Entrepreneurs innovate where energy companies are slow to tread

As part of EY Entrepreneur Of The Year™ 2019, 5-9 June, we will bring together entrepreneurs to talk about tomorrow’s energy customer and whether they present an opportunity, or pose a threat.

This has never been more important, because the energy transition is hastening. Technology is rapidly changing the energy system and consumer behaviors with it. And energy companies, though inching forward, are often out of synch with the speed at which technology evolves.

A lot of the changes in the energy sector are caused by players that aren’t traditional energy companies. These agile new market entrants, often led by entrepreneurs, are bursting with ideas and innovations to accelerate the decarbonization agenda. As a result, new value pools are forming in areas as diverse as energy management, electric car charging, and home automation.

These disruptive entrepreneurs have everything to play for. Legacy investments, customer bases and assets do not weigh them down. They think creatively about solutions to the big challenges of the day. 

‘Getting’ the customer

Whether an old-timer or new upstart, every energy player is competing for a share of the customer wallet. But innovation is altering customers’ behaviors and buying habits, meaning energy companies have to re-evaluate who their future customer really is.

In the B2B market, a growing number of businesses are choosing clean-energy power purchase agreements (PPAs) or investing in self-generation options on economic or carbon neutrality grounds.

In the residential market, more and more electricity consumers are becoming producers themselves (“prosumers”), thereby radically changing the traditional model of energy supply. For example, Lithuanian WePower has built a decentralized marketplace that enables renewable energy prosumers to transact electricity among each other without a third party. The company also directly connects customers with green energy producers so they can contract solar electricity at competitive rates with full transparency through digitally-enabled PPAs. 

If energy customers’ demands are different, then energy companies’ business models have to change too. And that means products, services and platforms that are the energy equivalents of what customers have become accustomed to in other sectors.

Entrepreneurs are especially good at ‘getting’ the customer view. They understand how to do things differently, better, cheaper or faster. They do their research and go to market with new technologies that will resonate with their intended buyer.

Where entrepreneurs lead

Innovation is pushing the boundaries of possibility. The three most impactful areas, as EY sees it, are:

• Solar, wind and batteries – Falling technology costs make renewables, in some areas, cheaper than conventional generation. Batteries will determine whether renewables achieve their predicted market share, or not. And it is here that innovation is most prolific. Entrepreneurs are working on different battery chemistries, rate of charge, energy density and price in a bid to deliver a break-through. For example, US company Solid Power produces solid-state batteries, which provide a major improvement in energy density, safety and reliability compared to the best Li-ion cells available. And Australian startup Redflow manufactures Zcell zinc-bromine flow batteries – these batteries have a lifespan of 10 years, during which they can be discharged to 100% without capacity loss.
• Grid optimization – Growth in distributed energy resources warrants better ways to control and shift energy peaks and to automate and monitor two-way flows across networks. We see new entrants, like German Envelio, which has developed an Intelligent Grid Platform, a modular software assistance system that supports distribution grid operators in digitizing and automating grid planning and grid operation processes.
• Consumer control – To give customers more personalized experiences, tailored products and control over their energy usage, Australian startup Redback Technologies has developed an all-in-one solar and storage solution for households and small businesses. Redback’s Smart Hybrid System uses machine learning to predict the power generation of solar panels, as well as the amount of energy a customer will use. And Wattio, a Spanish startup, offers a smart home system comprised of a series of wireless devices that collect data through smartphone apps. With this system, users can monitor the energy use of different home appliances and switch them off remotely.

Collaborative endeavor

Acquisitions, partnerships and collaborative arrangements see start-ups and scale-ups work side by side with energy companies, auto companies, tech giants and platform providers to conceive and deliver niche capabilities. Big companies bring reputation and finance; entrepreneurs provide creativity and technology sophistication.

Value is returned to customers, who continue to break with current energy norms, play an increasingly active role in delivery and supply, and share, trade and profit from the energy they generate. These customers, in turn, put pressure on governments to explore energy alternatives, experiment with technologies and cut emissions.

The environment will be the biggest winner in a cleaner, more efficient energy system, powered by electricity and enabled by smart-thinking entrepreneurs who dare to do things differently.

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Joining me at EY Entrepreneur Of The Year™ 2019 to further discuss the role of entrepreneurs in energy are:

• Rebecca MacDonald, founder and executive chair of Just Energy Group Inc., a leading retail energy provider, serving 4.1 million residential customers in the US, Canada, the UK, Germany, Ireland and Japan.
• Dr. Christina Lampe-Önnerud, CEO and founder of Cadenza Innovation, a lithium-ion battery start-up.

At EY Entrepreneur Of The Year™ 2019, 5-9 June, EY will bring together the world’s most exceptional mold-breaking entrepreneurs to celebrate the bold sense of purpose that drives them to do things differently and transform our world in the most unexpected ways. Join the conversation by following #WEOY, #BetterQuestions and by visiting www.ey.com/weoy.