6 A framework for a whole systems approach


In an uncertain, complex environment can the energy industry be expected to plot a route to the future now? Philip New and Eric Brown consider what should be included in a whole systems approach.


Whole systems thinking and approaches are particularly relevant right now as we face a potential revolution in the way in which energy services are delivered to consumers. This revolution is a function of the need to de-carbonise, modernise and respond to changing consumer and community expectations that have been enabled by innovations specific to the energy sector as well as general developments such as digitisation.


Change is coming from many directions, is characterised by unprecedented complexity and uncertainty, and is unfolding at increasing pace. The drivers of this change are iterative and interlinked while the cast of agents involved is growing, and their motivations are diversifying.


In such an uncertain, complex environment can we reasonably be expected to have the foresight to predict what solutions are needed now to get us to 2050? Or do we need a framework that points us towards 2050, whilst understanding that we will do things with a range of lifecycles and possibly with an element of experimentation? The energy system will be rooted in physical assets for the foreseeable future. However, the life expectancy of these assets will most likely become shorter, with the solution lifecycle compressed, as requirements and responses change. We can already see the investment challenges confronting massive, capital intensive projects. So, we should hold the probability that the pendulum will swing away from the big and bold and towards the smaller, highly dispersed and incremental, as well as away from the supply-push and towards the demand-driven and customer- centric.


Reductionist, linear, mechanistic or deterministic responses are unlikely to be effective if we are to make sense of the transition that is fast unfolding around us. Such approaches served us well when the system outcome was largely a function of enduring and material capital investments, made by a limited number of actors pushing supply using long lived assets in discrete vectors. This had the effect of creating significant barriers to entry to generation, transmission and distribution, effectively creating a largely endogenous energy system. Making the right choices in a more complex environment requires that we understand the full costs and benefits of the choices in aggregate, including factors not historically considered as well as interactions with adjacent systems such as water, agriculture, cities. We must also be able to understand costs and benefits not just from a static perspective, but dynamically, as the energy system evolves over time.


Understanding the system


The UK Energy Research Council (UKERC) has provided a sensible definition of the UK Energy System, stating: ‘“the set of technologies, physical infrastructure, institutions, policies and practices located in and associated with the UK which enable energy services to be delivered to UK consumers’.


We like this definition because it not only embraces the technical, economical and sociological aspects of the system, but importantly, is framed by the UK consumer. The effectiveness of changes to any system are best judged by the end users of the system. It should be axiomatic, but it is worth reminding ourselves of this; the system does not serve the participants in the system, it serves the end users of the system. This means that, at a bare minimum, a whole systems approach needs to cover all the potential energy vectors. It needs to cover the entire value chain, from generation to consumption, and also include how energy will be used in transport, the built environment and in industry.


The whole systems approach must also take into account storage and efficiency, flexibility and balancing as well as the consumer experience, market structures and governance mechanisms. This approach must embrace the national and international, the local and domestic, and it also needs to be dynamic. The boundaries of the systems are broader, less rigid, more porous than the technology, policy and market structures that bound our current, relatively rigid, vector-specific silos. Using whole systems thinking enables the dynamic nature of the interactions between changing components in the system to be captured. The focus is not on individual components in the system, but rather on the relationship between different components. It allows for feedback on experimentation across a broad front, and builds a learning capability that enables agile responses.


Such an approach is essential if we are to understand, respond to and take advantage of the opportunities that system transformation presents. But the value of the approach is not limited to future investment choices. It also applies to existing assets in the system, and can provide insight into the integration and optimisation of the legacy asset base, incorporating these physical assets, processes or people into transition pathways. Considering the system as a whole can also show where the flexibility points are, or at least might be. Such an approach can provide visibility - to the investor, the innovator or the market-maker - of the outcomes of an intervention in the context of the overall system performance.


This approach can predict or measure the impacts of interventions, planned or otherwise, in the context of the whole system and not just in the silo where the intervention occurs. The risks of unintended consequences are reduced while investment efficiency can be improved. And it also


enables incremental developments to be coherent, increasing the probability that these will be deployed at the right time, and the right place.


Whole systems approaches frame plans of action, describing and assuring a sense of direction and understanding the nature and priorities of the individual developments that underpin it. The framework allows for adaptation and evolution as learning, from what worked, and what didn’t, gets fed back and informs the next steps.


Such approaches do not require silver bullets, big bet monolithic projects or solutions, but instead, enable architectures and roadmaps from which programmes and projects are drawn and executed.


Developing the framework


Bearing all this in mind, in starting the design of a whole systems approach the team at the Energy Systems Catapult is developing the following generic framework that will incorporate a host of questions (see ‘What’s in a framework for the future? ’).


“A whole systems approach represents a paradigm shift for


institutions and individuals, calling on a set of tools and a way of thinking, that is unfamiliar”


By its very nature, the framework will be complex and Energy Systems Catapult cannot, and should not, tackle this single-handedly. Indeed, one of the defining characteristics of a systems approach is that any response has to be co-developed and collaborative, with the responsibility for innovation spread as widely as possible.


But crucially, a whole systems approach represents a paradigm shift for institutions and individuals alike. It calls on a set of tools, and a way of thinking, that is unfamiliar. The approach will present many challenges, including the development of new ways of talking about performance management. But we have the opportunity to get ahead of the change, direct, drive and influence it, rather than merely reacting to events after they happen.


To make the most of the very different world we face, we must take a different approach. In the words of Albert Einstein: Without changing our patterns of thought, we will not be able to solve the problems we created with our current patterns of thought”.


Philip New is Chief Executive Officer of the Energy Systems Catapult. Eric Brown is Head of Strategy and Innovation at the Energy Systems Catapult.


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