Energy Transformation: 5 tips for Grid Edge Innovators
The Fourth Industrial Revolution is fundamentally transforming the global electricity supply chain and grid edge technologies are playing a disruptive role in enabling this rapid transition towards a cleaner and greener energy future.
Globally, the electricity grid is one of the largest supply chains with no capacity to store its product making grid edge technologies inherently valuable.
According to a recent report published by the World Economic Forum (WEF), adoption of grid edge technologies is estimated to generate $2.4 trillion in value over the next 10 years. This past week, I was in Silicon Valley attending the Grid Edge World Forum 2017, an annual event organized by GTM. At the forum, I had the opportunity to connect with key thought leaders and innovators, and exchange ideas for building next generation energy solutions for a greener sustainable grid. This three-day event was packed with a burst of energy and excitement around the future of grid edge.
Three major trends influencing grid edge innovation were highlighted during this event.
Electrification — The argument for enabling electrification is no longer centered on just environmental benefits but also aided by growing economic benefits. Convergence of EV innovation, smart charging, and optimizing grid utilization across both commercial/industrial and residential use are proving to be critical in both meeting decarbonization goals as well as capturing economic value.
Decentralization — Distributed generation combined with distributed storage along with demand response and energy efficiency are presenting some unique challenges as well as transformational opportunities for the grid. Utilities in particular are recognizing this transformation and are gearing to embrace the changing business landscape.
Digitalization — Digital technologies are leading a new era of the energy internet, enabling a dynamic and responsive grid infrastructure. Innovative smart grid technologies along with Connected Energy, IoT, and Blockchain enabled offerings are presenting new opportunities to create enormous value in the electricity supply chain.
Grid edge innovators need to be cognizant of these mega trends and the resulting transformational shifts which are creating new grid edge opportunities. Given the enormous need for adoption and expansion of grid edge technologies to solve new challenges, here are my five key tips for innovators, entrepreneurs, and intrapreneurs who are looking at launching new grid edge solutions:
1. Forge Key Partnerships — Partnerships can dramatically increase the adoption rates while also ensuring project success for newly designed energy solutions. One of the key partnership stories that stood out at the forum was between BMW and Pacific Gas & Electric (PG&E) working together to design a demand response program with an intent to demonstrate that Electric Vehicles Can Be a Valuable Grid Resource. They shared lessons from their successful implementation of a smart charging demand response program and also indicated that over 48% of customers enrolled in the program in response to an email from BMW. This partnership story reinforced the importance of strategic partnerships.
2. Engage Customers Early – While there are many hard problems to be solved in this space, identifying the right problems is crucial for the success of new programs. Customer engagement strategies do matter and are pivotal in launching successful solutions. During the course of the Grid Edge forum many companies highlighted the importance of early customer engagement and presented several success stories.
3. Rethink Business Models — Solutions for integrating new grid edge infrastructure along with changing principles of regulatory paradigms and customer experiences will need rethinking of traditional business models and revenue sources. Innovators need to build agility in adapting to this rapidly changing landscape as they launch their products and services. One such innovative company that is at the forefront of this change is Seattle based Drift.
4. Build for the Internet of Value — Integrating grid edge capabilities to manage energy from distributed resources while minimizing transactional costs could be a winning strategy for new solutions. Blockchain is an enabler technology for the energy internet that can aid the pace of grid edge innovation. Innovators should also keep an eye out for opportunities resulting from the rapid convergence of Connected Energy, IoT, and Blockchain.
5. Explore new Financing Strategies — Although grid edge innovators have traditionally relied on venture and angel funding for launching new technologies, there is an increasing availability of select funding support from both federal and state agencies for piloting grid edge innovation. There was a lot of enthusiasm amongst attendees on using initial coin offerings (ICOs) and many viewed them as a game changing paradigm for funding transformative grid edge ventures. I am personally intrigued by this emerging financing paradigm and would be happy to share my research and findings.
In a sector that is traditionally risk averse but also experiencing transformational disruption, innovators who want to move rapidly must be smart about building for the long term and innovating through strategic partnerships rather than thinking for the short term and going solo.
PS: My favorite moments from the event
2017 Grid Edge Awards were a worthy recognition of innovative companies that are leading the future of integrated, interactive, internet of the electric grid. Enervee, eMotorWerks, EVBox, Tendril, Whisker Labs, and many others were recognized for their innovative energy solutions and offerings in the grid edge space.
@TheEnergyGang’s live podcast on the opening session of the second day caught the pulse of the attendees and was the most talked about session at the event.
Photo credit: Grid Edge Taxonomy used with permission from GTM