Long term optimization of asset replacement in energy infrastructures

In the western energy distribution systems, the assets are relatively old. Distribution companies expect a large number of assets to fail because they reach their end of life in 10 to 30 years from now. Those failed assets will have to be replaced, which would potentially double the total workload in this 20 year period. Unfortunately, half of the work force is expected to retire in the next 10 years. This combination of trends presents the distribution companies with a number of questions. What is the expected number of assets to fail due to age problems? What would be the cost-optimal preventive replacement strategy for those assets? What is the feasibility of this strategy, given the constraints caused by the employee shortage? What are alternatives to overcome those limitations? We have explored those questions with a System Dynamics model, based on real data from a distribution company. We determined that an increase in the number of failures is to be expected in the coming 10-20 years, even under a cost-optimal replacement strategy. However, because of employee shortages, this cost-optimal strategy cannot be executed with the current Human Resource policies, worsening the problem. Hence, optimal strategies would not only have to define asset replacement programs but also a matching HR policy.