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FUTURE EXPECTATIONS FOR THE AUSTRALIAN ENERGY SYSTEM
The main focus of this Opportunity Assessment is on understanding how actors in the energy system prepare for the future, and whether these practices can be improved. What the future will be like is not a key focus for the Opportunity Assessment but offers important context. To judge whether the anticipatory capacity of the Australian energy system is sufficient, we need to have some sense of the kind of futures we need to be preparing for.
3.1 Uncertain futures
The clearest message from the research to date is the high degree of uncertainty about the future of the Australian and international energy systems. As summarised in Table 1, participants in our first Consultation Workshop identified six key sources of uncertainty: government policy and politics; customer choices and practices; infrastructure resilience; rate of uptake of new technologies; market and pricing reform; and transition pathways.
Aurecon has done stakeholder engagement on the future of energy in Australia that found a similar level of uncertainty.17 In their research with over 100 industry participants, stakeholders asked:
• Where will the energy come from? What will be the future fuel and technology mix? • How will decentralisation shape the future energy system? • How fast will we reduce greenhouse gas emissions and through what technologies? • What role will electrification play in the future of the energy system? • What will happen to energy demand? • Which stakeholders will lead policy development? What policy settings will there be in the future?
With all this uncertainty, and the changes observed in the energy system in recent history, few would argue that the future trajectory of the energy system will be steady and continuous. Foresighting methods that go beyond forecasting and projection will be needed to cope with uncertainty, discontinuity and surprises.
3.2 Zero carbon and beyond
Despite this uncertainty, there is a near-consensus that a future energy system will at some point need to achieve zero carbon, and perhaps move beyond that to sequester greenhouse gases that have already been emitted. When we asked our IRG to describe their vision for the future of the energy sector in just three words, some of the most popular choices were renewable, clean and decarbonised, as shown in Figure 3. In the Aurecon research mentioned above, stakeholders did not ask whether we would reduce greenhouse gas emissions but how fast it would happen and through which technologies.
While the technology mix to achieve zero carbon and the pace of change is fiercely contested, there is little doubt that anticipatory systems will need to provide guidance on how to navigate the transition to a zero carbon future. This means having the capacity to imagine, model and compare alternative pathways for achieving that goal. Global investors with trillions of dollars of assets are increasingly ready to commit funding to projects that can demonstrate net zero outcomes18 .
17 https://www.aurecongroup.com/markets/energy/transforming-energy-market-australia 18 https://www.climateaction100.org/
Figure 3: Word cloud summarising IRG visions for the future of the Australian energy system.
3.3 Holistic, integrated and decentralised
For decades, before decarbonisation became a shared agenda, the goal of energy system actors was to plan sufficient centralised energy supply to meet steady growth in energy demand - keeping the lights on. Practices for anticipating the future in that context included forecasting, modelling and projections, which worked well in a stable energy regime. But once the energy transition kicked off, these practices were no longer sufficient. Now, stakeholders agree that the future of the energy system needs to be more holistic and integrated, treating demand-side and supply-side options equally. In Figure 3, words like integrated, decentralised, optimised and least-cost capture this expectation.
This means that practices for anticipating the future need to be able to see the whole system and the full set of opportunities for intervening in the system, including supply-side and demand-side responses, or centralised and decentralised options.
3.4 People-centred
In Figure 3, stakeholders captured the need for the future energy system to be people-centred, user centric and low cost. Human behaviour is notoriously hard to predict. Faster than anticipated customer uptake of particular technologies, such as air-conditioning and rooftop solar, has created past and current challenges for the Australian energy system. Customers now have easy access to vast amounts of information and actively seek opportunities to obtain better energy services, reduce their energy bills and consume in ways they see as ethical.
In the past, customer preferences and practices were either left out of forecasting or reduced to simple pricebased behaviours, which do not match observed reality. Anticipatory practices need to develop a much clearer view of possible futures on the customer side, which will have a huge impact on the uptake of distributed energy resources.
3.5 Resilient and flexible
Finally, given all of the above, we can anticipate that the future energy system will need to be resilient and flexible, to cope with the uncertainty described above, but also to weather the increasing impacts of climate change. Keeping the energy system functioning through storms, fires and floods will be an inevitable part of our future. Flexibility is also needed to avoid stranded assets and be able to move in new directions as technology advances.
For anticipatory systems, this means being able to develop least-regret pathways and options that are robust across multiple possible futures.
