{"id":64282,"date":"2021-05-04T14:30:51","date_gmt":"2021-05-04T04:30:51","guid":{"rendered":"https:\/\/www.aspistrategist.ru\/?p=64282"},"modified":"2021-05-04T14:29:11","modified_gmt":"2021-05-04T04:29:11","slug":"innovation-in-australias-electricity-sector-holds-lessons-for-defence","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/innovation-in-australias-electricity-sector-holds-lessons-for-defence\/","title":{"rendered":"Innovation in Australia\u2019s electricity sector holds lessons for Defence"},"content":{"rendered":"
<\/figure>\n

Disruptive innovation<\/a> almost always takes the incumbent by surprise. Successful organisations are very often good at sustaining innovation (that is, incrementally improving their business model), but they\u2019re generally unwilling to foster disruptive innovation, and are often structurally or culturally unable to. But those disruptive innovations can blow their business model away\u2014and by the time they realise what\u2019s happening, it\u2019s too late to adjust.<\/p>\n

We can see a striking case of disruptive innovation in action around us, and it\u2019s a case that has key lessons for the Department of Defence. Australia\u2019s energy sector is deep into a fundamental transition. It wasn\u2019t long ago that renewables were dismissed as being unable to generate \u2018baseload\u2019 power. They now regularly generate<\/a> over 40% of Australia\u2019s electricity, and sometimes more than half. Rooftop solar was mocked as virtue signalling; it now regularly hits 25% of our generation. And in the space of two years, utility-scale solar has gone from virtually nothing to nearly 10% at times.<\/p>\n

The electricity sector has reached a tipping point in Australia. Not one where all or even most of our electricity is consistently being generated by renewables (although they totalled more than 27%<\/a> in 2020), but rather a tipping point in that nobody wants to invest their own money in fossil-fuel generation, certainly not in developing new generating capacity.<\/p>\n

Almost every day we see another story about a traditional generating company admitting that it didn\u2019t see this coming<\/a> and that it\u2019s now having to write down<\/a> or close generating assets. Companies aren\u2019t doing this out of a woke sense of obligation to stop climate change, but because they can\u2019t make money running them. Renewables are cheaper<\/a> to install and run and they massively outperform coal-fired generators in responding to the energy spot market. They are also much faster to build, resulting in a faster return on investment.<\/p>\n

The question facing companies built around traditional generators is not whether their business model will survive, but whether they can move out of that business model into renewables fast enough to survive.<\/p>\n

A key reason we have got to this point is that our somewhat privatised and deregulated electricity sector has so many players. There are the federal and state governments; generators, both publicly and privately owned; energy distributors and retailers; international players, providing technology, investing in the sector and sending demand signals about the future of requirements for green energy; and Aussie mums and dads installing solar panels and batteries, making themselves both consumers and generators, and an increasingly key part of a resilient grid. Many of them are in direct competition and all of them, except governments, are playing with their own money.<\/p>\n

Electricity generators are not the only incumbents who can be taken by surprise. Military organisations can be good at sustaining innovation, but not necessarily at disruptive innovation. That\u2019s a key vulnerability for them. A major reason for that is that there simply isn\u2019t the same number of competing players in the defence sector. Rather, it\u2019s characterised by its monopoly\u2013monopsony nature. That is, Defence is a monopoly provider of security services to the government and is a monopsony consumer of security products from industry. Governments have some options for providers, such as private security companies, but mums and dads can\u2019t simply install a grenade launcher on their roof to take care of their security needs.<\/p>\n

In peacetime, military organisations are protected monopolies. In such an environment there isn\u2019t the same constant pressure to innovate. The acid test of whether a military organisation has innovated adequately, technologically or conceptually, comes on the first day of war, and it doesn\u2019t want to find that its business model has been rendered uncompetitive.<\/p>\n

In the absence of the daily existential grind of competition that marks the commercial sector, military organisations need to work hard to drive innovation. One way to do this is to look at external analogies for lessons and inspiration. There are a lot of lessons Defence can draw from the transition in our electricity sector. Since I\u2019ve been very interested in robotic and autonomous systems recently, I\u2019ll propose a couple that are relevant to that area.<\/p>\n

New forms of power generation were loudly dismissed. They were criticised as being economically uncompetitive, despite their proponents\u2019 arguments that this was a transitory problem. That\u2019s a standard feature of the approach taken by incumbents that are blind-sided by disruptive innovation\u2014why take resources out of your core business to put into new, unproven ideas that aren\u2019t making any money? But renewables are now cheaper and become cheaper by the day. The lesson for autonomous systems is that we need to be investing heavily in them now, even if they are less efficient or effective than crewed systems. It may well take more people to operate autonomous systems right now. But we will reach a tipping point.<\/p>\n

It\u2019s also important to be aware of the conscious or unconscious biases we bring to the issue. The electricity transition in this country has been overlaid by the rhetoric of our culture wars, blinding many to what was actually going on. The Australian Defence Force\u2019s views that \u2018people are our most valuable resource\u2019 and \u2018wars ultimately are human activity\u2019 are undoubtedly true, but they shouldn\u2019t blind us to opportunities where machines can replace humans, even in tasks long considered the sole province of human intelligence.<\/p>\n

Another lesson is that we need to assess innovative potential at the system level rather than regarding innovations as simply replacements for existing things. It was easy to dismiss rooftop solar panels as poor competitors with or replacements for large-scale carbon-fired generators. A grid based on renewables could never be reliable and resilient, it was claimed. But a grid based on renewables and large-scale batteries is proving itself to be more reliable than a traditional one. It functions differently, with much larger numbers of smaller generators.<\/p>\n

One reason the emerging grid will be more reliable is that it is more responsive\u2014batteries can respond instantaneously to stabilise the grid. This agility also means batteries and renewables can outcompete traditional generators in the spot market. So, while old and new generators have some overlap in their roles, new generators create a robust system\u2014just one that operates differently.<\/p>\n

Again, there are clear parallels with the military. If we compare uncrewed systems with large, multi-role systems, they look like very poor replacements; no uncrewed underwater vessel can currently come close to doing what a crewed submarine can do. But if instead of comparing platform with platform, we look at how robotic and autonomous elements can contribute to the entire warfighting system (in other words, the grid), they have much to offer. It\u2019s highly likely that a military employing large numbers of robotic and autonomous systems will become more effective than one based primarily on a small number of crewed platforms. The future system will look very different from the current one, just as our electricity system already looks very different from the one we had only a few years ago.<\/p>\n","protected":false},"excerpt":{"rendered":"

Disruptive innovation almost always takes the incumbent by surprise. 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