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Working in harmony to propel the energy transition forward

To reach net zero, we need new technologies and solutions that work in harmony with each other to help customers and power distribution system operators to flourish in a greener, electrified world. Strong commercial partnerships with startups can help established players fill innovation gaps and solve the energy industry’s most pressing challenges.

The EU recently raised its binding renewable target for 2030 to a minimum of 42.5 percent, up from the previous 32 percent, and included industry in the Renewable Energy Directive, which is set to lead to a massive scaling-up and speeding-up of renewable energy adoption across power generation, industry, buildings, and transport.

As more renewables enter the grid, the electrical distribution infrastructure is undergoing a massive – and rapid – transformation. We are no longer working with a centralized power plant generating electricity 24-7. As a result, we need to think about the network in a different way. To have any chance of meeting national net zero targets and enabling the transition to decentralized power generation, the energy sector needs to evolve and adopt new technologies and solutions, which will work in harmony with each other, to help customers and system operators to flourish in a greener, electrified world.

But no company ‒ no matter its size, the scale of its commercial infrastructure, or its R&D capacity ‒ can claim to have all the right ideas at the right time. Building strong commercial partnerships with young agile startups is proving to be one of the most effective ways for larger, more established players to plug their inevitable research and innovation gaps ‒ and propel the energy transition forward.

The three Ds: decarbonization, digitalization and decentralization

Andrea Rota is global business developer at ABB’s Distribution Solutions division. As he explains, there are ‘three Ds’ that are shaping the energy transition and guiding the company’s search for commercial partners: decarbonization, digitalization and decentralization.

“The grid is becoming increasingly complex. Whereas previously we had a central plant delivering power, it is now becoming more decentralized,” he explains. “Solar panels mean everybody can be a power producer. At the same time, we have higher electricity consumption and more elements linking up to the grid, such as electric vehicles and heat pumps. More renewables are entering the picture, and this is causing more complexity for the utility providers managing the grid.”

Digitalization is the only way to effectively manage this increasing complexity. By implementing sophisticated software tools, grid operators can get a clearer picture of where energy is coming from and going to and how the various technological elements that make up their assets are performing, allowing them to make better decisions on how to manage and maintain them and ensuring greener energy is transported to homes and businesses as smoothly as possible.

Decarbonization is the overriding direction of travel for industry, and the force guiding the other two Ds. “It touches every aspect of businesses involved in the energy sector: the decarbonization of the product portfolio in terms of components used; the decarbonization of operations in factories and vehicle fleets; and the development of products that can support partners in reducing their own CO2 emissions,” Rota explains.    

“In the short term, customers are worried about energy prices, which means many are reducing their investments in new assets. According to our recent Energy Insights survey, over a third (38 percent) of businesses around the world have or plan to reduce technology investment, while a third (33 percent) expect to cut spending on infrastructure. But their sustainability goals are still important; 34 percent have already increased investment specifically focusing on improving their energy efficiency. If they invest in digital products to improve energy efficiency and reduce the downtime of their assets, they should be able to reduce their energy bills too.”

Betting big on open innovation

With today’s energy landscape evolving at pace, established organizations must look beyond the bounds of their own R&D departments, and even outside the energy industry, for ideas and expertise that can help them address customer needs holistically.      

“This is why ABB decided to launch a Startup Challenge in 2020,” Rota says. “The most exciting entrants are invited to undertake a 10-day virtual challenge to develop their products with the help of the company’s innovation growth hub, SynerLeap, and guidance from Microsoft. Winners receive a collaboration project with ABB worth $30,000 and operational support to convert their prototypes into a Minimum Viable Product (MVP) within six months.”

Swedish AI startup Viking Analytics won ABB’s first Startup Challenge. “Operators across the energy sector can benefit enormously from digital software that can analyze data coming from devices like sensors and provide useful insights,” Rota says. “Viking Analytics has an AI engine that is able to identify anomalies and trends in large datasets. By working together, we applied their engine to the electrical domain, allowing operators to predict faults in electrical equipment and figure out the remaining useful life of their assets. Solutions like this make it easier for operators to prevent costly failures, plan maintenance efficiently and maximize uptime.”

The most recent winner of the Distribution Solutions category of the 2023 Startup Challenge, Danish startup Hybrid Greentech, is also seeking to solve one of the energy sector’s most pressing challenges: how to increase the revenue and performance of energy storage installations.

“According to research company BloombergNEF (BNEF), the global energy storage market will grow 15-fold by 2030,” Rota says. “Hybrid Greentech’s proposed new control logic hardware and software architecture for ABB’s Battery Energy Storage System (BESS) could create a fully AI-driven virtual power plant, improving the return on investment in batteries by 10 years or more.”

To further strengthen our innovation pipeline, ABB is also partnering and investing outside the Startup Challenge process. A great example of this is our collaboration with Zaphiro Technologies, a young Swiss company that offers grid monitoring solutions utilizing phasor measurement technology.

As the integration of distributed energy resources in the medium voltage network increases, this in turn increases the complexity of the distribution grid. As a result, it is becoming more and more important for customers to continuously monitor their assets remotely so that they can take the right decision and prevent faults. Zaphiro’s solution does just that, providing accurate visibility of the grid status, real-time detection, and precise localization of any type of grid faults. Using phasor measurements allows Zaphiro to build an effective technology with intelligence requiring only a limited number of measuring points in key nodes of the network, enabling fast deployment, easy scalability, and most importantly low total cost of ownership for high-performing solutions.

Trust, freedom and a solid foundation: the three keys to partnership success

When seeking out startups to work with or invest in, the best solutions come from products that are complementary to an organization’s existing product offering and which either fill a technology or a geographical gap. “We are constantly scouting for startups that can bring additional value to our offering and help us address the three main trends we have identified: decarbonization, digitalization or decentralization,” Rota confirms.

In Viking Analytics’ case, the AI engine is complementary to the ABB Ability Energy and Asset Manager, which provides full remote visibility of asset and electrical-system health status. The integration of AI technology adds advanced analytics so businesses can predict and prevent faults in their electrical equipment.

But making a success of a commercial partnership takes much more than complementary technological expertise. “In our experience, trust is the key ingredient to open innovation,” Rota says. “If you treat startups as true partners, open innovation will be more organic, with mutual successes that benefit both parties, the environment, and ultimately society. At the same time, if startups embrace the opportunity to work with larger organizations it will give them scope to bring their solutions to market more quickly, with both parties sharing the risk.”

It’s also critical to give startups the freedom and means to test ideas and prototypes quickly to speed up proof of concept and the identification of viable investments, as long as this is combined with a solid foundation, including a shared vision, governance and specific KPIs.

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

Energy insecurity coupled with a global focus on decentralizing 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.

In response, our focus on innovation should switch from “what can we innovate for our customers?” to “what do our customers need and who can help us deliver it?” As we continue to listen to our customers and solve their core challenges, we see open innovation as another powerful way, in addition to in-house development, to integrate insight and the latest startup technologies available on the market. By embracing this approach, we will truly combine the best of both and work in harmony to accelerate the energy transition.

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