Post on 18-Dec-2015
“Making Hard-Headed Decisions Pay Off”
Dale WahlstromCEO, The BioBusiness Alliance of Minnesota
January 14, 2009
Legislative Policy Conference
Strategic Flexibility
Strategic Flexibility: Renewable Energy
Enriching Minnesota’s Future through the Biosciences
Advanced Scenario Planning
Scenario planning or scenario thinking is a strategic planning method to develop flexible long-term plans
• Uncover and anticipate hidden weaknesses
• Minimize the probability of an unintended consequence
• Bring together divergent opinions to focus on a most probable scenario
Various Scenario Planning Methods:
• Contingency Planning
• Sensitivity Analysis
• Computer Simulations
Enriching Minnesota’s Future through the Biosciences
Why is it Important to Do This Kind of Modeling?
• All planning is based on models – mental or simulated• Planning in the business and policy worlds relies heavily on the use of mental models• Mental models are difficult to surface, share and test for completeness and accuracy• Goal: integration of various mental models into one shared model• Overall – it is a cost-effective way of reducing errors and increasing the odds of being successful
Real World
InformationFeedback
MentalModels ofReal World
Strategy,Structure,Decision
Rules
OrganizationDecisions
1. Problem Articulation(Boundary Selection)
2. DynamicHypothesis
3. ModelFormulation
4. Model Testing& Validation
5. Implementationof Results
System Dynamics Modeling
Enriching Minnesota’s Future through the Biosciences
Base Case Results: Share of Renewables
8.84%
20.50%
Thank You!Dale Wahlstrom
dwahlstrom@biobusinessalliance.org
952-746-3847651 276 5735
www.biobusinessalliance.org
BACK UP SLIDES
Enriching Minnesota’s Future through the Biosciences
Know Whom
Know What
Know How
Cluster of Knowledge & Competency
Finally: Review
Linking What-How-Whom• To be successful, Collaborative Knowledge Teams must integrate across lines of experience and trends in technical applications around specific market, economic and/or societal challenges.
• Clusters of Knowledge & Competency are formed when the Know-How, Know-What, and Know-Whom are linked throughout a region.
Enriching Minnesota’s Future through the Biosciences
Model Interface
Enriching Minnesota’s Future through the Biosciences
Model SpecificsMinnesota Energy Divided into 5 Sectors
• Electricity
• Transportation
• Industrial
• Commercial
• Residential
Overall Objectives and Measures:
• Share of Renewable Fuels by 2025
• Jobs
• GSP
• Carbon Emissions
Enriching Minnesota’s Future through the Biosciences
Renewable Energy Analysis Team
•Cecil Massie, 6 Solutions LLC
• Mark Willers, MinWind Energy
• MaryJo Zidwick, Cargill
• Rolf Nordstrom and Brendan Jordan, Great Plains Institute
• Richard Magnusson, MN Wheat Growers
• Ralph Groschen, MN Dept of Ag
• Shalini Gupta, Izaac Walton League
• Greg Chamberlain, Xcel Energy
• Core Team: 20 Experts from Across Minnesota• Feedback Sessions Throughout the State
•Michael Sparby, AURI
• Bruce Stockman, MN Corn Growers
• Mike Bull and Lise Trudeau, Dept. of Commerce
• Mike Youngerberg, MN Soybean Growers
• Vernon Eidman, UofM
• Kate VandenBosch, UofM
• Elaine Hoffman, Bemidji State
• Bruce Jones and John Frey, MN State U at Mankato
Enriching Minnesota’s Future through the Biosciences
Modeling ProcessTo use a model, you need a process
1. Discussion to capture the diversity of opinions
2. Debate the issues until the team reaches agreement on a possible scenario (this becomes the “base case”)
3. Input the data and run the scenario
4. Analyze outcomes to understand the behavior
Enriching Minnesota’s Future through the Biosciences
Understanding the Model Results
Three Reoccurring Options when Reviewing Model Results
1. Results are true and showing insights or unintended consequences that we wouldn’t have expected to see using traditional analysis tools
2. Results are skewed by incorrect data
3. Results are skewed by incorrect model structure
» Validation and testing needed - never really ends
» Includes
• Reviewing with experts
• Tracking against historical data
• Sensitivity analysis
Enriching Minnesota’s Future through the Biosciences
Current, Unconstrained Base Case AssumptionsThe base case developed by the team suspends reality and assumes an unconstrained environment
This means that the challenges in the following areas are resolved:• Funding • Workforce• Research and Technology• Construction Materials and Feedstock Availability• Feedstock Storage and Distribution• Regulatory Requirements, etc.• Land and Water Use
An unconstrained model is not reality
Enriching Minnesota’s Future through the Biosciences
Current, Unconstrained Base Case Assumptions
• All energy units converted to BTUs
• Annual 0.5% growth rate in Minnesota energy demand
• Nuclear is not replaced
• Wind turbine capacity doubles during the 25 year period
• Percentage of wind generation utilized – 37.5%
• Corn available for ethanol production – 35%
• Corn Yield Growth Rate – 2%
• Cellulosic ethanol technology becomes viable by 2008
• Available Biomass = 300 trillion BTUs
Enriching Minnesota’s Future through the Biosciences
Current, Unconstrained Base Case Assumptions
Ethanol Targets• 2000-2010 – 10%
• 2013-2020 – 20%
• 2020-2030 – 30%
Biodiesel Targets
• 2000 – 0%
• 2005 – 2%
• 2010 – 5%
• 2015-2030 - 20%
Solar Target – 0.1% by 2025
Hydrogen Target – 0%
Wind Targets (RPS)• 2010 – 11%• 2012 – 15%• 2016 – 21%• 2020 – 22.5%• 2025 – 25%
Biomass• Industrial – 20% by 2025• Commercial – 20% by 2025• Residential – 5% by 2025• Electricity – 5% by 2025
Enriching Minnesota’s Future through the Biosciences
Current, Unconstrained Base Case Assumptions
Time to Construct Plants:• Ethanol and Biodiesel – 3 years• Cellulosic Ethanol – 5 Years• Wind Lead Time – 2 Years• Solar – 1 Year• Hydrogen – 5 Years• Biomass:
» Commercial/Industrial – 2 Years» Residential Biomass – 1 Year» Electricity Biomass – 4 Years
Enriching Minnesota’s Future through the Biosciences
Base Case Results: Share of Renewables
Enriching Minnesota’s Future through the Biosciences
Base Case Results: Net Renewable Electricity Jobs
Enriching Minnesota’s Future through the Biosciences
Base Case Results: Wind Turbines
Enriching Minnesota’s Future through the Biosciences
Base Case Results: Transportation Jobs
Enriching Minnesota’s Future through the Biosciences
Base Case Results: Ethanol Jobs
Enriching Minnesota’s Future through the Biosciences
Base Case Results: CO2
Enriching Minnesota’s Future through the Biosciences
Base Case Results: CO2
Enriching Minnesota’s Future through the Biosciences
Conclusions
• With food and energy demand increasing, even with our most optimistic projections, we can’t keep up with need….• Doubtful that humans will respond in time with conservation methods to avert a crisis• Energy and food production and consumption will be distributed• We believe the agricultural community is our primary hope• Given the known constraints on workforce, construction materials, funding, feedstock distribution, etc., we now need discussions with our communities on how to resolve the constraints in order to achieve our goals for Minnesota• We believe that each community can benefit if they “think globally, but act locally”…… start with what can be done now.
• Systems dynamic modeling• • Dale’s four lessons to keep in mind:• • Benchmark• Look forward• Make informed decisions, prioritized• Track if the prioritized decisions are being implemented• • KEY AREAS for you to cover: • -Use tools like System Dynamics Modeling and Strategic Flexibility (it is the process and not just a
tool)• -Focus on what you know and don’t know and make investments where you know and
explore what you don’t know• • (There was a third point here that I missed but think it might be in the few lines above under
the “Dale cover” line.)