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Investing in UK’s future

Utilities form the backbone of the UK, with the cables, pipes, roads and tunnels they create stretching to the farthest reaches of the country. The energy, water, power and waste that flow through these arterial networks are vital to keep the UK moving.

But the nation’s utility assets are growing tired. The UK’s golden age of engineering was 150 years ago, when many of our current systems were constructed. Decades of underinvestment means that utilities have struggled to keep up with population growth and technology advances.

The workforce trained to service these assets is ageing too. A 2012 study commissioned by the Royal Academy of Engineering found that the UK will need 100,000 new graduates in science, technology, engineering and mathematics (STEM) subjects every year until 2020 just to maintain current employment numbers. Utilities have a long – and expensive – task on their hands to ensure that their assets and staff can match future demand.

The UK’s largest water utility, Thames Water, is one such business using Victorian assets to service a 21st-century population. The company serves 14 million customers and is currently proposing a £4.2-billion upgrade of its sewer works, which would see Sir Joseph Bazalgette’s 1865 system augmented with a new tunnel 75 metres below London.

Thames Water’s asset director Lawrence Gosden acknowledges the scale of their task. “We have a significant amount of work to do upgrading our deteriorating infrastructure over the next 25 years and beyond, while keeping customers’ bills affordable. If we are to achieve this, a different approach is required,” he says.

The National Grid is also reassessing its approach to existing and future assets. The operator owns and manages the systems that deliver gas and electricity across the entire country, and beyond. Last month it signed an agreement with grid operator Statnett to push forward with plans to build the first electricity link between the two countries.

However, the UK-Norway project comes with a £1.7-billion price tag and Kjell Arne Moi, Statnett’s head of process and IT, says it is a question of carefully managing the old and the new when it comes to deciding when and how to plough their cash into these projects.

“There needs to be a very fine balance between prioritising new investment and maintenance of existing assets. It’s the art of timing investments and maintenance correctly, and having a solid asset management solution in place is vital to this,” he says.

“We see IT playing a major role in physical asset management, whereby we ensure we are facilitating the flow of real-time information across the entire business.”

The implications of failing to look after existing and nurse a new generation of assets into existence are terminal for utilities, Mr Moi says. “Without ensuring leading asset management processes, the worst case scenario for us would be that our customers would be without power and our license to operate would be severely jeopardised.”

Utilities must embrace strong asset management practices if they are to survive. “In our industry, managing the security of power supply is vital. Blackouts will not be tolerated,” he concludes.