Adopting a risk-based approach to decarbonise with confidence

Regardless of industry, decarbonisation presents several challenges for your organisation, impacting multiple aspects of operations. Quite often, shifting low-carbon solutions requires significant upfront investment and demands more complicated feasibility studies. On top of that, policy makers and regulators are also still grappling the best way forward in this new market to ensure safety and reliability of the network. The lack of clarity, mandate or guidance towards clean energy solutions is creating uncertainty in this space.

Integrating renewable energy sources such as wind and solar into existing grid infrastructure presents technical and operational challenges. Organisations are cautious about the variability and unpredictability of renewable energy – as well as impacts on capacity and imbalances between supply and demand impacting their business. There’s also a general hesitancy to make bold moves towards the transition because of community and political sentiment that a low-carbon economy might threaten their status quo.

Taking a risk-based approach to decarbonisation involves identifying, assessing and managing the risks connected to transitioning to a low-carbon economy. Risk management looks to determine the impact of potential risks, with a view to better understand priority actions that could effectively mitigate. Depending on where you are on your decarbonisation journey, there may be specific areas where a more risk-based approach will help inform your decision-making, identify financial and digital obstacles, and capitalise on new market opportunities.

Organisations in the mining and production industries are navigating site closures, decommissioning and land rehabilitation for alternative uses. Experience has shown that operators are under-provisioning this process, particularly on the regulatory side. Using a collaborative approach, and mapping detailed pathways based on applied learnings results in operational and bottom-line benefits.

Forward-thinking oil and gas companies are considering biofuels as part of their energy transition strategy. Adopting a risk-based strategy addresses diversification of strategy to better balance long-term plans with short term energy needs. Other examples of where risk management can be effectively applied is in the transport industry, specifically the electrification of fleets or in the retail industry when making decisions around safety and reliability of renewable energy, smart grids and batteries.

Uncertainties related to rapidly evolving technologies and supply issues are concerning to investors in hydrogen and Battery Energy Storage Systems (BESS) projects. Assessing regulatory, environmental and market risks provide clarity in approaching policies, subsidies and compliance – and gives investors confidence in mitigating financial risks to strengthen returns.

GHD is working with the Australian Energy Council (AEC) to inform and guide large BESS installations in South Australia and Victoria. Although these grid scale applications of batteries provide carbon reduction advantages, several heating, thermal runway and other incidents have highlighted potential hazards and risks that need to be addressed. Outside of a publicly available high-level risk assessment, our team provided the AEC with guidance material that helps leaders make better decisions around site selection, facility orientation and configuration, safety, emergency planning and environmental offsite effects.

Implementing systematic and rigorous risk methodologies assist our clients achieve the following:

• Enhanced decision-making: Facilitates easier decision making on funding options for decarbonisation with well-prepared plans or business case solutions.

• Stakeholder engagement: Promotes open dialogue and collaboration with key stakeholders such as the wider client workforce and regulators leading to early buy-in for decarbonisation plans.

• Holistic understanding: Provides a comprehensive view of the challenges and opportunities for change across the business and market.

• Informed action: Enable informed and logical steps towards change using a risk-based approach to decarbonisation issues.