Australian Community Energy

Following this excellent Guardian article by Matt Charles-Jones, I thought it worth summarising the best examples of community energy in Australia.

CORE

Image from C4CE.net.au

A core group of people need to be credited with the foresight to build a backbone organisation for community energy – The Coalition 4 Community Energy, C4CE. This gives the sector insights into what each of us is up to and measurements on our collective impact.

You can quickly see a concentration of projects in Victoria and NSW. To some extent this is caused by state politics. In NSW regions have been awarded over $1m, typically as $50,000 grants, to deliver community energy projects. In Victoria, lobbying by local sustainability groups has resulted in strategic government investment in Community Energy. And speaking of politics – with a federal election looming, C4CE members have been instrumental in developing the Home Grown Power Plan as a proposal for all politicians to chew on in the lead up to July 2.

No summary of noteworthy projects can go past Australia’s first community owned wind farm in Hepburn Springs and the Embark wiki that was set up to ensure that the learning in Hepburn was used to help other groups.

Others have followed the shareholder model – although not necessarily with the community benefit commitment (Hepburn wind plows $30,000 per year back into community projects). Repower ShoalHaven put their grant money into a solar system on the local club, a great way to engage a community through the facility at the heart of social activities. Clearsky Solar do not link their investments to local investors but it is worth noting the 20 investors per trust model that avoids more complex financial regulations. Each project is snapped up in less than 24hrs with reasonable returns of around 8%.

And in those three projects you can clearly see the issue some people have with the tag “community energy” when applied to shareholder models. You do need to work harder to ensure a project benefits everyone in the community – not just the investors, trust or coop members.

In NSW, one region decided to invest its grant money in a business case for moving to Zero Net Energy. Towns bid for the honor of being the Z-Net town and Uralla was chosen. The resulting blueprint is available for any town or region to use. The project was led by Moreland Energy Foundation and supported by Starfish initiatives – (both excellent organisations with objectives rooted in delivering community benefits).

NSW is also the home of Australia’s first community owned energy retailer – Enova. They have recently fundraised $3m through a share offer to invest in the necessary billing systems and regulatory capacity to play with the big boys on the Australian market. What makes them ‘community’ is that no shareholder can have more than three votes regardless of no. of shares owned. Enova will also invest a portion of profits back into community projects.

In Victoria, some towns have adopted ambitious targets. Totally Renewable Yackandandah is driven by an active group of citizens and has been awarding Golden Yacks to the best energy performers in town. Newstead, like Yackandandah, already had a history of trouble shooting infrastructure problems as a community. It was successful in getting $200,000 from the Victorian Government and has developed an MOU with its local electricity network provider to work together on the 100% challenge, improving the local supply at the same time. Tyalgum has come together as a community and workshopped the process of going off the grid altogether.CORENA banner

imageFinally, a post about community energy wouldn’t be complete without a plug for my favourite organisation – CORENA, Citizens Owned Renewable Energy Network Australia. CORENA has members and donors all over Australia who have gradually built up a revolving fund. To date the fund has delivered 11 projects on community buildings in most Australian states and territories. CORENA looks at all opportunities to reduce greenhouse emissions and often funds both energy efficiency and solar to best serve the community organisation. As repayments from savings and further donations flow into the fund, new community energy projects are built.

In this process, we must not forget the communities at the heart of our traditional energy system (and therefore our economy). These are larger communities, reliant on coal and going 100% renewables is not a simple option. Importantly, they are starting the energy transition conversation. Last week South Australia turned off its coal fired power station for the last time, having close its coal mine about 6 months earlier. The positive conversation we can have about the future there is largely thanks to the Repower Port Augusta campaign. We can’t underestimate the importance of working with the community to shape the town’s narrative, and doing the underpinning analysis to support hopes for a solar thermal power plant.

I am currently looking at community energy models in some of the leading jurisdictions around the globe and tomorrow I will be in Fort Collins, Colorado. This is a town that owns its own electricity system, is 50% owner in a coal fired power station and mine and is actively having the conversation about zero emissions. You can download the slides for the presentation I am giving in FortCollins here.

 

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Imagining a Low Carbon Economy

Our economy is interlinked with our energy consumption – intimately. The Oil Crisis of the 70’s triggered a scramble of activity in Energy Departments around the world. Suddenly energy security could not be taken for granted and energy efficiency was an asset. The reliance of developed economies on oil became crystal clear.

Australia has had a more comfortable run than many economies. We had an abundance of fossil fuels and for many years ours was one of the cheapest places for energy intensive industries to locate. So to a large extent our energy resources have shaped our economic structure. We now have an economic transformation underway, and renewable energy resources that we must exploit if we are to successfully transition to a low carbon economy.

Low Carbon Jobs Forum AdvertI’m honoured to be joining our expert panel on Monday night to discuss New Jobs in a Transforming Economy. As part of signing up, we asked our audience of over 300 people to tell us what they most want to understand about this dual energy and economic transformation. I’ve published a sorted list of questions here and you can see many common themes are emerging.

The insights are fascinating.

Many of you are already eager to see a post-capitalist world emerge. What does the world look like when workers are no longer needed? How do we provide basic incomes to everyone? Can we make sure community, culture, arts etc. are more strongly valued? Could this be the trigger for us to finally develop sustainable ways of operating?

Justice and equity is front of mind. Will there be a shift in wealth and power? How do we manage unemployment? Can the new economy be fairer than our current industrial model? can we please make sure we retain the dignity of work and don’t leave people behind in this transition? (a theme shared with the Renewables for All project)

Some of you have been scanning the emerging technologies: automation, artificial intelligence, 3D printing. Some, emerging social models: co-working, microbusinesses, co-operatives, grassroots approaches, home and lifestyle based work.

Many of you jumped straight to the types of questions that we hope our economic development policy makers are asking: What will be our competitive advantage? What economies should we emulate? Where will the investment come from? Who are our competitors? Are we inviting enough or are we dreaming about what SA can become when we appear to be in such a sorry state?

And the concerns about skills hit us at a personal level. Where will I find a job? What should I study? What skills do my children need to gain in order to prosper in this brave new world? Are we doing enough to develop the right skills in our community and to help people transition from jobs in the industrial economy?

And finally, you have a clear focus on the question of How? How do we get this transition right? Are Governments doing enough? What should we get started on now? We started this process with a discussion paper and proposed a roadmap to help build a common understanding of the implications of the transition path we are already on. We are hoping to use this forum and further conversations at the Adelaide Festival of Ideas in October to build the next steps.

There are also many questions about renewable energy technologies, the proposed nuclear waste dump, and the numerous opportunities that you see in a future energy and economic system. These are not minor details. As I said at the beginning, our energy future will be instrumental in shaping our economic future. Discussing and imagining this future is a conversation we need to have.

A short plug for me: After many years talking about the technology and working on the financial viability of energy changes, I am about to spend three months investigating the social/governance dimension of our energy transition. You can read more about my Churchill Fellowship here and I hope to blog regularly while I am away. First stop the World Energy Innovation Forum at the Tesla factory in Silicon Valley – woohooo!

jobscloud

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The world in a truly democratic era

Have you heard of the Visions 2100 project? Leaders and thinkers from around the world, and especially from my home town of Adelaide have contributed their Visions for a world in 2100. The premise is that we need positive stories to shape a positive future and this project and book is a great start. The stories are hopeful and sometimes slightly dark. Commentators in the climate change space simply can’t ignore the enormous challenge we have left ourselves and the impossibly slow pace of change at the moment. Nevertheless they have summoned their optimism and tackled the idea from a fantastic range of dimensions – energy, transport, lifestyle, culture etc.

I have a particular interest in the way the internet is breaking down so many industrial era structures. Clay Shirky talks about the hierarchy becoming redundant as people self-organise. A common theme of many of the books I have read is the way information is becoming free and the innovative business models of this new information-era.

So I thought I would take up the Visions 2100 challenge and try to craft 200 words of my own:

We learned to share

By 2100 we have shrugged off the hierarchy of the traditional organisation and everything we do focuses on the contributions we can make rather than the rules we must obey. We don’t use consensus to make decisions, but rather we have opted for a rapid and flexible approach built on the early 21st century idea of Holacracy.

Our energy systems were the first to transform. Solar energy had democratised energy by becoming cheaper than any other power supply. When their customers started self-organising to trade energy and optimise their usage times, the energy companies fell into line. Over time these behemoths have come to resemble the communities they serve and have shed the profit-driven corporate culture of the 2020’s.

Climate change too was solved by individual action and cooperation. While international governments dallied, people worked out how to share their surpluses and bring down the overall human carbon footprint. The human cost of climate tragedies in the early part of the century shook us all into action, we needed to do something and so we did. West helping east, north reaching out to south. Yes, this was the century when we built the tools for self organising and once we had, we all learned to share.

Do you have a vision for 2100?

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Learning our way to 100% renewable energy

SA aust-map-smlSouth Australia is a surprising leader in the world’s journey to 100% renewable energy. Other smaller islands and towns have already hit the 100% target. Denmark and Germany have been in the lead for policies and action for 1 to 2 decades but many people remain surprised when I tell them how much renewable energy we use in South Australia and how quickly it has happened.

The purpose of this post is to document some of the lessons that we can all learn from. It is easy to be wise in hindsight but the best outcome from some of South Australia’s challenges will be that other jurisdictions act earlier to head off potential problems.

Adelaide is the capital city on the south coast of Australia and it has a population of approximately 1 million people. The whole state, despite its vast size only has a population of 1.67 million and a gross state product of around $100bn. So we are a modest sized place, only 7% of the country’s population but an endowment of resources – particularly wind and solar energy. Our energy system uses some 300PJ, roughly a third each for transport, industrial and domestic heat and electricity. The electricity system delivers 3,000MW at peak load and 10,000GWh per year. This is where the story starts.

Over the past decade, South Australia has moved from little renewable energy to over 40% and its current goal is 50%.

We started with a wind boom. The renewable energy target (RET) had been introduced at a national level and South Australia had two key things to attract investors – a welcoming regime with politicians that wanted a clean green state and electricity prices that were slightly higher than the other states. Between the RET subsidy and the market prices that wind output could fetch, there was enough to incentive to attract the first wind farms to South Australia.

Public servants were spurred into action. The planning regime was checked to ensure development laws would allow the building of wind turbines. Investors chased the wind resource to the Eyre Peninsula on our west coast, only to discover that the cost of bringing the energy back onto the main backbone of the electricity system was prohibitive. (We still don’t have a good mechanism to encourage the collective investment that is needed to justify the expense of extending network infrastructure, a challenge our geothermal investors have also faced). It wasn’t long before wind farm investors realised that a poorer resource next to a solid part of the network could become an equally viable investment.

Our solar industry is somewhat more home-grown. For many years South Australian businesses got by with a small market that included off-grid farms and homes and two big corporate customers – SANTOS who needed small amounts of electricity as corrosion protection along its gas pipeline (which runs 800km from the desert to Adelaide) and Telstra which was installing satellite phones in remote locations between Darwin and Adelaide.

The renewable energy target helped with slow growth of solar energy (from 2001) and households could install 1.5kW of solar PV with a RET payment for the first 15 years of solar production. By 2008, we had an estimated 2MW of solar energy, including a showpiece installation at Wilpena Pound of 100kW. Most households optimised their investment in solar energy by using older style meters that ran backwards when the surplus was exported to the grid. South Australia introduced the country’s first feed-in tariff at that stage with much wrangling over the value (44c/kWh), the duration of the scheme (20years), and whether it should be for net exports or gross(net).

No one foresaw how fast the solar landscape could change. The federal government introduced a multiplier in 2009 and solar panel prices were falling. Other state governments rushed to introduce their own solar feed-in tariffs. By 2010 restrictions were introduced on the feed-in scheme and rules to ensure that the retailers paid for the export electricity they were receiving.

South Australia now has some 800MW of solar panels installed across 200,000 households and businesses (but mostly households). This is phenomenal considering we only have 750,000 homes and 100,000 businesses.

renewable capacity

You can see the uptake of wind and solar in the graph from AEMO.

Now that you have a sense of the journey so far, lets consider some of the lessons.

Subsidies: The subsidy environment for solar (in particular) has given the industry a number of quick cycles of boom and bust. I don’t have any answer for this problem but for those who work in the industry, life has been very difficult at times and some have lost significant money. It doesn’t help that state governments introduced different feed-in tariffs around the country and the federal government introduced a multiplier to increase its subsidy. The market conditions changed faster than the government regulations so some people made a lot more money than others, even though this would never have been the intent.

Feed-in tariff design: The feed-in tariff was hard to change. It is worth taking a note out of Germany and Spain’s playbook. Both introduced sliding scales in regulations so that the tariff could be adjusted to match the falling price of solar energy and the level of subsidy remained adequate to encourage investment but not lucrative.

Net vs Gross feed-in: I think we made the right decision to have a net feed-in tariff. Many households exported more than anticipated. When the tariff stops, those households enter the market as prosumers, using some of their solar energy and exporting the surplus. By contrast, consumers in NSW (gross feed-in) are trying to get their metering arrangements changed because without the tariff, consumers can’t get top dollar for their electricity by using it themselves. In other words, in SA we connected solar panels in the way that made sense in the long term.

Smart meters: We changed 200,000 meters from old spinning disc meters to import/export meters at the same time Victoria was rolling out smart meters to all its customers. We get a big FAIL for not ensuring those meters were smart, a real wasted investment opportunity.

Scheduling of wind farms: We had to play catch up on managing our wind farms. The capacity quickly reached a point where the market operator needed to be able to turn off some wind capacity at times. These wind farms are now known as semi-scheduled. We also did a lot of work on forecasting in order to predict the wind output in advance. We still have negative price events occasionally where the traditional generators force a cost on the wind turbines if they don’t turn off.

Frequency Services: Wind turbines have never been considered as full players in the market so it is no surprise that they don’t offer frequency control services. Anecdotally, wind farms in Denmark turn off just before the morning peak and then bring capacity online again, just to sell some frequency services into the market. SA has now hit a point where there are few traditional generators online to offer this service during the ramping up of load (particularly as all the solar panels shut down for the evening at sunset, known as the duck curve).

System response to faults and high/low voltage frequency: the protection settings on solar inverters can become a problem if they all have exactly the same settings. A high voltage event can shut down every solar system on the street (for example) and the market operator is still investigating how the inverters will behave in response to other fragile events in the system.

Hot water timers: the majority of our hot water systems are boosted at midnight. This minipeak didn’t used to be a problem but with less synchronous inertia in the system it can be. We should have created diversity in this earlier and as we do it now, we should ask if there is a smart way to do it.

Electricity Act Objectives: Over a decade ago, the Total Environment Centre advocated for environmental objectives to be incorporated into the electricity act. I, for one, believe we would have worked harder on integrating renewable electricity into our grid and planning for a long term energy transition if this had been the case.

Do you have any other lessons this post should mention? please join us in the comments below.

Some of you will be more familiar with elements of South Australia’a energy changes than I am. I welcome corrections and questions to make this story as robust as possible. I am hoping it will be a useful story to tell to people I visit on my Churchill Fellowship travels. What do you think?

 

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The Rainforest

Rainforest…as a metaphor for an innovation ecosystem.

I can always tell when I should write about a book because I find myself telling people about it before it has even gone cold on my bookshelf. This is one of those books. “If you are interested in innovation, you need to read the Rainforest”, said Philip, and he was right.

And the metaphor is rich. Think of a desert, where nothing grows and a plantation where growth is managed and weeds are carefully pulled out for incremental improvement. A rainforest, by contrast is an unwieldy, lush ecosystem where everything grows and the weeds are an essential part of its unpredictable nature.

The book describes the foundations of economic theory as exchange and specialisation. And uses the ancient silk road as its example. Innovation, they argue, is also based on exchange – the exchange of ideas and skills. And the invisible currency of innovation is trust. Trust is a great theme and it weaves itself consistently throughout the book.

Hwang and Horowitz argue that there are good reasons Silicon Valley emerged out of the wild west frontier culture of California and they tell a lovely story about the characteristics needed for innovation and the match with those needed for survival on the frontier. But their theory is that you can build these cultural characteristics anywhere and even create virtual innovation ecosystems that span the globe.

I’ve thought a bit about where that places South Australia. Our history and culture is decidedly different. Richard Blandy recently described our culture as Marxist as opposed to the American individualistic culture framed by the Enlightenment. We lay claim to a number of neat inventions – pioneers, making do with scant resources perhaps? We have a history of groundbreaking social changes and we like to remind people that we’re not like the rest of Australia because our first white settlers weren’t convicts. I wondered though, how many migrants – from the eastern European wave, the Italian and Greek wave, and the Vietnamese and even more recent waves – how many of these South Australians feel the culture we describe when we talk about our pioneering past? If you are interested, I’m still trying to get people to tell me what they think and give us an updated snapshot of Adelaide’s strengths. In any case we probably need to understand the stories that resonate with people  – a form of appreciative inquiry – in order to understand the type of innovation ecosystem that we can hope to inspire here.

Here are the foundations that Hwang and Horowitz think we need.

Firstly the cultural rules that support innovation:

  • permission to break the rules and to dream. This will be a challenge for us South Aussies – we do suffer from a tall poppy syndrome and my personal experience is that we mostly embrace authority and follow the rules. It’s the first rule of the rainforest though and we probably need to tap into some more recent cultural roots to find acceptance of an unapologetic ambitious and challenging approach.
  • a natural tendency to open doors and listen
  • a willingness to trust and be trusted
  • experimenting and iterating together
  • a preference for seeking fairness, not advantage
  • forgiveness and encouragement when we make mistakes, fail and persist
  • paying it forward (to use the american term for giving without expecting to receive because in other circumstances you will be or have been the recipient)

And then the tools for building innovation ecosystems anywhere:

  • Learn by doing
  • enhance diversity
  • celebrate role models and peer interaction
  • build tribes of trust
  • create social feedback loops
  • make social contracts explicit.

I was also fascinated by the description of key players in the rainforest. The keystone species are essential entities that support the biodiversity of the entire system. In the book these are described as the connectors, the people and institutions that help link everybody together, that bring diversity into the mix and that willingly (often without any direct financial incentive) make introductions and play host to new conversations.

The discovery of key connectors is also a theme in Jean-Alain Heraud’s work on knowledge angels which is a much more down to earth evidence base of small business, cities and emerging markets. By contrast the Silicon Valley ecosystem of entrepreneurs and venture capitalists sounds much more high-powered. The business consultants that are most frequently connecting businesses in Heraud’s work are nowhere to be seen.  (Further exploration of the upper, middle and underground that Heraud cites can be found here.)

Nevertheless, The Rainforest is an entertaining read and its axioms provide plenty of food for thought:

  1. While plants are harvested more efficently on farms, weeds sprout best in Rainforests
  2. Rainforests are built from the bottom up where irrational economic behaviour reigns
  3. What we typically think of as free markets are actually not that free
  4. Social barriers – caused by geography, networks, culture, language, and distrust – create transaction costs that stifle valuable relationships before they can be born
  5. The vibrancy of a rainforest correlates to the number of people in a network and their ability to connect with one another
  6. High social barriers outside of close circles of family and friends are the norm in the world
  7. Rainforests depend on people who actively bridge social distances and connect disparate parties
  8. People in rainforests are motivated for reasons that defy traditional economic notions of ‘rational’ behaviour
  9. Innovation and human emotion are intertwined
  10. The greater the diversity in human specialisation, the greater the potential value of exchanges in a system
  11. The instincts that once helped our ancestors survive are hurting our ability to maximise innovation today
  12. Rainforests have replaced tribalism with a culture of informal rules that allow strangers to work together efficiently on temporary projects
  13. The informal rules that govern rainforests cause people to restrain their short term self-interest for long-term mutual gain
  14. Rainforests function when the combined value of social norms and extra-rational motivations outweigh the human instincts to fear

If you want a good book to provoke your thinking about our capacity to innovate and stimulate change, pick up a copy of The Rainforest.

 

 

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Update – Renewables for All project

R4A headerThe theme behind this project is making sure parts of our community don’t miss out in the race to renewables. Those on the lowest incomes and renters, have extra hurdles to jump if they want to benefit from rooftop solar for example and yet they may have the most to gain. In the Renewables for All background blog I provided a snapshot of these issues in South Australia.

We held a workshop with Nicky Ison of the Community Power Agency facilitating  advocates from across the energy and social services sectors. This work resulted in a submission to State Government for the climate change strategy and low carbon investment plan.

At a national level workshops were also held in Queensland, NSW, Victoria and ACT. A series of discussion papers have been developed and submitted to the funder of this project – Energy Consumers Australia.

So here is a quick update on the themes identified – (the first four were identified in the SA workshop and by workshops interstate):

  1. Community Owned Renewable Energy: We suggested
    – Development of a central facilitator / management authority
    – Investigation of a carbon neutral Adelaide project
    The national paper suggested
    – grant funding for community energy
    – a dedicated team within government
    – ensure a fair price is paid for community owned renewable energy
    – help projects gain access to host sites such as public buildings
    Other progress
    – The State Government has received an expression of interest* for the central authority under its call for low carbon electricity and energy productivity proposals. It is likely we need to build more support behind this idea, or simply calling for greater support for community energy like other states have managed, in order to expect some traction.
    – The Victorian Government has released a Guide to community-owned renewable energy
  2. Solar Gardens and virtual net metering: we suggested
    – Virtual trials to develop the concept and create support for rule change proposals
    The national paper suggested
    – New tariff structures. (This is the subject of an electricity market rule change for Local Generation Network Credits but could also be legislated at a state level)
    – trials of solar gardens to reduce the cost of the bill-credit software platform
    – Incentives or mandates to ensure retailers and distributors participate
    There has been no specific progress on this mechanism but a determination on the rule change is expected by mid-year. ARENA and the Institute of Sustainable Futures is running a virtual trial in Moira and Swan Hill, Victoria.
  3. Rates-Based Financing: We suggested
    – Support for ACC current investigations and development of initiatives within other Councils
    The national paper highlighted that the following is needed
    – legislative change but in SA the Local Government Act already supports rates-based financing
    – aggregation of finance at a low cost of capital so that low income participants are better off from Day 1. In Darebin, the Council provided its own low/no interest loan for the initiative.
    – supporting measures that make rates-based financing easy for Councils to implement.
    Further progress
    We have opened discussions with Adelaide City Council who are hoping to implement a Solar Savers scheme based on rates-based financing as part of the carbon neutral Adelaide commitments. A number of EOI’s* into the state government energy productivity process would provide supporting measures to an ACC scheme.
  4. Mandatory Disclosure of housing performance, star ratings and energy efficiency upgrades: we suggested:
    – Development of specific proposals to advocate for regulatory and policy progress
    This issue was raised by a number of interstate groups as well as SA, but it quickly became clear that there was a bit of a minefield and a fair amount of existing policy activity. An attempt at mandatory disclosure failed a few years ago despite some positive numbers when looking at cost vs benefits. The various jurisdictions couldn’t agree to proceed. The CSIRO is spearheading a discussion based on its CRC, ‘energy fit homes initiative: empowering consumers‘. The national energy productivity plan says it will consider a range of options to improve market information on residential buildings. A private sector approach might also be supported – and this liveability approach was cited as an example because it has the real estate sector marketing culture at its core.At a national level two other briefing papers were prepared:
  5. Rent Based financing which calls for:
    – pilot projects with community housing providers
    – co-funding renewable energy AND energy efficiency to ensure the projects maximise possible savings for low income tenants
    – Broker relationships between the community energy project developers and the community housing providers.
  6. Mini Grids and Embedded networks which calls for:
    – Funding for pilot projects

    – Feasibility studies and technical assessments for interested communities
    – Improve and upgrade mini-grids in remote locations to ensure they are powered by renewable energy not diesel
    – Investigating the benefits of ownership transfer of centralised network assets
    where there is an interested community, particularly in edge-of grid locations.
    – Assessing grid upgrades more stringently in areas where mini-grid solutions are
    possible
    – Supporting a cultural shift in network operators and energy retailers

The paper identifies four forms of mini-grids:

  • Community based: This is what towns like Newstead and Tyalgum are exploring.
  • Private Sector: This is what Zen Energy is attempting with its Zen communities model
  • Utility based: Our utilities have some experience running off-grid systems but the regulatory model does not create incentives for cheaper mini-grids to be developed as an alternative to servicing the expensive fringe-of-grid locations in a traditional manner
  • Hybrid: based on some combination of the above modes.

This post really serves as an interim update. If you would like to get involved in speeding any of these initiatives forward, please get in touch.

*I have written about the state government EOI in this post on what state government could achieve if it bought 100% renewable energy.

Other Resources
If you would like to read the South Australian Renewables for All original Discussion Paper it can be found at this link.
A short summary of the South Australian workshop and next steps can be found here.
The presentations from the workshop can be found here (Nicky’s) and here (Heather’s)

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How will you measure your life?

measure lifeI picked up this book because I’m on an innovation roll and Clay Christensen is the father of disruptive innovation theory.

I didn’t expect quite so much moralising, but in a sense it is Christensen’s faith that has led him to challenge his students about life’s purpose and propose that there is much to be learned in the business theory they have just spent years studying.

I actually like his approach of ‘I can’t tell you the answers but if you understand the theories you will be better armed to work it out yourself’. (along with a little dig at various self help books, many of which I’ve indulged in)  And since I am not a business student, but I am a fan of theories and frameworks, I was pleased to pick up a few more for my toolkit.

Here are the lessons from the book. maybe some of them should have stayed as business theories – you be the judge:

Career happiness grounded in the science of motivation suggests we place minimum priority on sanitary measures such as salary & status and instead expect to be fulfilled by meaningfulness, personal development & learning, achievement and recognition and responsibility.

Pathways cannot be fully planned. A deliberate strategy is good but needs to be open to serendipity and emergent opportunities. In other words, the classic business pivot happens when the emergent strategy overtakes the original plan and becomes the new plan. But beware flawed thinking and planning fallacies, “what has to be true for this to work” can be a very important question to ask.

Strategy is empty if it doesn’t align with where your resources are spent. Don’t kid yourself, actually look at the time, money and effort and make sure it fits your values and ambitions.

Relationships are arguably the main source of lifetime happiness but the investments cannot wait until you are ready, rather they are like trees – you need to start nurturing the saplings many years before you need them. Good Capital and Bad Capital theory explains that in the early stages of a business investors need to be patient for growth and impatient for profitability but when the model is proven they need to be impatient for growth and patient for profitability.

The theory around uncovering the utility of products ‘what did you hire that milkshake to do?’ can be applied to uncovering your own utility in a relationship – service the need of your spouse and loved ones.

The critique of outsourcing explains the dangers when you fail to develop capabilities because you’ve given that opportunity to your supply chain instead. This section was applied to kids skills and given the recent article that explained successful people were all made to do chores as kids, there must be some case for it. Develop your kids’ capabilities by giving them opportunities to achieve things for themselves is the main message here.

The school of experience, the importance (for business) of recruiting those who’ve learned at a similar coal face – and the lesson for us to give our children opportunities to fail and learn in many spheres of life.

Culture as the invisible hand that helps an organisation rely on decisions by everyone contributing in the right way – and in the family context, setting guidance for our kids to help them to grow up with the values that we aspire to.

From the outset, Christensen’s vision for a good life was:

  • a fulfilling career,
  • great relationships
  • full of integrity.

Staying out of jail is an interesting third measure, justified by the story that he studied with Kenneth Lay of Enron. Some people may not seem bad but life can hit a slippery slope and Christensen feels that the Barings Bank trader, Nick Leeson, shows us how easily one exception, a little step wrong, can spiral out of control.

The business theory he invokes is full vs marginal thinking. Incumbent companies tend to add the opportunities their competitors are pursuing to a current cost base and conclude that it is not worthwhile. In fact Christensen argues they need to see the innovation from scratch – new sales teams, new equipment, everything. Only with a clear view of the whole change to the cost base can a business see the value (and hence the cost of not innovating). Marginal thinking will always look unexciting by comparison.

The slippery slope in marginal thinking is that these businesses get swallowed up by their smaller competitors inevitably.

All in all, an interesting and relatively short read.

 

 

 

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