When you ask people the companies they think of when you say ‘energy industry’, most likely they will come up with oil majors such as Shell and BP, or utility giants like Essent and Eneco. However, the past few years change is upon us.
Local energy initiatives seem to appear out of nowhere throughout the whole country and innovative concepts are entering the market with the pace of a true explosion! For this reason, I could not have been less surprised by the latest announcement of InnovationQuarter that they will invest in the YES!Delft-based startup, SolarMonkey, emphasizing the current situation in the energy sector.
The question then arises: “Will all of these exciting startups disrupt the entire energy landscape?” No, they will definitely not. However, a small selection of them most certainly will and the Dutch startup climate is perfect for them to grow fast, with the support they need. Of course StartupDelta, the initiative from the national government to stimulate entrepreneurship, is putting innovation back on the agenda as a top priority, but true game-changers often come from incubators or accelerators, like AirBnB and Dropbox that originate from Y Combinator. Accelerators traditionally provide training, funding, networking and events for a defined period of time, providing startups with a place to gradually expand their business. In the Netherlands we could take Rockstart and YES!Delft as examples. These accelerators have been ranked among the top in Europe and surprisingly or not, lots of energy related startups have their origin here!
To keep myself informed and connected to the startup ecosystem, and the energy sector as a whole, I have visited many events and gatherings lately. One particular event to mention, that combined my interest in startups and the energy sector, was the Energy Convention in Groningen, an international platform that I believed was able to keep me informed about the current state of the industry.
How to lose half a trillion dollars?
Laura Cozzi from the International Energy Agency presented the latest World Energy Outlook that teaches us there is a growing demand for renewable energy. However, merely focusing on renewable energy sources, as most utilities have been doing, will definitely not be enough in the decades to come. This became even more clear when she raised the question: how to lose half a trillion dollars within a couple of years?
At first a ridiculous question, so it seemed, but the figures clearly showed that energy utilities in Europe lost about this amount of net value over the past years. No one claims this is all due to new entrants that are changing the energy landscape, as we are all aware of the effect Fukushima had on energy policies, especially in Europe. However, to some extend even the energy giants have to admit; startups are changing the sector, and yes this change is here to stay for quite some time.
Hearing from multiple energy experts about the trends in the sector, definitely strengthens my believe that the energy industry has no choice but to innovate at an ever increasing pace and more needs to be done than solely investing in the obvious ‘alternative energy sources’, like wind, solar and bio. So far, large utilities have been slow in innovating and adopting to the changing circumstances, but there seems to be light at the end of the tunnel!
Startups to watch in the energy sector
Talking to one of the largest utilities in the Netherlands convinced me that the sector is really trying to change. In-house innovations, cooperation with startups and investing in promising technologies are no longer an exception, and for a good reason so it seems! To clarify this statement, I have made a small selection of startups to watch in the coming period.
Kicking off with a startup I have visited, PowerWindow. They have developed a technology with the potential to disrupt the solar energy market, if not the entire electricity market. Their technology combines the functionality of windows with the functionality of solar panels. For the record , these windows are clear, colorless and transparent, making them an interesting substitute for solar panels and thus a potential disruptor to the utility giants. Recently I have been in close contact with these inspiring entrepreneurs and subsequently accompanied them to the Energy Convention. With a combination of the right team, true passion and a promising technology, it was no surprise to me that they won the startup pitch competition of Generate ’15, well-deserved!
Another startup that is most certainly affecting the landscape is SustainerHomes. They believe to have designed the home of the future that brings independence, sustainability and above all no compromise to the living comfort we are so used to nowadays. Combining solar panels, wind turbines, rainwater collection and filtration, and by applying the cradle2cradle principle, SustainerHomes definitely is one of the most interesting startups I have seen in the past year.
The last startup to highlight is Masar. Masar is disrupting the Middle East & North African utility sector with their mobile solar power installations that can be plugged into the grid on unutilized land of property owners by means of long-term rental agreements. The mobility of their technology also makes it an excellent solution to the challenge of supplying refugee camps with electricity, one of the most pressing issues the world is facing these days.
It is without a doubt that all above described startups influence the current landscape in their own way. However, as this is only the tip of the iceberg of the many disruptive minds that are out there, the energy giants really need to stay on top of their game, as David is entering Goliaths landscape and certainly has the intention to change the game!
What do you think of the current development in the energy sector? And how do you see the influence of startups on the energy giants? Please share your views!
Author: Mart Beune, management consultant KPMG
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