FST BLOG

A Systems Approach to Net Zero

• 18 June 2021
• Environment
• Guy Newey

I spend a lot of time with systems engineers. They are an annoying bunch, by and large. Always telling me that we have not considered all the elements of a problem. That we need to think about the whole system (they even say it like it is in italics). Even if you demonstrate you have thought about the whole system, they then suddenly tell you it is actually a systems of systems problem. I spend time with economists for a bit of light relief…

But despite the relentless tedium of their company, if I could give Government, Ofgem and those determined to achieve net zero one piece of advice, it would be this: spend more time with systems engineers. Because good strategy, and a good strategy for future energy policy, would benefit hugely from adopting a systems approach.

The energy system or energy systems (see, I was listening) is/are hugely complex. The interactions between different actors and parts of the system bewilder even seasoned energy sector observers or participants. It is part of what makes energy and climate such an enthralling intellectual challenge.

And guess what? It is going to get a whole lot more complex. Not just the gargantuan challenge of decarbonisation, but also the landing of digital technology on the sleepy analogue system we are used to today. And doing all this while maintaining reliability. One system engineer described the challenge as: “changing the engine of a plane, while keeping the plane in the air”. That seems hard.

And this is when systems engineers perk up. You see, they like the things that make most people’s eyeballs hurt. Building nuclear submarines; keeping lumps of metal in the air; providing energy on demand to millions of people at a reasonable price. I once spent a wonderful couple of hours as one of Energy System Catapult’s systems engineer told me how she would approach Brexit. Systems engineering is a discipline that has developed an approach (and a set of tools) for managing and tackling complex problems. And getting to Net Zero must be one of the most complex problems out there.

A huge amount of our work at Energy Systems Catapult is trying to grapple with this complexity, whether it is our analysis for credible pathways to 2050 using our whole system modelling capability, or working with some of the remarkable projects tussling the practical realities of building smart local energy systems on the ground (as part of the Prospering for the Energy Revolution Industrial Strategy challenge).

All this work highlights the big, overlapping challenges that make up the various aspects of the Net Zero macro-challenge:

• Rapidly changing technology
• How the introduction of digital technology into the energy system, fuelled by greater data availability, will create new opportunities and risks (new digital monopolies, anyone?)
• How decentralised, behind-the-meter technology (EVs, heat pumps etc) will integrate smoothly
• Aligning the morass of different and inconsistent carbon incentives across different parts of the economy
• How to ensure the citizenry/consumers/voters/people welcome unfamiliar low carbon technology or adopt more sustainable lifestyles
• How to knit these technologies and consumer propositions together so that they provide greater demand-side flexibility to the system; oh, and how to reform energy markets in order that the new technologies can capture the new value they are providing

And that is before you get to all the huge sector-by-sector challenges. But innovation in technology is not enough. It is important to understand that integrating these new technologies is as big an innovation challenge as maturing the technologies themselves.

So, if you wanted to take such a systemic approach to the problem, what would you do and what tools would you need to be able to do it properly?

On what you would do, it is tempting to jump straight for the institutional answer. Atkins, in their excellent Engineering Net Zero report, called for a system architect. Dieter Helm argued for the DSOs to be a key institution, alongside market reform for firm power auctions and carbon pricing. I am sceptical of starting with the institution. In some people’s minds ‘a systems architect’ has the whiff of the CEGB. Good system thinking is as much about designing and aligning markets to reveal solutions as it is about central planning.

A systems approach would: identify a clear set of requirements; break down the problem into manageable pieces; lay out options; start to understand the trade-offs and compromises between different solutions; and then begin to implement, before testing and refining. It will speed up innovation, not slow it down.

So, if we were going to take a systems approach to Net Zero, what might be the set of tools that would need to do it properly?

• Not just techno-economic models, but market simulation tools (ideally integrated with physical system simulation tools). This allows you to simulate and test alternative future market designs, as well as checking how the physical system would work in such a market. They are common in many other industries, such as aerospace. 
• Improved agile code governance. We need an approach that can respond quickly to changes of a digitalised, decentralised energy system, whilst maintaining a coherent view of how the architecture of the system needs to develop.
• A place to test new market/policy arrangements in the real world with real customers. We have prototyped such an approach with our Living Lab, which allows people to test new products and services quickly in real homes. It is the ideal kind of environment to also test new policy ideas or regulation, including how you integrate all these new smart technologies so they are interoperable. This could see the energy sector replicate the success of GSM standards in telecoms, leading to an extraordinary wave of innovation.
• Whole system local area energy planning to inform infrastructure investment, and to keep costs down.
• A series of city or town-scale Net Zero ‘pathfinders’, showing how net zero would really work in practice. 

All of this could help make the UK the home of the next wave of low carbon and digital energy innovation. Where brilliant companies like Origami, Octopus, Logicor, Senergy, Extreme Low Energy, Neuville, Ventive, Equiwatt, OrxaGrid, Digital Engineering, Electron, OVO, PassivSystems, Sunamp and many, many other (see our map here) can thrive and create new jobs, while creating better outcomes for consumers. 

And what if we fail to take a systems approach to Net Zero? Well, it is likely the transition will be more expensive, the system could fall over a lot more, and we would fail to capture the economic opportunity from being the first country to get this right. And we would struggle to get close to Net Zero, or give confidence to other countries that getting there was feasible, let alone desirable.

Delivering a Net Zero energy system will be enormously challenging given the scale of action needed, and the range of technologies that need to be improved, deployed and integrated. Doing so requires a systems approach, which is why — it pains every fibre of my being to say it — we may need to listen more to systems engineers…

 

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