Managing energy transition has been one of the focussed areas of World Energy Council and it's triannual World Energy Congress. In the run-up to the 24th World Energy Congress 2019, Dr Angela Wilkinson and Mr. Martin Young present their analysis on managing energy transition through Dynamic Resilience.
Energy transitions are not new, with modern societies flourishing thanks to previous technology-led energy transitions, including steam-power and electrification. However, managing a global-scale energy transition is an unprecedented recent phenomenon, which presents new risks and opportunities for societies across the world. Some of the risks could manifest in disruptions of current arrangements, and some incumbents may be abruptly and very negatively affected. Developing resilience ahead of potential regime shifts could help them recover, rebound and adapt.
At the same time, the risk space that energy market players manage is evolving into a broader landscape of systemic and emerging risks - such as increasing price volatility, cybersecurity and extreme weather events - due to a combination of urbanisation and climatic variability, and in some cases increasing evidence of the impacts of global climate change. The unfolding and evolving risk landscape is fast-moving and unpredictable, which is likely to leave some energy system players unsighted on emerging threats and less prepared if they continue to rely on a passive system. The new risk landscape requires a more agile and adaptive response framework, with a greater emphasis on resilience and rapid recovery. In this environment, energy stakeholders are starting to experiment with responsive, networked and innovation-rich strategies as energy leaders shift their focus from better risk management to building new dynamic resilience capabilities. The shift reflects a gradual recognition that the traditional risk management approaches to control risk are no longer sufficient, and that greater systematic resilience is required to enable more agility, adaptation and regeneration by energy firms, sectors and communities.
The World Energy Council's new Dynamic Energy Resilience (DER) framework aims to help enable energy firms and communities to improve their approach to resilience to endogenous or exogenous shocks and disruptive innovations. Working in conjunction with our partners at Swiss Re and Marsh and McLennan Companies, the Council is evolving from risk-centric approaches to energy security and building integrated and dynamic capabilities for resilience, by identifying and sharing best practice from within and beyond the energy community. It integrates three previously separate systemic and emerging risk themes - (a) extreme weather or natural hazard and (b) digital or cyber risks and iii) food-energy-water nexus, with a practical focus on risk identification and assessment, situational awareness and prevention-mitigation plans.
The Dynamic Energy Resilience framework identifies a combination of four capabilities:
- situational awareness of all risks (current/potential);
- agility (speed);
- adaptive capacity to prevent or mitigate the impact on performance (flexibility/optionality); and
- regenerative development i.e. the evolution/self-transformation of energy organisations and systems to promote synergies in human-centric wellbeing, planetary health and socio-economic flourishing.
We aim to develop the DER framework thorough engagement with the emerging global community of practice, to draw on the new and different experiences and new solutions firms within the energy sector and beyond are using to improve their organisational and energy system resilience – agility, adaptability, regenerative capabilities. We want to use the DER framework to highlight systemic risks that emerge between the interfaces between conventional risk categories or policy silos, and impact before significant trends are fully visible. This suggests new capabilities for horizontal learning, improvisation in crisis, and integrated innovation are needed, which are enabled through a "team of teams" culture and connect risk appetite with context and capability.
Currently, the World Energy Council's Dynamic Resilience workstream is looking at extreme weather and cyber resilience. We are using extreme weather case studies to identify key broader issues within the Dynamic Energy Resilience framework, with the aim of launching the relevant interactive tool at the 24th World Energy Congress. For cyber-resilience, we are developing a program using the scenarios to explore best practice.
(Dr Angela Wilkinson is Senior Director, Scenarios & Business Insights, World Energy Council and Mr. Martin Young is Director, Policy & Risk, World Energy Council)
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