Fantastic innovations and where to find them

Energy security coupled with a global focus on decentralising the grid are profoundly shifting the way we generate, distribute and consume energy. Demand is growing for resilient, efficient, and sustainable power supplies, and operators are in desperate need of technologies and innovation that can help them deliver it.

Responsibility for bringing to market the right solutions often falls at the feet of large technology companies. They have the commercial infrastructure and R&D capability needed to deliver the technologies required by those maintaining and improving grid reliability.

That said, despite the size of a business, or the skill of the people within it, no company can claim to have all the right ideas at the right time. That's why it is so important for established businesses and start-ups to work together on concepts and ideas that could propel electrification and the energy transition forward.

Over the years, a notable number of large organisations have developed 'venture-clienting' programmes that harness the expertise of young, agile start-ups from both within and outside the energy sector. They understand the importance of open innovation and have the investment funds to bring even the most ambitious ideas to fruition.

Unfortunately, 'big company culture' can sometimes clash with the less structured nature of a start-up, incentives can be misaligned, and complex organisational structures can sometimes result in a lack of focus, making it difficult to get things done.

Start-ups need an open and fast-paced environment to thrive; they don't want to be restricted by the bureaucracy and lengthy decision-making often associated with larger organisations. This cultural difference has been the undoing of many established technology providers, causing them to retreat away from open innovation and the fresh thinking that can be found in the start-up arena.

It is critical that we as an industry overcome these barriers to innovation and create an ecosystem which nurtures the collaboration of new talent, and established skills. At ABB, based on experience with our venture capital unit and our Startup Challenge competition, we have learnt some valuable lessons that other companies considering venture-clienting might want to follow to improve their offering and embrace open innovation and true collaboration.

Innovation over investment

In our experience, trust is the key ingredient to open innovation. If you treat start-ups as true partners, open innovation will be more organic, with mutual successes that benefit both parties, as well as the environment and, ultimately, society. At the same time, if start-ups embrace the opportunity to work with larger organisations it will give them scope to bring their solutions to market more quickly, with both parties sharing the risk.

Look beyond your core offering

Today's energy landscape is complex and changing at pace. It needs a dynamic approach in which organisations are open and receptive to innovation that comes from unexpected sources. It is important to remember that no single player can address all customer needs; by looking outside of your core offering, you can create a partnership and a solutions portfolio that addresses customer needs holistically. This works for both the venture-clienting team and the start-up – working collaboratively will create stronger results and help bring innovations to the market at pace.

Identify the right need and planning resources

One of the most important lessons we have learned is that we need to identify clear customer needs and specify them so that the team formed by the start-up and the organisation are collaborating to solve a specific issue with common and shared goals. In this way, it is easier to plan and allocate the required resources on both sides.

An important part of this is giving the start-up the freedom and means to test ideas and prototypes quickly, thereby speeding up proof of concept and the identification of viable investments.

Resources should also include sharing a vision, governance, and specific KPIs (key performance indicators) to create a solid foundation for a new working relationship when there are clear disparities in an operational capacity and culture.

Creating supporting documentation that acts as a framework to outline processes for functions, such as R&D and procurement, can align incentives and head off some challenges at the pass, making the early stages of each new partnership as productive and well-managed as possible.

In 2020, we launched our Startup Challenge with a focus on finding the best tech for solving the world's energy challenges. Each year, the most exciting entrants are invited to undertake a 10-day virtual challenge to develop their products with the help of our growth hub, SynerLeap, and guidance from Challenge Partner Microsoft. The winners receive $30,000 and operational support to convert their prototypes into a minimum viable product (MVP) within six months.

Now in its fourth year, the Startup Challenge has supported 14 innovations with the potential to electrify the energy distribution sector in a safe, smart and sustainable way. Some concepts were proved unviable, others received investment, and the ones capable of solving challenges faced by our customers have since received further support, such as our recent investment in Viking Analytics.

Viking Analytics was a winner in the first ABB Electrification Startup Challenge and has since developed software and dashboards for detecting anomalies in a data series generated by electrical equipment sensors. After three successful years of collaboration, we joined a strong syndicate to make a minority-stake investment in the Swedish start-up.

With customer demand for predictive maintenance tools increasing, Viking Analytics has created an analytics engine that automatically detects unseen or pre-failure operational conditions for electrical equipment. This makes it easier for operators to prevent costly failures, plan maintenance efficiently and maximise uptime.

During the current energy climate, being able to predict issues before they arise, and prevent costly downtime, is an essential solution for power generators and grid operators. This collaboration really showcases what can be achieved through open innovation and a carefully managed start-up investment scheme.

The 2023 Electrification Startup Challenge winner, Hybrid Greentech ApS is helping to solve one of the key challenges for the energy transition. Founded in 2018 by a Danish entrepreneur, it has the conviction that global demand for energy storage will increase significantly. Their proposed new control logic software for our battery energy storage system could create a fully AI-driven virtual power plant. Providing near real-time market access with country-agnostic ancillary services and split-second response times, the solution could improve the return on investment in batteries by 10 years or more.

To truly embrace open innovation, and harness the agile minds of start-ups, large organisations must embrace a cultural shift that allows genuine partnership with businesses of all sizes, with a range of working styles.

By doing so, the focus on innovation can switch from "what can we innovate for our customers?" to "what do our customers need and who can help us deliver it?" As we listen to our customers and strive to provide the best possible solutions, we see open innovation as another powerful way, in addition to our in-house R&D, to collect insight and the latest technologies available on the market from start-ups. By embracing this approach, we truly combine the best of both.

Andrea Rota is business developer at ABB Distribution Solutions.