As the world’s population grows, the energy demand continues to increase. ExxonMobil, an oil corporation in North America, informs that developing countries account for 100% of demand increase because of the advancements in technology and growing population. With this increased demand, it is critical that we properly manage aging assets. In this blog post, I will explore the challenges of managing aging energy infrastructure and discuss potential solutions that can be implemented to address these challenges. Find also the commentary of Florian Strock, an energy economics student and member of the student association YES Consulting e.V. 

Why does aging infrastructure matter?

As mentioned, the world population is rising rapidly along with the demand for electricity both for industrial and private consumption. Hence, each energy resource should be preserved and improved to meet this demand with minimal expenses. Not only does aging energy infrastructure lead to increased costs, but it also poses significant risks, such as blackouts and other system failures. This pushes energy infrastructure in Germany to orient towards building new assets and focusing on renewable energy. Does it make old infrastructure unimportant? No! Our expert, Florian, claims that building new assets is resource- and time-consuming. Not to mention the absence of a high-skilled workforce. 

“Currently costs for materials and construction works are very high and we don’t know how the situation will look like in the next years. That’s why using and reusing existing materials and infrastructure is potentially more sustainable, logical, and in many cases financially successful.”

Florian Strock

Challenges of Managing Aging Energy Infrastructure Assets

Managing aging energy infrastructure assets is complicated for numerous reasons. Firstly, funding that governments and businesses are not keen to invest in obsolete assets. Repairs and advancements of such infrastructure are constantly due to deferred maintenance that people just wait until a particular of them falls apart. A vivid example of such neglect is the Genoa bridge collapse in Italy, with over forty casualties. Why does the bridge literally hit the river? Absence of proper maintenance because of funding scarcity (and neglect, of course).

Florian Strock shares that energy infrastructure is rather old because of its establishment 40-60 years ago. But the problem rather lies in regulations instead of the assets themselves. In Germany, for example, there is a reaction strategy instead of prevention. Simply put, companies are not supposed to improve and preserve assets but have a well-designed plan for reacting to a catastrophe. It does not look very sustainable, does it? But of course, there are many exceptions and good examples on how to create and implement strategies on how to deal with aging infrastructure.

Technology is our relief in various fields. But even technology is pointless in aging infrastructure maintenance. Many aging infrastructure assets were built before modern technology was available. This means they were not designed to handle modern technology, leading to an increased risk of failure and decreased efficiency. However, regulations around energy infrastructure have become more stringent in recent years, requiring utilities to meet higher standards for safety and efficiency. Older infrastructure may not meet these new standards, leading to increased costs and potential safety hazards.

Another considerable challenge is human resource scarcity. Many skilled workers who maintain aging infrastructure are nearing retirement age, leading to a potential shortage of skilled workers. Besides management neglect and technology’s ineffectiveness, even people won’t be able to look after aging assets soon.  

Solutions for Managing Aging Energy Infrastructure Assets

Fortunately, several solutions can be implemented to address the challenges of managing aging energy infrastructure assets. One of the most effective approaches would be asset management plans. Asset management plans can help utilities and governments better understand the condition of their infrastructure and develop strategies to maintain and upgrade it. These plans can help prioritize maintenance and upgrade projects and allocate funding more efficiently.

Although some infrastructure is incompatible with technological solutions, it can be upgraded with technical advancements. Upgrading aging infrastructure with modern technology can help increase efficiency, reduce costs, and improve safety. For example, upgrading power grids with smart grid technology can help utilities better manage their systems and prevent blackouts.

Not only is technical improvement a key to solving the issue, but particular business strategies such as Public-Private Partnerships may be as effective. Public-private partnerships can help utilities and governments access the funding and expertise they need to maintain and upgrade their infrastructure. By partnering with private companies, governments and utilities can access new sources of funding and knowledge, while private companies can gain access to new markets and customers. Such a shift can also catalyze Workforce Development.  

On the one side, you have private companies with often better access to capital, which is particularly important for investments and also for future rebuilding and renewing of aging assets. On the other side, you have the local part [public company], helping to maintain a close relationship with residents, which is critical to the successful renewal of aging infrastructure systems

Florian Strock

Digitalization is another technological advancement that can facilitate problematic aspects of aging infrastructure. Florian proposed a compelling way to exploit digitalization: collect data from (old) infrastructure assets, turn it into an accessible database, and implement a clear strategy on how to use these data and how to create value out of it, when building new assets. Because of the scarcity of high-skilled employees, such databases would significantly facilitate the maintenance of aging infrastructure and use the knowledge of previous generations to avoid repeated mistakes. Such databases can also be used to train employees that play a central role…  

People must be a central focus, including the workforce, besides consumers. Developing a skilled workforce is critical to maintaining aging infrastructure. Utilities and governments can invest in training programs and partnerships with schools to build the next generation of skilled workers. In order to achieve human-orientedness, communication must be advanced. Florian shared a case from his experience that massive projects require communication about the impacts and social changes they bring. Communication, in turn, must be a value of the company’s vision. Therefore, people-values-communication always goes together and has the power to become a theoretical foundation for managing aging infrastructure.

Managing aging energy infrastructure assets is a critical issue that requires careful planning and investment. While the challenges of managing aging infrastructure are numerous, several solutions can be implemented to address them. By developing asset management plans, upgrading technology, developing public-private partnerships, and investing in workforce development, utilities, and governments can ensure that their infrastructure is safe, efficient, and capable of meeting the needs of a growing population.

Iryna Nykoriak

Published 14.04.2023

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