Scenario Planning and Energy Futures
Scenario planning entails preparing for a variety of potential futures in an uncertain world, rather than relying on a single prediction. In contrast to forecasting, which employs historical data to predict a single “most probable” outcome, scenario planning investigates hypothetical scenarios under varying assumptions. It requires generating a variety of plausible future narratives—optimistic, challenging, and disruptive—and evaluating strategies to deal with or mitigate them.
The value of scenario planning is the liberation of decision-makers from their blind areas. When crises or unplanned situations occur, forecasting frequently fails; scenario planning, on the other hand, embraces uncertainty and assists leaders in developing resilient, adaptable strategies.
A Case Study of Shell’s Scenario Legacy
Scenario planning was invented by Herman Kahn, who developed the methodology for policy planning and decision-making in the 1950s, and was popularized for use in business strategy by Pierre Wack at Royal Dutch Shell in the 1970s.
Shell is widely recognized for its demonstration of the effectiveness of scenario planning. In the early 1970s, its strategists were bold enough to consider a scenario in which crude supplies were disrupted. Shell was more adequately equipped than its competitors during the 1973 oil embargo, safeguarding its assets and saving billions.
Shell has elevated scenarios to the forefront of its strategy since that time. They have, in the course of their business, examined the changing geopolitics, new energy technologies, and climate policies. For instance, their 2008 “Scramble” and “Blueprints” scenarios underscored three unpalatable realities: increasing demand, limited supply, and environmental stress, which encouraged the implementation of early climate action.
The Significance of Scenario Planning in the Energy Sector
Fuel prices, politics, technology, and climate are all unpredictable factors that influence energy systems. Scenario planning is indispensable because it evaluates strategies against unexpected events.
Bringing it home, scenarios assist families and small businesses in evaluating options such as installing solar panels or utilizing generators—an approach that is also beneficial for both individuals and communities. Asking, “What would happen if the cost of electricity doubles?” or “What if outages worsen?” can spark proactive planning.
Scenarios assist organizations in managing risk and can enable them to achieve a balance between investments in renewables and gas by imagining both fossil-heavy futures and rapid decarbonization.
Lessons from the Withdrawal of U.S. Aid: Anticipating Shocks
The abrupt withdrawal of U.S. climate and energy support under the Trump administration is a striking example of why scenarios are important. For instance, support for South Africa’s Just Energy Transition Partnership, as well as billions in aid and commitments, were abruptly cancelled, halting many African initiatives.
Although such disruptions may appear unexpected, scenario planning is designed to anticipate them. A well-designed scenario set could have posed the question, “What if donor nations withdraw climate finance?” This would have inspired contingency strategies, such as developing local financing mechanisms, expanding partnerships, or modularizing programs to accommodate funding reductions. The severity of the impact would have been mitigated had African planners adequately internalized those warnings.
The Path to Energy Security
African energy futures are uncertain; however, scenario planning provides a method of navigating them. Individuals, businesses, and governments can make decisions that are resilient, flexible, and opportunity-oriented by methodically envisioning a variety of futures, including those related to pricing, technology availability, and government policy.
Africa’s population is growing fast, and about 600 million people still lack electricity. Energy security cannot be left to chance or single-line forecasts. It requires intentional, scenario-driven planning that anticipates shocks and builds resilience.
Scenario planning is not about predicting the future; it is about preparing for many possible futures. It gives leaders a radar to detect risks early and a playbook to respond when shocks hit—whether they are droughts reducing hydropower, volatile oil prices, or abrupt donor withdrawals.
The lesson is clear: to light up Africa, energy leaders must think differently. They must embed scenario planning into project design, national strategies, and regional cooperation. By doing so, they can reduce vulnerability, seize opportunities, and create pathways that ensure reliable, affordable, and sustainable energy for all.
