The energy internet will cause as much disruption as the internet caused over the last 20 years. The question is, what can you do now to prepare for it?
That was a question on the minds of many energy, finance, and technology industry leaders at the Bloomberg New Energy Finance (BNEF) Summit.
At the summit, two takeaways emerged that I want to talk about in this post. The first: There are no winners or losers yet, and new opportunities already exist for companies ready to innovate. The second: No single company can navigate the energy transition alone — we must all collaborate to succeed.
1. The energy internet is already generating new opportunities
It is no longer a question of whether modular, decentralized energy technology will be deployed; it’s a question of how quickly it will happen. And for early adopters of new energy technologies, there are clear opportunities to create new business models. A recent survey of the C-level showed that 68 percent of respondents expect their industry to be significantly disrupted by new innovations brought by technology in the next three years.
The “Rethinking the Energy Internet” BNEF session showed that the energy industry is at the beginning of a digital transformation similar to one that revolutionized the IT and telecommunication industries. Because energy generation is increasingly decentralized rather than reliant on a central source, a single node going down is no longer a major interruption — the same as the internet. Disruptions are happening fast — the consumer internet went from being a curiosity to a staple of everyday life in less than a decade. This transformation will lead to a series of disruptions in the energy industry — and opportunities.
The three primary dimensions to this decentralized energy network already exist, and are already being used to transform the new energy landscape:
– Distributed generation via microgrids
– Decentralized flexibility via electricity storage systems
– Decentralized data and control, via AI and machine learning
Machine learning is a particularly potent opportunity in the energy internet, as it unlocks opportunities across the energy value chain. It can locate cracks in wind turbines, optimize solar generation, find cybersecurity anomalies, and much more. But many companies are only in the early stages of harnessing machine learning.
2. Innovation and adaptation through collaboration
Companies and utilities are trying to determine just how to navigate this disruption. I participated on a panel on digital transformation, and the consensus among all speakers was that innovation through collaboration will be key to success in the new energy future.
In any uncertain market, it’s wise to hedge your position with small bets and partnerships. That’s why you see unlikely bonds forming between start-ups and utilities, between industrial giants and tech upstarts. And necessity breeds innovation; with a business-as-usual approach, many companies will simply get disrupted out of existence — digital transformation is a primary reason why half the Fortune 500 companies from 2000 are no longer on that list.
Our strategy: Innovation at the Edge
How does this collaboration look in practice? It could look something like our Innovation at the Edge program. This program places many small bets at the edge of our business to solve new customer problems.
We look for promising ideas and people and provide them with the capital, expertise, and access they need to disrupt our industry. We incubate companies, form joint alliances with large companies, and foster a culture of co-innovation. We believe these collaborative efforts will strengthen our business, but also move the industry toward a decarbonized and digitized model.
Why we created the Innovation at the Edge program
My advice for companies
Don’t try to go it alone. We’ve passed the dial-up era of the energy internet, but there is more disruption on the way and you will need ideas from outside your company. Digitize now. Every company needs a digital strategy — in 10 or 15 years we won’t even ask the question. It would be like not having a CFO — you won’t go very far. Ultimately, the companies that form partnerships, embrace digital transformation, and innovate together will be the companies who will thrive on disruption.