Meet the Challenges of Transformation, the Open Innovation Map for Energy Startups
Today, many people are under the impression that the energy industry is conservative and slow-moving. However, Plug and Play China understands that the industry is undergoing a massive transformation driven by the rapid decentralization of energy production, digitalization of energy systems, high operating margin pressure, and the emergence of new business models. A large number of energy corporations have taken advantage of this transformation by actively engaging startup companies through open innovation and breaking away from their traditionally conservative reputation.
▎Innovative Trends in Energy Industry
The concept of open innovation has evolved drastically since the term was coined in 2003, grown from merely a theoretical discussion in academia to a common practice among industry players. Today many large energy corporations have established their own open innovation arms to source new and innovative business models from outside companies to complement their own traditional business models.
We have noticed that there are three trends in Corporation Open Innovation:
- Besides traditional “input innovation” (introducing external resources into companies), we increasingly see “output innovation” (utilization of company internal resources for external use)
- The depth and the scope of collaboration between corporations’ internal departments and external partners have increased dramatically
- The practice of open innovation has proliferated beyond traditional corporations into governments, investment management firms, universities, and scientific research institutions.
Since its entry into China in 2018, Plug and Play China’s Energy and Sustainability vertical has played an instrumental role in promoting and further expanding the practice of open innovation through coordinating innovation resources across industry participants and facilitating energy corporates and startups in building a win-win collaboration model.
In the face of drastic transformation in the energy industry, Plug and Play China Energy and Sustainability vertical has gathered representatives from many world-renowned energy companies and nearly 30 technology startups during its accelerator Selection Day to share industry insights and discuss future collaborations.
▎Open Innovation Exploration of Energy Companies
At the Selection Day event, guests from State Grid, Envision Group, Shuangliang Group, Shell, ExxonMobil, Engie and other energy leaders shared their experiences in exploring open innovation and made insightful suggestions to startups in the industry.
Highlights from Speakers :
What will be the most profitable thing in future world of energy? Is it just to provide electricity, or to serve the power companies, or to capture something even scarcer than electricity?
The essence of renewable energy transformation is technology. It will not only reduce costs but also fragmentize the entire energy system. This will be a major battleground in our future.
When the price of energy becomes very low or even free, the real pain point in the future is the cost of coordinating energy. In other words, it is all about how to provide effective coordination and flexible technology and service for the energy system.
Corporate Reverse Pitches
“Ubiquitous Internet of things” is the focus of State Grid. We hope to introduce advanced technology including big data, mobile Internet of things, edge computing and others; bringing together the links in the power industry, increase operation efficiency, launch new modules, and serve users better.
This is a huge systematic project, but it is also a very broad and profound strategic concept, where embracing the concept of open innovation is essential. State Grid focuses not only on open innovation in the energy sector, but also on “cross-cutting innovation”.
At Plug and Play, we not only have access to the resources from the Energy and Sustainability program, but also to the resources from Smart City, Internet of things, Fintech and other programs. We work with verticals that are intersecting with energy through hosting competitions, direct investment, incubation etc.
“From equipment manufacturing to service” is an important direction of our strategic transformation. How to use better and more effective solutions to improve efficiency and solve the pain points that cannot be solved by conventional human labor. This requires leveraging new innovations in digital technology.
Our innovation focuses on innovation based on the customer’s application scenario and providing solutions to customers. Technology adds intelligence and generates wisdom. This is our understanding of innovation.
When it comes with working with startups, we prioritize creating values for our customer’s needs. We always believe that good innovation projects need to effectively integrate Information Technology, Operation Technology and Communication Technology. This is not simple software development, but requires a lot of “know-how” in the field.
We hope that startup companies can provide us with complementary capabilities, provide solutions for customers, and strengthen our core capabilities.
From today’s discussion, decarbonization, digitalization, and decentralization are beyond doubt the future of the energy industry.
Many complex issues and unique application scenarios are involved in decarbonization, and we believe that only embracing innovation with an open mind can better realize this vision.
There are many ways for us to cooperate with startups. We will provide a lot of experience and contact in the industry or traditional energy field, share internal resources with start-ups, and discuss win-win topics in an open system.
Everyone can see trends, but timing and pacing are just as important as those trends. Sometimes acting too early can leads to a failure to innovate.
In the case of Shell, we have quick responses to the trends. However, we tried three times on the trend of new energy transformation before finally entering this field in 2016, which now we consider to be the right time. The transformation has a process. We are not too anxious, instead, we need to make a judgement on timing.
The funnel of open innovation is well-known. The funnel of innovation is not completely closed, and the elements of innovation flow in both directions. Through our corporate R&D, good innovations from start-up companies and universities can be absorbed at any time. At the same time, however, not all projects will eventually become Shell’s solutions. In the process, many technologies can be exported to external enterprises in the form of technology licensing and business separation.
At ExxonMobil, most of our past innovation was internal. Now we have open innovation, because the world has changed dramatically in the last 30 years, in terms of information, talents, and money. Open innovation has become an important factor in our research and development.
▎Innovative transformation of traditional industries
“’Open mind’ was a key word that was mentioned many times during today’s event” Peter Xu, managing partner and CEO of Plug and Play China, was deeply impressed by the innovative culture of these energy companies at the event.
“Today we see these excellent enterprises accepting new things with an open mind on the platform of Plug and Play,” he said. “whether they are state-owned enterprises, private enterprises or foreign enterprises, they are all transforming into technology companies.”
Under such a transformation, external scientific and technological innovation forces can not only help corporations solve the pain points, but also help startups find the pain points with different perspectives and promote cross cooperation.
The Energy and Sustainability program of Plug and Play China divides energy innovation into two dimensions: technology and application scenarios. The horizontal axis is the different links of the industrial chain: from production, transmission to consumption, storage and environmental protection. The vertical axis is the cutting-edge technologies, including artificial intelligence, big data, blockchain, drones, robots, Internet of things, etc.. These technologies can be combined with different application scenarios to empower each one of the industrial chains above.
Selected by experts from corporations, some startups will enter the first batch of the Energy and Sustainability Acceleration Program of Plug and Play China. In the future, they will make clear intention of cooperation through in-depth communication with corporate partners, so as to achieve cooperation and implementation of technologies.