There are “48 projects and startup companies working on advanced energy technologies, worth over $1.3 billion, all over the U.S. and Canada” and that is just in the realm of nuclear energy, and just in North America. Add to that startups working on biofuels, solar and wind energy - as well as completely new and different approaches to energy such as gravity, kinetic energy, microgrids and optimization using big data - and global energy startups begin to number in the several hundreds. Last month the New York Times asked the question: “How can innovation in the energy business be pushed into overdrive?” We take a look at five large companies that are investing in energy startups to innovate and do just that.
Making the Future, One GravityLight At a Time
What do UK-based biobean and Shanghai-based Motioneco, solar startups Insolar from Brazil and UK energy startups Pavegen and GravityLight have in common? They are all part of Shell’s Make the Future project. Shell Oil, a US-based subsidiary of Royal Dutch Shell Plc, is making a push to promote clean energy, and AdAge reported last month that Shell has acquired over 28 million views on their recent #makethefuture video - beating pop culture giants Microsoft, Victoria’s Secret and Apple. Why all the interest? Besides the great company branding with a cool cast of six Globally popular musicians, this video features those five aforementioned startups who are using creativity and innovation to solve the world’s energy problems. Brian Muriuki, Kenya’s Country Manager for Shell was asked by Nigeria’s The Eagle Online why Shell is investing in alternative power. Muriuki said that in Kenya: “77 percent of people are living without access to electricity”; Shells #makethefuture project has brought 3,000 GravityLights – a replacement for Kerosene lamps - to Kenya so far. Another big reason Shell is investing in alternative power? Financial. Bloomberg News reported that Royal Dutch Shell Plc’s Chief Financial Officer Simon Henry said: “We’ve long been of the opinion that demand will peak before supply…And that peak may be somewhere between 5 and 15 years hence, and it will be driven by efficiency and substitution, more than offsetting the new demand for transport.” Early this year Shell invested $1.7 billion into their “New Energies” division to invest in “renewables and low-carbon power.”
Microgrids Using Blockchain Technology: Cleaner, Cheaper & More Reliable?
Late last month Siemens AG announced a partnership with New York startup LO3 to “jointly develop microgrids that enable local energy trading based on blockchain technology.” This collaboration is part of Siemen’s next47 start-up accelerator which is working to evolve a “decentralized energy system market”. Why microgrids? Recent power losses during major storms in the New York and New Jersey areas drew attention to the fact that places with microgrids were still operating, while everyone else was in a blackout. In fact microgrids are not only more reliable, Pew Charitable Trust research says that microgrids are also cleaner and cheaper. SiliconRepublic reports that Siemen’s has invested $1 billion in it’s next47 project, which focuses on "disruptive" ideas.
GE’s $9 Billion Dollar Start-Up
General Electric (GE) calls their renewable energy division a “$9 billion startup”. They have committed over $15 billion in clean technology and plan to spend another $10 billion by 2020. GE has named their growth strategy “Ecomagination” and Global Executive Director of that program Deb Frodl told The Drum that the $15 billion they invested in clean tech research has come back to the company in $232 billion in revenue, quite a return on investment. Besides being their own “startup” GE powers the Boston-based start-up Current, which Boston Business Journal describes as integrating: “GE's LED, solar, energy storage and electric vehicle businesses with a software that can deliver and identify the most affordable, efficient energy solutions required by customers.” Current's website says they are the: “first of (their) kind, to bring system-level capabilities together.” GE also has their own Venture capital arm called GE Ventures where they’ve invested in “virtual power plant” company Sonnen, named one of the “World’s Smartest Companies” by MIT Tech Review.
Looking for Growth Drivers in the Long Term
Total S.A. operates a Venture Fund called Total Energy Ventures which has made investment in 20 startups since being established in 2008. Similarly to the way big pharma uses biotech for R&D, Total looks for innovations that may deliver: “major improvements in our operations, in terms of safety, effectiveness and environmental footprint and new solutions or professional fields that might in the long term become growth drivers for the Group.” Some of the companies Total has funded include California-based Autogrid Systems for the development of: “applications for predicting, controlling and optimizing distributed energy resources (DERs) via the Energy Internet”; French IoT firm Sigfox; US distributed wind company United Wind; and Acquion Energy, named by MIT Tech Review one of the “World’s 50 Smartest Companies”.
“It’s actually quite an exciting world for an energy company”
CDP (formerly Carbon Disclosure Project), whose site explains that they are the only “global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts” just announced that Statoil was #1 in the world in their report on “climate preparedness”. Their ratings are based on: “fossil fuel asset mix, capital flexibility, climate governance and strategy, emissions and resource management, and water resilience.” Statoil possesses a venture arm called Statoil Energy Ventures which announced early this year that they plan on investing $200 million in green startups over the next 4-7 years. Their first investment was with United Wind (also backed by Total Energy Ventures). Irene Rummelhoff, Executive VP for New Energy Solutions interviewed in a podcast by Sarah Ladislaw for the Center for Strategic and International Studies, had this to say about their mission: “At Statoil we’re taking a stand on climate change. We don’t debate it, we recognize it’s there, evidence is overwhelming.”
Rummelhoff continues: “It’s actually quite an exciting world for an energy company. Energy demand is growing, we think up until 2040 energy demand is going to grow by 40%. But alot of that’s going to happen within the electricity sector. Both because I think part of the transportation sector is moving over to the power sector, and not the least because we’re going to help people move out of poverty. It’s a great mission, it’s a great place to be. We see that renewables are taking a big chunk of that growth in the power sector. We are a company that likes growth opportunities and we want to be a part of it. We have a two-fold mandate: One is to grow a profitable renewable business and we’re also going to look for lower carbon options for our existing core business.”
Know of any other large energy company investing in startups, or cool startups we should know about? Tweet to us at @KNect365Energy! We also invite you to join the discussion at our KNect Energy LinkedIn group.