and the measures chosen, so there is no general «yes, it pays» rule.

What question it answers, and what it does not

The risk assessment of IEC 62305-2 asks two different questions. The first is whether protection is needed: the risks of loss of human life (R1), loss of service to the public (R2) and loss of cultural heritage (R3) are calculated and compared with the tolerable risk. The second is whether protection is cost-effective, and it is answered with the risk of loss of economic value (R4).

For R4 the standard says that, in principle, the route is cost-benefit rather than a fixed limit. Risks R1 to R3 have typical tolerable-risk values (for example, 10⁻⁵ per year for loss of life); the economic value is decided by each owner according to cost and risk aversion.

This guide covers only the second question. The full risk management chain is explained in the guides on lightning risk management and lightning protection levels; here we assume you already know there is an economic risk worth evaluating.

What is evaluated: the structure, a part or a piece of equipment

The analysis can be done on the whole structure or on just a part: an internal installation, part of one, a piece of equipment or the contents. That freedom is useful. A building with a control room, a data center and warehouses has very different values and risks in each zone, and it may make sense to protect one zone and not another.

The standard divides the structure into zones and calculates the risk zone by zone. The total value (ct) includes animals, the building, the contents and the internal systems with their activities, expressed in currency. The last item weighs most in an electrical or industrial facility: what is lost is not only the equipment but also the activity that stops.

Which risk components are involved

Risk R4 is made up of the same components the standard describes for the other losses, according to the type of damage and the point of strike:

• Strikes to the structure: physical damage from dangerous sparking (RB) and failure of internal systems from the lightning electromagnetic impulse, LEMP (RC).
• Strikes near the structure: failure of internal systems (RM).
• Strikes to incoming lines: physical damage (RV) and failure of internal systems from overvoltage (RW).
• Strikes near lines: failure of internal systems (RZ).
• Injury to animals from step and touch voltages (RA and RU), only if there are animals in the structure.

The sum of the components of each zone gives R4, and the sum over the zones gives the risk of the whole structure. Each protection measure acts on some components: an external protection system reduces physical damage and injuries; SPDs and shielding reduce failures of internal systems.

The procedure, step by step

The standard summarizes it in a flowchart; the sequence is this:

The equations of Annex D (informative) are simple:

• Cost of loss in one zone: CLZ = R4Z × ct, and for the whole structure CL = R4 × ct.
• Cost of residual loss with protection: CRL = R’4 × ct.
• Annual cost of the measures: CPM = CP × (i + a + m), where CP is the cost of the measures, i the interest rate, a the amortization rate and m the maintenance rate.
• Annual saving: SM = CL − (CPM + CRL). Protection is justified if SM is greater than zero.

What the standard requires is the logic: money per year on both sides of the comparison. The values of the rates and the cost of the measures depend on the project and on each company.

How to read the result

• SM greater than zero: the measures cost less per year than the loss they avoid. They are justified.
• SM equal to zero or negative: the measures cost more than they save, or the same. The standard says protection may not be cost-effective on this basis. That does not rule it out if another risk (for example, loss of life) requires it.

Because the standard calculates risk zone by zone, the result can differ for each zone: it may be justified to protect the internal systems of a control room and not the rest of the structure. The calculation with your data is what decides.

When data is missing

The economic evaluation requires knowing the exposed value, the cost of the measures and the rates. If those data are not available, the standard allows a tolerable risk of 10⁻³ per year for loss of economic value, to which the calculated risk is compared. It is a reference for deciding when the full analysis cannot be done, and it does not replace cost-benefit when the data exist.

Common mistakes

• Valuing only the equipment. The cost of loss includes the activity: the shutdown, the replacement and the service no longer provided.
• Comparing a single scheme. The standard recommends evaluating variants of the combination of measures; the first combination is rarely the most cost-effective.
• Ignoring the cost of upkeep. The maintenance rate enters the annual cost, and a protection system without inspection loses its effect.
• Using the analysis to drop a measure that another risk requires. If R1, R2 or R3 exceed their tolerable risk, protection is necessary even if cost-benefit does not justify it.
• Treating the numbers in the standard’s examples as typical values. The Annex E cases use hypothetical data.

Guides in the same series

The measures being evaluated are described in LPS, classes I to IV; residual loss and losses by zone, in lightning losses LX.

What we deliver

The analysis requires defining the zones, the exposed value of each, the incoming lines and the candidate measures, and walking through the comparison with the real cost of the project. At Tiza Group we include it within our engineering studies for substations and industrial facilities: we quote the study and you decide on a figure, not on a general rule.

Related guides

• IEC 62305: lightning protection, what each part covers
• Lightning risk management: when protection is needed
• Lightning protection system (LPS): classes I to IV
• Lightning losses LX and dividing the structure into zones
• Lightning shielding of substations

References

• IEC 62305-2:2010, Protection against lightning, Part 2: Risk management: Cl. 5.1 (basic procedure), 5.3 (tolerable risk, Table 4), 5.5 (cost-effectiveness procedure and Figure 2), 6.10 (cost-benefit analysis of economic loss L4) and Annex D (assessment of loss costs, Eq. D.1 to D.6).
• IEC 62305-2:2010, Annex E: case studies with hypothetical data.

Frequently asked questions