When I started my career in energy a decade ago, I expected to spend a lot of my time fighting with utilities to create the clean energy future I dreamed of. The distance between utilities and the cleantech community just seemed enormous, and impossible to bridge.
If you would have told me that in 2017, I would be working arm-in-arm with utilities on direct investments and massive innovation projects, I would have said you’re crazy… but to my shock and delight, that is exactly where I find myself.
Last January I joined Elemental Excelerator, and immediately plugged into a group of forward-thinking utilities like Hawaiian Electric that we were collaborating with to deploy demonstration projects in the cleantech space. One year later, we’ve added three new utility partners (TEPCO, Vector, and First Philippines Holdings), and our team at Elemental Excelerator has been selected to facilitate a new utility accelerator program called Free Electrons, which will bring together 8 utilities and 12 startups in Silicon Valley, Europe and Singapore.
Free Electrons is a truly global consortium, spanning from Dublin to Melbourne. The utilities include Singapore Power, Origin, AusNet, TEPCO, ESB, innogy, EDP and DEWA, collectively operate in 25 countries, with 73 million customers and over $148 billion in combined net income. The Program Managers are CalCEF and Swissnex, and we will be joined by local accelerator partners Powerhouse (in San Francisco) and Beta-i (in Lisbon).
Elemental Excelerator will be supporting the due diligence process to competitively select 12 energy startups for the program, and will be facilitating workshops at each module to fast-track the development of pilot projects, aimed at generating meaningful data and customer proof points. I am personally excited to watch 12 yet-to-be-chosen startups as they explore opportunities to scale internationally with some of the biggest names in the business.
With the addition of Free Electrons to our existing cohort of Global Partners, we are developing an even broader and more informed view into the trends that will shape the utility of the future.
So, what have we learned thus far, working with 53 startups and funding 28 large-scale technology deployments? Generally, we find that ‘the utility of the future’ is more about the formation of people around new technology, rather than the technology itself. We have compiled our notes and insights from conversations with utilities around the world about their innovation journey (and you will notice that there is no mention of buzz words like Smart Grid or Blockchain):
1. Get outside the building.
At Elemental Excelerator, we teach Steve Blank’s customer discovery methodology which encourages entrepreneurs to get out of the building and talk to customers. The same goes for utilities — we are seeing a significant trend where international utilities are planting a small team in Silicon Valley. This has two benefits: increasing deal flow through a physical presence in the Bay Area, and getting utility executives outside of their typical environment.
2. Create a venture team… no matter how small.
We are seeing an uptick in the number of utilities forming venture teams that are reporting directly to the Board. This enables faster decision making and the ability for top brass to see trends and technologies before they are brought in by third parties. In addition, making direct investments allows utilities to participate in the upside of rapid change taking place in the industry, without fundamentally changing their business structure.
3. Make investments in cultural exchange.
Many utilities have expressed the challenges of cultural change. One of our leading utility partners has come up with a new strategy where they place a colleague within each of their investments for 3–6 months as a cultural emersion. This is a win-win because the startup gets subsidized support and the utility rep is able to bring a new perspective back to their organization. Another creative example to enable cultural change is Vector’s HR video that is aimed at inspiring employees and recruiting new talent from outside of the energy industry. Bringing in diverse talent is an impactful way to drive cultural change.
4. Follow the trends in deregulated markets.
There is nothing like competition to motivate change. From where we sit, utilities in deregulated markets are under more pressure to retain customers and are therefore more motivated to consider new technologies. Utilities in regulated markets are closely tracking deregulated markets to see what the future might look like… and ultimately avoid getting Uber’d.
5. The world is changing, collaborate with other utilities to get in front of it.
Due to the constraints of delivering electrons, utilities are almost entirely local businesses serving a defined geographic region. This allows utilities to collaborate, evaluate new technologies together, and share lessons learned in a way that large organizations in financial services or pharmaceuticals could never do. Under the Elemental Excelerator collaboration playbook, we are bringing utilities together to enable peer-to-peer learning with the ultimate goal of bridging the gap between disruptors and incumbents.
This is just a snapshot. I will continue to share insights throughout the year, particularly as the Free Electrons program launches May 1st at Swissnex San Francisco.
The best part of my job is talking to entrepreneurs in energy, water, transportation, agriculture, and cybersecurity that are creating the technologies and business models that will shape our future. Will that be you?