National Grid Partners’ inaugural Utility Innovation Survey also reveals more progress is needed to build bridges between startups and energy industry
MENLO PARK, Calif., Oct. 15, 2024 /PRNewswire/ — National Grid Partners, the corporate venture capital and innovation arm of one of the world’s largest utilities, today announced the results of its first-ever Utility Innovation Survey. The poll of nearly 220 industry innovation leaders explored the top priorities at US energy utilities, and more than half said it’s critical to boost electric capacity given skyrocketing demand to electrify transportation and heat. But respondents also admitted the industry’s traditionally slow-moving culture has led them to deprioritize innovation and shy away from working with startups that can offer technological breakthroughs.
Notably, nearly three quarters (72%) of utility leaders surveyed say innovation at their organization is primarily driven by regulation or compliance.
- Despite a heavy focus from the industry and from government, only 19% of utility innovation leaders named net zero goals as a top priority at their companies.
- Nearly three in 10 respondents named compliance as their top priority; this was followed by reliability, which 20% of respondents named first.
- When asked about their innovation priorities, respondents listed net zero third, behind digital transformation of their operations and boosting efficiency.
The survey findings were announced at the second annual NextGrid Alliance Summit in Boston. The event brought together more than 200 senior leaders from the energy, technology, startup and government sectors. Featured speakers included Greg Jackson, CEO of Octopus Energy; Silver Spring Networks co-founder Eric Dresselhuys; and a trio of senior leaders from the U.S. Department of Energy: Chief Commercialization Officer Vanessa Chan; Jeff Marootian, Principal Deputy Assistant Secretary for Energy Efficiency & Renewable Energy; and solar energy pioneer Jigar Shah, who leads the department’s $40 billion Loan Programs Office to help renewable technologies scale.
“Regulators historically have set the terms that drive innovation for our industry—for instance, by rewarding operators to build new infrastructure but not to take risks and deploy new software-based solutions,” said Steve Smith, Chief Strategy and Regulation Officer at National Grid. “At the same time, it’s incumbent upon utilities to think and act more boldly, without waiting for third parties to take the lead. That’s precisely why we convened the NextGrid Alliance: To accelerate the development and deployment of breakthrough technology at the speed and scale the market demands.”
The Alliance is a first-of-its-kind network that brings together utilities and startups to address the clean energy transition. Launched in 2020, the group now comprises more than 120 utilities worldwide, including Edison International, NextEra Energy and Enel. In the past 18 months alone, it has brokered more than 100 introductions between startups and member utilities.
Survey respondents indicated a number of ways regulation can shift utility priorities.
- Regulatory environment matters: Nearly half (48%) saw insufficient incentives and scarce resources as the top challenges to innovation – so regulatory environments need to support and encourage utility innovation efforts.
- Show me the numbers: Nearly two-thirds of those surveyed (66%) agree upcoming disclosure laws will change how they do business.
- Innovation priorities: Respondents identified carbon capture (76%), smartgrid (69%) and mass electrification (69%) as emerging technologies with the most promise.
“Electrification and artificial intelligence require robust power grids for a new era of energy consumption. And with the Securities and Exchange Commission pushing to require companies to disclose climate-related information, we must embrace new ways to deploy and scale innovation,” said Smith, who spent a decade as a top utility regulator in the U.K.
Smith also noted that survey respondents who are active in the Alliance said they are far more likely to partner with startups for innovation. Yet overall, just 26% of those surveyed said they identify fresh ways of thinking and operating from startups. Instead, utilities are primarily looking inward for innovation, with more than four in five (82%) saying their own employees are the top source of ideas.
And even when utilities do identify innovations, “pilot hell”—whereby new technologies scale slowly—is persistent.
- The median time for surveyed utilities to move from piloting projects to rolling them out is about a year;
- Just one in four innovation projects on the drawing board ever gets implemented (24%).
“The energy transition is in full swing, and utilities can lead the way or be a bottleneck,” said Adam Richins, Senior Vice President and Chief Operating Officer of Idaho Power. He is a past NextGrid Alliance working group co-chair and was a panelist at this year’s Summit on the topic of reducing barriers to innovation.
“This survey data underscores that our industry can do more to partner with startups to solve our innovation challenges,” Richins said. “We are in this together.”
National Grid Partners conducted the research using an online survey prepared by Method Research in late winter 2024. It was distributed by RepData and National Grid Partners to 219 directors, vice presidents and other executives involved in innovation at US energy utilities.
About National Grid Partners
National Grid Partners is the venture investment and innovation arm of National Grid plc., one of the world’s largest investor-owned energy companies. National Grid Partners invests for strategic and financial impact across four pillars: Future Electric Networks; Decarbonizing Gas; Customer First; and Efficiency Through Innovation. By providing corporate venture capital, business development counsel and direct integration with National Grid’s innovation team, National Grid Partners is accelerating the energy transition and helping innovators reach critical scale faster. We also convene the NextGrid Alliance (www.ngalliance.energy), an innovation network of senior executives from more than 120 worldwide utility companies. Headquartered in Silicon Valley, National Grid Partners has offices in Boston, London, and New York. Visit ngpartners.com or follow us on Twitter (@ngpartners_) and LinkedIn.
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