As part of the Innovator Series, we were honored to host Wade Bitaraf, the Founder of the Energy and Sustainability initiative at Plug and Play for a talk on digitalization, energy and start-ups. Plug and Play is an early stage venture capital firm that also acts as a “matchmaker” between large firms and start-ups. The talk focused on how big utilities and energy companies engage with startups to drive innovation in their sectors. Plug and Play has worked with the giants in the oil and gas as well as the electric utility industry and Bitaraf highlighted some key trends in how these industries are approaching innovation.
The energy and utility sector are decades old and have had a tendency to operate in a certain established risk-averse and slow-moving pattern. Bitaraf noted though, that for these companies the entire “competitive landscape is changing.” One driver of this change in the industry is migrating towards providing more customer centric services. The heavy use of data analysis needed to improve customer service has led to a perception within the industry that any company that has access to vast amounts of user data, for example, companies like Amazon, Facebook and Google, can be a competitor. This, combined with the trends of increasing decarbonization of energy and deregulation in markets such as Japan, are causing companies to adopt a more collaborative approach than ever before. “Collaboration is now mission critical,” (Bitaraf).
This collaboration is showing up in a couple of industry trends. One is for more partnerships and alliances than before, something that Bitaraf said was particularly evident in the automotive industry. The other is shifting expectations towards external innovation. Bitaraf said that the fact that half of companies previously in the Fortune 500 have collapsed due to external innovation hasn’t escaped the notice of the energy industry. Many of them now recognize that the “startup ecosystem is like a crystal ball into the future,” (Bitaraf).
As energy and utility majors are opening up towards collaboration with startups, many startups are also becoming interested in the energy market. Since quite a few of these startups are focused on digital technologies, this helps the majors with another problem, namely attracting technical talent. “Who would you rather work for, Google or PG&E?” (Bitaraf).
With the recognition of the importance of collaborating with startups, majors are rethinking their approach to match the business speed that startups need to survive. One example is an Austrian utility that created an innovation arm specifically set up to try out new technology without worrying about whether or not the tech will be successful – as long as the technology doesn’t affect their primary business. Bitaraf said that other companies should come up with similar measures. Companies aren’t the only ones changing, Bitaraf also noted that regulators outside of the U.S. are also changing regulations to allow for more innovation.
While there are still challenges to be overcome, Bitaraf’s talk showed that the energy industry is moving to embrace startups as one way to jumpstart collaborative innovation. As the world faces the challenge of providing enough energy to keep up with growth while decarbonizing, we will need all the innovation we can bring to bear.
The Innovator Series, brought to you by Intertrust Technologies, serves the local Bay Area tech community. These thought-provoking conversations inspire the future of tech while empowering our collective community to engage with one another in an open forum.