Innovation and the UK power network

A recent report from SmartGrid GB argued that the UK must move quickly to secure its leading position on smart grid technology or risk losing out on a £5bn export market and 10,000 skilled jobs. It warned that while the UK is currently well-placed to lead the development of smart grid technologies, a lack of ambition could see it lose its position to overseas competitors, such as the US, China, and South Korea.

The US now has a thriving smart grid sector. In the UK, on the other hand, we have a smart meter roll out which is yet to formally begin and only a tentative proposition for a smart grid. In order to make the most of our new methods of energy generation, and to allow for the extra capacity that will be required for future demand, for example, electrification of heating and vehicles, investment in the smart grid is a necessary requirement. Combine this incentive for new technologies with the abundance of small companies coming up with pioneering products in the UK and innovation in the power network should be easy. So why is it so hard?

From small to large

Ultimately there is a disconnect as small companies work very differently from the way large ones, such as DNOs and utilities, do. Long purchasing cycles and the fact that it can take months to test a new product can have devastating repercussions for smaller players. Communication can also be an obstacle. It can be difficult for small companies to access larger enterprises with increased layers of bureaucracy, and this makes it tricky for them to find out what the pain points in the power network are and what changes should be made. Even if they have the perfect solution to a problem, they may not know who would value the solution.

Large companies also tend to buy small companies if they think they have an interesting technology, rather than investing and supporting what’s already there. Acquisition is not always the best outcome and can stifle innovation. In some cases, once an acquisition takes place the development of new, innovative technology can stop.

This is due, in part, to the conservative nature of the energy industry. Unless technology is proven, DNOs and utilities are reluctant to invest in it, and new technology is hard to prove, especially for small companies with a limited budget. Utilities are not focused on innovation, they are far more concerned with asset management. They see innovation as a way to firefight problems as they arise, rather than as a way to improve customer experience and increase efficiency.

Innovation Britain

There are measures in place to encourage innovation, for example the Innovation Funding Incentive (IFI) scheme and the Low Carbon Network Fund (LCNF), which is designed to help address the mis-match between timescales. The LCNF allows DNOs to recover costs of investing in innovation from customers, as they have to deliver customer benefit, for example reducing outages.

Such schemes are undoubtedly positive for the industry, but we need to look at what we can learn from them and how we can improve even further. There are an abundance of small British companies focused on innovation, just look at the recently announced winners of the Queen’s Award for Enterprise. The UK must provide better access to funding, support and entry points to these small companies who have valuable and commercially viable innovations.

A more collaborative approach:

To realise a truly smart grid, DNOs and other large organisations in the sector need to ensure that they are tapping into innovation and expertise by employing a more collaborative approach and working with specialist partners. One example of this could be testing new products jointly to speed up the process and make it more cost efficient.

It’s not about technology alone, communication is an essential tenet of good innovation. Bringing together great minds who understand the problem that needs to be solved and matching these with innovators who may be able to come up with a solution, will result in a product of offering that meets market needs. Too often these conversations take place at a high level, when in fact getting the engineers on both sides to collaborate would produce an end product that is better targeted at genuine pain points. A useful comparison can be made with the software industry, where it is common for developers to get together for conferences and coding events such as Google’s Summer of Code. It is this type of collaboration that enables innovation to thrive. The rail and pharmaceuticals industries also have innovation forums to help develop cooperation between small and large companies in their respective sectors. For example P&G operate ‘Connect & Develop’ which is about connecting with SMEs for idea generation and innovation implementation. GSK also operate an Open Innovation network.

There is now an Energy Innovation Centre which may help to facilitate communication between smaller innovators and the utilities and network operators, with the aim of improving the power networks.

The UK has the home-grown engineering skills to deliver a truly smart grid, but to avoid being left behind by countries like the US and China it’s crucial that we create an environment where innovation can thrive.