National Grid Partners Unveils Key Findings on Utility Innovation Priorities
National Grid Partners, the venture capital arm of one of the world’s largest utilities, has announced the results of its inaugural Utility Innovation Survey. The survey, which polled nearly 220 innovation leaders across US energy utilities, reveals significant insights into the sector’s priorities, challenges, and the pivotal role of regulation in fostering innovation.
Increasing Energy Capacity Amid Rising Demand
The survey indicates that more than half of utility leaders view increasing electric capacity as a critical priority, driven by the rising demand for electrification in sectors such as transportation and heating. However, many respondents acknowledged that the traditional, slow-moving culture of the utility industry has hindered the adoption of innovative technologies. Consequently, utilities have often overlooked the potential collaboration with startups that could offer the technological breakthroughs needed for the clean energy transition.
The Regulatory Influence on Innovation
One of the most striking findings of the survey is that nearly 72% of utility leaders claim that innovation within their organizations is primarily driven by regulation or compliance. Despite a strong governmental push towards decarbonisation, only 19% of respondents identified net zero goals as a top priority for their companies. In contrast, 29% of respondents highlighted compliance as their primary focus, with reliability being the second most common priority (20%).
Key Innovation Priorities for the Utility Industry
When asked to identify their key innovation priorities, respondents indicated that digital transformation and efficiency improvements were top of the list, followed by net zero objectives. The push for digitalisation is in line with the industry’s need to modernise its infrastructure and operations in order to meet the growing demand for electricity and accommodate the integration of renewable energy sources.
The Role of Startups and New Technologies
The survey findings were shared during the second annual NextGrid Alliance Summit in Boston, an event that convened over 200 senior leaders from the energy, technology, and startup sectors. The summit featured speakers such as Greg Jackson, CEO of Octopus Energy, and senior U.S. Department of Energy officials. A key takeaway from the summit was the importance of fostering collaboration between utilities and startups to accelerate innovation in the energy sector.
National Grid’s Steve Smith, Chief Strategy and Regulation Officer, stressed the importance of regulators in setting the framework that drives innovation. He stated, “Regulators have historically set the terms that drive innovation for our industry, but utilities must also think more boldly and act swiftly to keep up with market demands.”
The NextGrid Alliance, established in 2020, is a pioneering network that unites utilities and startups to accelerate the transition to clean energy. The group currently includes over 120 utilities worldwide and has successfully brokered over 100 partnerships between startups and utility members in the last 18 months.
Regulation as a Driver of Change
Survey respondents also pointed to several regulatory challenges that need to be addressed to enable innovation. Nearly half (48%) cited a lack of incentives and limited resources as major barriers, underlining the need for regulatory environments that support utility-driven innovation.
Emerging Technologies with Promise
The survey highlights several emerging technologies poised to drive the next wave of innovation in the utility sector. Carbon capture (76%), smart grid technology (69%), and mass electrification (69%) were identified as the technologies with the most potential to revolutionise the industry.
Smith emphasised that technologies such as electrification and artificial intelligence require robust and flexible power grids to meet the needs of a new era of energy consumption. With the Securities and Exchange Commission (SEC) introducing new disclosure laws, he highlighted the need for utilities to embrace innovative ways to scale solutions and meet regulatory requirements.
The Innovation Roadblock: ‘Pilot Hell’
Despite the identified potential for innovation, the survey also revealed that many utilities face significant barriers in scaling new technologies. A persistent challenge described as “pilot hell” – where new technologies progress slowly from testing to full deployment – was highlighted by respondents. On average, utilities reported a median timeframe of one year to transition from pilot to full implementation. Furthermore, only 24% of innovation projects on the drawing board ever make it to full-scale deployment.
A Call for Bold Action
The survey’s findings underscore a crucial point: the energy transition is underway, and utilities must act as leaders rather than bottlenecks in the process. Adam Richins, Senior Vice President and Chief Operating Officer of Idaho Power, summed up the sentiment, saying, “This survey data highlights the need for our industry to collaborate more with startups and embrace bold solutions to overcome our innovation challenges.”
