Editorial: Start-up, collaborate and listen

Utilities seek to disrupt themselves by collaborating with start-ups to accelerate their rate of digitalisation.
Published: Fri 03 May 2019

A tsunami of digital technology start-ups is chasing opportunities for private and public funding to develop smart energy solutions while utilities are opening their doors to collaborative innovation projects like never before.  Successful ventures will bite off a piece of an enormous and growing pie. Spending on digital transformation in the global economy overall could reach nearly $2 trillion by 2022, with utilities share at 7.2%, according to the International Data Corporation. 

In the past week alone the US announced a joint initiative with Israel to provide up to $1 million per renewable or energy efficiency project, New York said it will provide $280 million for energy storage projects, and the UK has set aside £30 million for clean, cheap local energy systems. Together with ongoing research and development programmes such as the EU’s Horizon 2020 package, EPRI’s work in the US and many others, it is hard to keep up with the frenetic activity around the world as utilities seek to reap the benefits of digitalisation.  

Gone are the days when the capital-intensive nature of the energy industry precluded anyone but large vertically integrated companies from providing electricity supply services. For digital energy services the barrier to entry is low, as customers can be offered a direct plug-in device, app, or online platform with no need for energy asset ownership.  

But venture capital investors have been ‘blown out of the water’ before, losing billions on energy start-ups from 2008 to 2011, says Stephen Comello head of the Energy Business Innovations focus area at Stanford Graduate School of Business. Utilities are not as agile as other industries, and start-ups offering new revenue streams will have to survive very long gestation periods as internal risk management and regulatory procedures go through lengthy approvals.  

 

The possible, and beyond

Cultures are changing however, and most large utilities have innovation teams now and many have their own partnership collaborations or are involved in consortia with innovative start-ups. National Grid (NG) says it has set up venture capital and innovation firm NG Partners in Silicon Valley California in order to ‘disrupt itself’ and go ‘beyond the edge of possible’.  

Engerati speaks with blockchain company Electron CEO Jo-Jo Hubbard this week about digitalisation and ongoing projects, such as a collaboration with network operators around curtailment and congestion relief which she expects to go live this year, and a consortium of traders to develop an exchange in which multiple products are stacked together.  

Coming soon we are talking to utility innovation accelerator consortium Free Electrons, which is taking 15 start-ups to pilot phase starting this month. You can also find Engerati at Innogrid2020+ in Brussels where we will be reporting on all the latest results from many European grid-edge flexibility projects, and early next month we will broadcast some live interviews from CIRED in Madrid to get a really deep dive into the detail of the technical challenges involved in integrating more renewables into the grid.  

Academic institutions are also becoming strong supporters of start-ups, such as the European Institute of Innovation and Technology’s innovation engine InnoEnergy. A storage-solution competition saw two start-ups winning €100,000 each last month, Switzerland’s Battrion with a lithium ion battery technology and Germany’s instagrid with a portable electrical power supply. InnoEnergy will hold an event in Paris in October called The Business Booster, bringing together start-ups and energy industry stakeholders from over 40 countries.

Utilities are waking up to the realisation that digital technologies will transform their business from front to back office and they need to collaborate with more nimble start-ups to remain competitive. 

“Now is the right time to move to action,” EDP Distribuição director for European affairs Luis Cunha tells Engerati. “This is the time when the transformation happens within companies. It's the time we need to deliver the message and to really implement it.”