When a flash of inspiration struck Archimedes, he was famously on his own, in the bath. Legend has it that the ancient Greek scientist ran naked down the street shouting “Eureka!” or “I have found it” (the “it” in this case being an insight that led to Archimedes principle, a leap forward in physics). Some two thousand years later, the best eureka moments in green technologies, while perhaps not taking place in the bath, are happening in small, often young organisations, a world away from the huge research and development (R&D) departments run by established global corporations.
There has been a shift in the way multinationals develop new technologies, explains Luciano Tommasi, head of external startup activities at Italian energy company Enel. “Companies are now looking outside their own four walls for the solutions that can help give them an edge in the market place.”
The model today is this: allow the creativity of startups and other small, specialist businesses to flourish and drive forward green technology, enabled by both the financial backing of venture capitalists, and the technological support of a major industrial partner, such as Enel.
“We want to create an ecosystem where different resources work together in order to create something better, providing our customers with new services and products, and helping to develop the new technology that can support our operations,” says Tommasi.
The idea of open innovation, where companies look to outsiders for inspiration and know-how, is now at the core of Enel’s business model. Alongside open innovation runs the idea of “disruptive” innovation, a buzzword that refers to technology that shakes up old markets and also creates entirely new markets.
This is especially relevant to the energy sector as it moves away from conventional methods and sources of energy production to renewable power sources such as wind and solar, and to technology to manage electricity more efficiently, such as smart grids and smart meters.
Last year, Enel’s chief executive Francesco Starace set up an innovation committee, which he chairs himself. It’s mission is simple: to identify the startups that have the ideas that Enel needs.
And there’s a lot of choice, as this is something of a golden era for the startup. In the UK alone over 550,000 new companies were registered last year, an annual rise of some 60,000. The Kaufmann index of entrepreneurial activity in the US suggests the proportion of people starting a business there each month rose from 280 per 100,000 adults in 2014 to 310 per 100,000 adults this year, which it says represents around half a million new firms each month. Figures globally are harder to come by – but one recent article puts the number of startups worldwide at 100 million a year. Entrepreneurial hotspots are developing in a diverse range of countries from Jordan to Kenya.
One of the key reasons for this growth is the availability of what Josh Lerner of Harvard Business School, calls the “technologies of startup production”. From online payment software, to virtual servers and services which help startups to test new products, these mean that businesses that once took months to launch can now be up and running in days, often at little cost.
There is more expert support too, much of it provided by startup accelerators or incubators, from the privately run, such as Techstars or Y Combinator, to those managed by governments or large corporations. Dubbed the business schools of the 21st century, these might provide a workspace, some seed capital, advice and access to a network of contacts and mentors, although it’s no easy ride with a tough selection process that only picks those with the potential to succeed.
Perhaps because of this, the importance of this new breed of businesses shouldn’t be underestimated. Writing in the Global Startup Ecosystem Ranking 2015 report, entrepreneur Steve Blank argues:“Companies will need to adapt a new strategy that embraces disruption, sustaining innovation, and execution…[and] it is the strategy lessons from startups that will light the way for the massive restructuring of all corporate structures by the middle of this century.”
Of course many big firms will still retain their own R&D departments – but the way they work is going to change. Enel’s own R&D department, which employs over 200 researchers and has a multi-million euro budget, still has a crucial role, not only in fine tuning and modifying existing technologies (such as turbines and grid management systems), but also in collaborating with startups in the joint development of new technologies aimed at increasing value for the stakeholders. Such an approach allows Enel to reach and manage a wider range of innovative projects.
Enel continues to work with major corporations too, especially when it needs a fully developed, off-the-shelf solution. “But if we need a product that isn’t on the market we prefer to develop this product ourselves with the startup because they are more flexible, faster. They are better at disruptive technologies than us,” says Tommasi.
Rather than investing in the startups itself, Enel operates as an industrial partner, explains Tommasi. It leaves the finance to specialist venture capital organisations – but does provide know-how, facilities and an international network to support start-ups, while also facilitating partnerships with venture capital funds, universities, research centres and incubators.
It’s a win-win situation, says Tommasi, with the startup getting both the finance it needs and an industrial partner with access to a huge global market and state-of-the-art research and testing facilities that the startup can use. In return, Enel gains new products and services at competitive prices and, while never asking for exclusivity, it does take the opportunity to become a “first adopter” of the new technology.
Smart-I is one of Enel’s startup partners. It has developed a range of sensors and “SmartEye” cameras that can vary street lighting, respond to the time of day, traffic, weather conditions and the number of cars and pedestrians, so save energy.
The system is already being used in municipalities in Italy, Chile and Brazil and has been shown to improve efficient energy management and lower street lighting energy costs by up to 49%.
Mauro Di Giamberardino, the Rome-based company’s founder and chief executive says that big players need small, flexible firms like his to keep in touch with the latest market trends: “Big corporations are required to actively look at new business models and technologies; when it doesn’t happen they risk misunderstanding new business trends and therefore missing massive market opportunities.
“Startups have a crucial role in the innovation strategy of corporations because they challenge the status quo and bring not only innovation but also the entrepreneurial attitude.”
Enel is currently working with 25 startups worldwide, many of which have been invited to take part in INCENSe – a European Commission/Enel partnership to provide funding and support to green tech innovators. Enel also supports the European Commission’s startup Europe partnership, which is helping the best startups to scale up by partnering with bigger firms.
In South America, the company recently launched Energy Start Brazil, a programme to promote Brazilian startups and entrepreneurs who develop new sustainable energy technologies.
Back In Europe, Italian business i-EM (Intelligence in Energy Management) has teamed up with Enel Green Power and Enel Distribution to develop systems that can accurately forecast how much energy renewable sources – such as, say, wind or solar, which are affected by the weather – will produce, making use of big data and artificial intelligence models.
The firm’s chief executive, Dr Emilio Simeone believes open innovation is the best way to address new challenges, particularly those facing traditional energy companies managing renewable rather than conventional energy plants. “It’s a winning strategy for the disruptive innovative solutions of tomorrow,” he says.
I-EM, he says “can bring new technologies and methodologies…that a few years ago were not considered of interest for the energy business”. These include satellite imaging, AI models and big data analytics that supply Enel with information, predictions and analysis about the impact of renewables on its smart grid, as well helping to optimise renewable energy plant performance.
Simeone can also see wider benefits from this open approach as his company links up with Enel’s global network of partners. “Networking with other international companies that cooperate with the Enel Group is opening many business opportunities and stimulating creativity,” he says.
Content on this page is paid for and produced to a brief agreed with Enel, sponsor of the energy access hub on the Guardian Global Development Professionals Network.
