FUNDAMENTALS OF ENERGY TRANSITION #1 – Creating an inclusive TRIBE

I’ve recently seen a real sea change in the nature of the conversation on how the energy sector will deliver its part of the deal on climate change. Previously, the focus has been heavily on what the end-game will/needs to look like (EVs, distributed energy-storage, virtual power plants etc.). The dominant question that keeps coming up in engagements now is – how do we manage the transition to this new system efficiently, effectively and rapidly (also known as “keeping the lights on”)?

There’s no single answer but I do think it comes down to getting one's head around some fundamentals. I suspect everyone involved in energy transition has theirs. I thought I would put mine down in a series of posts. As ever, not rocket science, but they may/may not provoke some thoughts. Some are broad (and frankly may appear blindingly obvious!) and some more specific. 

This first one is about getting beyond semi-polarised tribes and creating an inclusive tribe to promote the right enabling mindset and mechanisms. 

In summary, whatever your current allegiances, you need to have sufficient allegiance to a common tribe – the Aggressive Transitionists. They understand the importance of collaboration as well as competition in designing and building the new energy system on top of and around the existing infrastructure. This is because they understand that transition means addressing three system challenges; (a) how to support the building of new infrastructure elements, (b) where and how to integrate these with the existing infrastructure, and (c) how to support the existing infrastructure during the transition, before parts of it become redundant. This requires the right mindset and mechanisms to make this happen.

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Here’s the longer version if you have the time or inclination.

End-Game

The collective consultancy/advisory community continues to do an excellent job in articulating both (a) the required emission curve to hit a +1.5-2.0’C temperature target and (b) the end-game decarbonised energy/transport/building sectors to achieve this (as well as the critical solutions to help decarbonise heavy industry). What is less easy to define are the messy chess-piece moves to get there.

Transition Tribes

Kids don’t become adults over night – for most it’s a multi-year transition, populated by both painful and exhilarating experiences. Some kids resist it out of fear of the unknown, some aggressively rebel against everything in front of them, but most are out there engaging with the world, pushing boundaries and working hard to figure out how to face whatever the world throws at them. Each is often shaped by their pre-adolescent experiences.

Energy transition is not dissimilar. Sometimes it feels like the energy transition players fall into similar(ish) tribes;

• Passive Sceptics who have not accepted that serious disruption is coming. Some even appear to be working to try to put the brakes on it (a kind of King Canute syndrome).
• Active Transitionists who understand its criticality, know they have to change, and are working, often through partnerships, to make this happen, but may not be moving at the required pace to achieve rapid transition.
• Aggressive Pioneers who are the mavericks at the cutting edge but through their experiences often feel this is a zero-sum game vs. slow/intransigent incumbents.

There’s no implied judgement in the way these are defined. Each is usually shaped by their own experiences.

Using a crude analogy; the Passive Sceptics either don’t know about the party, don’t like the look of it, or don’t know how/where they fit in, the Active Transitionists are there, working out how to fit in and how to make new friends but are sometimes a bit clumsy, and the Aggressive Pioneers would prefer their own party.

I exaggerate to make the point. Seriously though, we need to foster an inclusive tribe - the Aggressive Transitionists, to which all subscribe. This means the Passive Sceptics realising that there is no alternative, the Active Transitionists realising that they need to go faster, and the Aggressive Pioneers realising their success is dependent upon others. 

In my experience in energy transition, strong tribal allegiances have a habit of falling away once folks better understand each other, realise that they share a common goal, better understand their respective pressures/challenges, and realise that they are interdependent.

A well-oiled example is the opportunity presented by the electric vehicle (EV), where we have seen glimpses of all three tribes in action. EVs are a great decarbonisation solution for multiple mobility/storage reasons (assuming the electrons are low carbon) but they will only be an efficient, effective and rapidly scalable solution if we enhance the network to accommodate the vehicles, which is probably a more complex task than building/selling the EVs themselves. This horrendous complexity has dawned on most of the stakeholders, many of whom are collaborating to solve it locally, regionally and nationally. 

Whole System Solution

As is well known, energy transition is all about redesigning the energy system and building on top of and around the existing infrastructure. This needs to be done in a way that achieves 4 outcomes; (a) drives decarbonisation, (b) is cost effective, (c) ensures security of supply, and (d) is sufficiently flexible to meet changing customer needs, market solutions and business models. 

This presents three related system challenges;

• How to support the building of new infrastructure elements
• Where and how to integrate these with the existing infrastructure, and
• How to support the existing infrastructure during the transition, before parts of it become redundant. 

This kind of whole system approach has to be driven as much by collaboration as competitive forces. 

Mindset and Mechanisms

This means having the right mindset and mechanisms to enable this to happen.

Mindset: There needs to be less focus on emphasising polarised tribes and the bigging-up of their differences, and more focus on the common goal and driving collaboration to achieve it, especially across industry, government and civil society. 

By all means call out the Passive Sceptics when they create a drag on the system, but be careful not to assume that all incumbents are Passive Sceptics. There is increasing evidence that many incumbent power utility and oil and gas players are actively working as part of the transition, with intent to direct their significant financial muscle accordingly, and they need to be challenged to move faster.

After the 2008 financial crash a colleague of mine wryly noted “…well, we all need to be Keynesians now”. His point being that we had little choice but to adopt Keynesian’s monetary policy to prevent economic meltdown. In energy transition, If we want to limit the impact of climate change I think we all need to become Aggressive Transitionists.

Mechanisms: Mindset is one thing – creating the mechanisms to achieve transition is the hard part. There is much talk about creating enabling mechanisms/frameworks to design and build the architecture/infrastructure to help drive transition. Here are three such examples (far from an exhaustive list):

• System/architecture design mechanisms - that help to understand and address the 3 infrastructure/architecture challenges identified above, including suggesting the required regulatory changes. An example of a mechanism asking the right questions is the UK’s Future Power Sector Architecture (FPSA) initiative.
• Enabling match-makers organisations – that bring players together to develop individual and systems-level integrated solutions. These may be for-profit/not-for-profit organisations but focus on driving the development of collaborative outcomes.
• Industry-level technology enablers – that draw funds from incumbent industry players, government and finance market sources to develop pan-industry technology solutions, spreading the risk and accelerating the potential for eventual uptake.

Mechanisms are sometimes messy and frustrating, can feel slow, and nearly always require new collaboration disciplines. But there is no getting away from the fact that they are critical to transition success.

In conclusion, it may all sound self-evident but to drive this progress, we unquestionably need to retain tension and aggressive competition in the system, but at the same time we have to promote collaboration to break down barriers between tribes in order to design and build the new system, which means having the right mindset and mechanisms to feed this.

As ever, any comments/criticisms appreciated.