D. Lachman - A High Stakes Poker Game - WTB - DL080214

Prologue
Let’s talk a bit ‘bout Monkeys first…

Power & Monkeys
A B C D
8 februari 2014 Energy Security - D 3

aniel A. Lachman MSc CMRP
Power & Monkeys
A B C D

Power & Monkeys
A B C D

Power & Monkeys
A B C D

Power & Monkeys
A B C Z

Power & Monkeys
A B Y Z

Power & Monkeys
A X Y Z

Power & Monkeys
W X Y Z

A high stakes
Poker Game
Hedging your Bets to Safeguard
Energy Security through Energy Education
Daniël A. Lachman MSc CMRP

Presentation Overview
1. The Aspect of Uncertainty

2. Scenario Planning
3. Scenarios for Suriname
4. Energy Security: the common trap
5. Safeguarding Reliability
6. Implications for Suriname
7. Concluding Remarks
Number of slides: 103


“Prediction is very Hard,
especially when it is about the
Future”
– Yogi Berra

Context Extrapolation

Context Extrapolation – cont’d
Some examples:
 "I think there is a world market for maybe five computers."
Thomas Watson, chairman of IBM, 1943
 "This 'telephone' has too many shortcomings to be seriously considered
as a means of communication. The device is inherently of no value to
us."
Western Union internal memo, 1876
 "Books will soon be obsolete in schools. . . . Our school system will be
completely changed in the next ten years."
Thomas Edison, speaking about motion pictures, 1913
 "Heavier-than-air flying machines are impossible."
Lord Kelvin, president, Royal Society, 1895
 "Who the hell wants to hear actors talk?"
H.M. Warner, Warner Brothers, 1927
 "640KB ought to be enough for anybody."
Bill Gates, 1981
 "Everything that can be invented has been invented."
Charles H. Duell, Commissioner, U.S. Office of Patents, 1899

Uncertainty
 More recently…

Uncertainty in
the World of Energy
The aspect of
uncertainty is
also present
with…
energy
technologies and
energy resources!!

Uncertainty in
the World of Energy – cont’d
 Fracking boom

Uncertainty in
 Rumbling in the nuclear industry

Uncertainty in
 Tipping point

Uncertainty in
 Export ban

Uncertainty in
 Fuel prices
 True bio-fuel life-cycle GHG emissions
 Convergence Technology
 Etc.
 Etc.

Suriname’s Context – cont’d
Suriname
 What if the
aluminum smelter
closes?
 What if BHP-Billiton
leaves Suriname?
 What if more
energy is
consumed than
forecast?
 Offshore possibilities

 Climate change  which way?

 Re-negotiating Afobaka?

 What if wind/wave/tidal/etc. potential is
unlocked due to radical new tech?

Uncertainty is Rising
 Uncertainty rises:
 Increasing complexity
 Globalization
 Intertwined
 Disruptive events
 Etc.
 Suriname’s small nature:

 Trends are easily broken
(e.g. “sudden” expansions / investments)

Suriname’s Context
 Suriname  Uncertainty

Lachman 2009
Dilemma
On one hand:
 Big timeframe from decision-making to
production
 Long life-span
 Enormous (financial) resources
“locked”
On the other hand:
 Increasing Uncertainty

“Vision is the Ability
to See the Invisible”
–Jonathan Swift

Scenario Planning
 A proven tool
 Scenario: not a prediction, but hypothesis
about how the future might unfold, built on
combinations of highly uncertain and high-
impact driving forces
 Driving Force: Forces of change outside an
organization that shape future dynamics in
predictable and unpredictable ways

Scenario Planning – cont’d
A set of scenarios covers a wide range of
possible futures, contrary to traditional
planning
More resilient strategies, na r io2
Sce
Sc
policies and plans can i onal
en
it
Trad ing
ar
be created n
Plan
io
ture
3
through scenario al F u
Ac tu
planning.
Leading indicators Sce io4
nar n ar
determine towards io 1 Sce
which scenario the present
develops
predetermined elements
Procedure
driving forces
critical uncertainties
process
driving forces
scenarios
scenario/
strategy map
early indicators
Advantages of Scenario Planning:
 Create resilient strategies, policies and plans
 Test strategies, policies, plans and projects
 Accelerate collaborative learning
 Improve perception of the environment
 Rehearse actions under different circumstances
 Increase adaptability, reaction time and
preparedness
 Less vulnerable to sudden changes
 Excellent tool for communicating different futures

 50% of Fortune 500 (incl. Royal
Dutch/Shell)
 Ireland, Saudi-Arabia, Netherlands,
UK, US, Kenya
 Texas vs Oklahoma
 DoT, DoE (+ EIA) , WEC, IEA
 Chatham House, RAND, SRI, IPCC
 Abolition of Apartheid


… if you
“Any tool is know how
useful… to use it”
8 februari 2014 Energy Security -
D – The Fist42 of th
North Star
Ranking Critical Uncertainties

Energy Scenarios for
Suriname to 2050
Two most uncertain, highest impact Critical
Uncertainties are combined to create scenarios

Lachman 2009a
Energy Strategies for Suriname
to 2050 – cont’d

Biggest, Highest Impact
Uncertainty
 All scenarios have 1 thing in common:

Possible effect of Climate
Change on Energy Security*
 Less precipitation  hydro
 Increased evaporation  hydro
 Extreme weather events  energy infrastructure
 Due to elevated temperatures
 Less yield  thermal
 Steep increase in climate control requirement  energy
demand
 Variation in vegetation behavior  bio-fuels
 Rising sea levels  energy infrastructure
*IEA 2013
Lachman 2013a,b
IPCC 2013
Contreras-Lisperguer R. and de Cuba


“If you look deep into an
abyss, the abyss looks into you”
– Friedrich Nietzsche
Energy Security
 Energy Security*:
 Availability
 Affordability
 Reliability
and recently:
 Social Acceptability
 Sustainability
*Source: IEA 2006
Energy Security – cont’d

 Availability
Availability
 Meets (changes in) demand

Meets (changes in) demand
 Affordability
 Reachable, competitiveness
 Reliability
 Uncertainty in supply, quality, etc.
 E.g. nuclear post-Fukushima, (large) hydro
 Sustainability
 Long-term viability

Major Pitfall: BIAS
 Bias towards: AVAILABILITY
meeting demand relentlessly
Despite:
• Huge amount of subsidies
• No Production Excellence (cost of the
hidden plant)
• Inefficient consumption, no demand-side
management
 1743 kWh/cap*
8 februari 2014
*Source: Lachman 2009b
Energy Security - D 53
Energy Security vs
Resource Curse
Source:
Lachman 2010

+ Subsidies
Major Pitfall: BIAS – cont’d
end-of-pipe solutions
Existing energy system has become the
8 februari 2014 Energy Security - D
Rule-
56
set / Regime in Suriname

 Availability
 Meets (changes in) demand
 Affordability
 Reachable, competitiveness
 Reliability
  Reliability
Uncertainty in supply, quality, etc.
 Uncertainty in supply, quality, etc.
 E.g. nuclear post-Fukushima, (large) hydro
 Sustainability
 Long-term viability

 The uncertainty surrounding the range,
variability and strength of the impact of
climate change  energy security in
serious danger
 CC WCS



“The difficulty lies, not
with the new ideas,
…but in escaping the old ones”

8 februari 2014
John Maynard
Energy Security -
aniel A. Lachman–MSc CMRP
D
Keynes 61
How to Hedge
I. Maximum energy portfolio

diversification

How to Hedge – cont’d
II. Decentralized energy system

III. Energy efficiency & conservation

(less generation required)

IV. Smart grids

IV. N
V. Reliability Excellence

Pillars
 Diversification
 Decentralization
 Interconnectedness
 Efficiency & Saving
 Production Excellence

Advantages
 Contingencies: less impact
 Hedge against climate change impact
 Energy efficiency
 Easier integration of renewables
 Impetus for research
 Decentralization, counter urbanization

End-of-pipe vs Extra-systemic

Regimes vs Niches

Regimes vs Niches

Energy System Transition
 The energy system needs to be
fundamentally re-thought
 Rule-sets / Regimes needs to be critically
reviewed
 Niches need to be introduced to challenge
the status quo on a level playing field
 Energy system transition management is
of paramount importance!

The difficulty lies…



“It’s not
the plan … it is the
that is
planning”
important,
– Graeme
77
Edwards
Implications
 The longer you
wait…
 $$$!
 Difficulty
 Greater
dependency
 Energy security

Implications – cont’d
We have the energy potential:
 ± 4000 MW hydropower (run-of-the-river) 1)
 Kabalebo: 850 MW2)
 Tapajai: 305 + 116 MW 3)
 Guyana-stream: ± 5 GW4)
 Solar: ± 7 – 52 GW
 Wind, Tidal, Wave, etc.: to be explored

1)
BWKW 1981
2)
Ng A Tham 1987

3)
Boksteen 2008
79
4)
Geeraert 2009
Energy efficiency & conservation (less
generation required)
How
•
to Hedge – cont’d
No Production Excellence (cost of the
hidden plant)
• Inefficient consumption, no demand-
side management
 1743 kWh/cap



The 4 Levels of Change
effective
CHANGE
begin
firm
BELIEF
forming
full
UNDERSTANDING
partial
complete
AWARENESS
initial
 Paradigm shift: decisions need to be
taken, starting on the highest level
1) Belief
2) Scenario Creation
3) Vision
4) Strategy
5) Transition Management
6) Policy
7) Action Plans


“Big things have small beginnings”
– Lawrence ofCMRP
Arabia
aniel A. Lachman MSc
Concluding Remarks
Unit of Analysis
Future Present Internal External
Strengths X X
Weaknesses X X
Opportunities X X
Threats X X
Concluding Remarks– cont’d
 Quick overview of current status
 Input for Strategy building
Threats
Weaknesses
Future State
Strength
Opportunities
Current Normative
Situation Scenario

 Strategic Fit
 SW aligned with OT?
  strategies, action plans
To assess the degree of Strategic Fit

of the energy sector in Suriname
Strategy and
Policy building

It has been said
something as small as the
flutter of a butterfly’s
wing can ultimately cause
a typhoon halfway
around the- Chaos
worldTheory

The Iceberg Model
 Looking for underlying “driving” factors
 These cause sensible phenomena

The Iceberg Model – cont’d
Bias
Centralized power dispatch Path Dependency
Rigid regimes Education
Fragmented decision making

Politics
Deficient government capacity
Outdated legal framework Level of Policy Making
Opaque subsidy scheme Education
Inability to deal with uncertainty
Relative high T&D losses

No production excellence } Path Dependency
Education
Poor fin status of utilities

8 februari 2014
High energy intensity } Too low tariffs
Energy Security -
D 97
Concluding Remarks
 Energy Sector increasingly challenged
 Challenges inherent to energy system
 Inability of system to deal with challenges
 Energy Sector requires Transition
 Transitions are based on paradigm shifts,
re-learning, 4 Levels of Change, etc.
 Best possible way to tackle this, is
through education
Concluding Remarks – cont’d
 Solid education program is therefore
required, that focuses on:
 Energy Engineering (generation, T&D, R&D)
 Energy Resource Assessments
 Energy Strategy & Policy
 Energy Scenarios & Transitions
 Social and Environmental Impacts of Energy
Systems
 Business Administration in Energy Systems
 Etc.
The Butterfly Effect
“Change one thing, change

8 februari 2014 everything”
Energy Security -
D 100
To choose, or not to choose…
The greatest
trick the Devil
ever pulled,
was making
people believe
he didn’t exist
- The Usual Suspects

“Every Epoch dreams its Successor”
– Jules Michelet, quoted in Rintaro’s adaptation of Osamu
Tezuka’s “Metropolis”

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Prologue

Let’s talk a bit ‘bout Monkeys first…

8 februari 2014 Energy Security - D 3

8 februari 2014 Energy Security - D 4

8 februari 2014 Energy Security - D 5

8 februari 2014 Energy Security - D 6

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8 februari 2014 Energy Security - D 10

Daniël A. Lachman MSc CMRP

1. The Aspect of Uncertainty

1. The Aspect of Uncertainty

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 Suriname’s small nature:

(e.g. “sudden” expansions / investments)

8 februari 2014 Energy Security - D 31

1. The Aspect of Uncertainty

8 februari 2014 Energy Security - D 34

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1. The Aspect of Uncertainty

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1. The Aspect of Uncertainty

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set / Regime in Suriname

8 februari 2014 Energy Security - D 58

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1. The Aspect of Uncertainty

8 februari 2014 Energy Security - D 60

…but in escaping the old ones”

I. Maximum energy portfolio

8 februari 2014 Energy Security - D 62

II. Decentralized energy system

8 februari 2014 Energy Security - D 63

III. Energy efficiency & conservation

8 februari 2014 Energy Security - D 64

IV. Smart grids

8 februari 2014 Energy Security - D 65

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