HOUSTON — Renewable startups and innovators are finding new ways to make their mark on an electricity industry that can be resistant to change.
The space is due for a transformation in the coming years: smart grids, distributed generation and a steady advance of renewable power sources are all on the way. But the changes often contrast with the norms of the industry they’ll be transforming, said executives at an IHS CERAWeek panel Thursday. The electricity industry is tightly regulated, and its fundamental goal of keeping the lights on means executives and customers value reliability, not necessarily fast paced change.
“It’s not easy to innovate in electricity,” said Kristian Bodek, IHS’ director of North American power, who chaired the panel. “Large risk averse incumbents, long lead times, capital intensity, scale, and a highly regulated structure pose enormous barriers to entry.”
Still, change is possible, and utilities are among the ones funding new ideas, said Hans Kobler, a managing partner at energy efficient investment fund Energy Impact Partners.
“By definition utilities are not (venture capitalists). You cannot go out and say I’m going to try 10 different things to increase efficiency,” he said. “This time feels different. Utilities … are making a big move to change on many fronts, carefully.”
Others on the panel offered examples of how change can be achieved.
Taunt Mohan, now the CTO of Enlighted, founded his business after working late into the night in an office building that was flooded with light.
“The amount of waste was astounding,” he said.
His company now retools existing buildings with sensors to align things such as lighting and air conditioning with the building’s use. He estimates that he can save customers as much as 65 percent from lighting bills by installing better lights and using them less often.
The product he was offering businesses didn’t catch on immediately. Few major corporations were willing to spend thousands upfront on energy efficiency, he said. It took a fresh approach and an innovative financing option to gain traction.
Today, Mohan’s company essentially offers companies the chance to buy a lower electricity rate, then makes the upgrades to get them to that level. The structure means his company bears the risk of the efficiency upgrades.
“The industry partners are actually coming to us,” he said.
Throop Wilder, the CEO of lithium ion battery company 24M, offers a similar anecdote about how his company approached raising funds. 24M is developing a lower cost, more efficiently manufactured battery.
In a recent round of fundraising, the company swore off investors that have traditionally been associated with similar technologies in favor of asking companies closer to the product’s actual production — manufacturers in China — to step in.
“In our Series B we didn’t even go to venture capitalist at all,” he said.