It’s good to see more futuring emerging in NZ. A few weeks ago, the Chartered Accountants Australia & New Zealand released a report on the risk to jobs of automation. I’ve previously noted the research from Oxford University that this is based on, as well as the caution that it’s a relatively simplistic model and the results shouldn’t be treated as facts.
Last month the Business New Zealand Energy Council also released two energy scenarios developed in association with the World Energy Council. While they have been adapted from two energy scenarios (“Jazz” and “Symphony”) applied elsewhere, quite a lot of effort, involving discussions with NZ interested parties, has gone into developing scenarios that reflect NZ conditions. The two kiwi scenarios are called “Kayak” and “Waka”, derivatives of “Jazz” and “Symphony”, respectively.
These are scenarios for engineers – quantitative models for those who are after numbers not simple narratives. They follow the tradition of some of the Shell scenarios – both in terms of quantification, and in only presenting two scenarios (rather than the traditional business school four). Having just two is intended to make it easier for people to read and engage with them, rather than being put off by four meaty pieces.
These two scenarios, like their parents, bracket different ends of the spectrum between market control and government intervention. The authors stress that neither is the most preferred or likely future, but serve to stimulate discussion and thinking about options that lie between them.
Kayaks and wakas
As their names imply, “Kayak” is about independence across the energy sector and going with the flow, while “Waka” is about greater coordination from government. The results are looked at in terms of the effects on energy security, equity (ie, cost), and sustainability.
Kayak has strong market competition, with government focused on environmental regulation. This results in greater energy security, cheaper energy prices, but higher carbon emissions and continuing use of fossil fuels.
Under the Waka scenario economic performance (using traditional measures) isn’t as strong, and there is less energy security (due to less certainty about supply using renewables) and higher prices compared with the Kayak scenario, but carbon emissions are much lower and energy supply is nearly completely renewable.
To me they don’t seem like surprising results, but they do illustrate in quantitative ways the consequences of certain decisions and policies. This is important for the audiences they are aimed at.
Of particular interest is the fact that the study identifies 19 critical uncertainties associated with New Zealand’s energy future. That’s a very complex system to model – your typical business scenario attempts to use just two critical uncertainties to develop 4 scenarios.
In an excellent short review of scenario planning Wilkinson & Kupers note that
Scenarios act as temporary scaffolding – rather than a fixed structure – to support the strategic conversation
Let’s hope that the scenarios from Business NZ do this.
But Wilkinson & Kupers also note that scenarios were developed at Shell to step away from the false sense of certainty created by traditional modeling:
The challenge lies in realizing how, when and why models linked in them can hide assumptions and constrain thinking rather than refine it.
So the real work starts now that these two scenarios have been produced.
One of the difficulties for me is that the two scenarios are supposedly extremes, so there is a lot of space, and alternative consequences, sitting between these which needs exploring. The effort will have failed if decision makers decide to go for the Kayak or the Waka scenario, or simply ignore them
The Goldilocks scenario
The Council indicates that they are considering developing a third “Goldilocks” scenario that will look at what is required to meet the sweet spot of high energy security and equity, as well as high sustainability outcomes.
Scenarios are just one of the methodologies used in foresight. I’d like this work connected up to other foresight activities (such as how do we change mindsets that will enable the system to evolve, and what are the critical steps that need to be taken to get to where we want to be with our energy system) to really get the best value out of the scenarios and connect them to actions.
What’s also seems to be missing from the scenarios at the moment is the modeling of changes to electricity storage and transmission systems. The scenarios focus on the generation side. Whether technologies that allow distributed grids and battery storage systems for wind and solar energy become practical and economic for widespread use in the near future remains to be seen, but they are likely to have significant implications in energy systems over the coming decades.
The Electricity Authority has just released a consultation paper on the implications of new technologies on the pricing of the distribution system.
So, good steps for starting to pay more attention to the future, but we need to start thinking about broader scenarios for what’s going to keep our lights (and other things) on.