Sparks

Energy meets tech: a startup love-story

 By Jim McClelland

Not a classic celebrity couple, but energy and tech are definitely an item. The global tech community has clearly fallen in love with clean energy—not only for data centers and HQs, but also as a financial asset. Google had become the largest corporate buyer of renewable energy on the planet, and Apple even created a subsidiary to manage activities and sell-off excess generation from its new Cupertino campus. Now, though, their relationship appears to have moved to another level: energy and tech have a startup family…

In January this year, utilities and accelerators from across the globe launched a first-of-its-kind incubator consortium in San Francisco to help clean-energy startups refine and test innovation. Called Free Electrons, it is supported by program managers New Energy Nexus and swissnex San Francisco, plus accelerator partners, Powerhouse, Elemental Exelerator and Beta-i. Its real market muscle, though, lies in utilities.

Google Campus (Sebastian Bergmann, Wikimedia)

Its eight partner utilities are all leaders in clean energy transition: AusNet Services, Dubai Electricity and Water Authority (DEWA), Electricity Supply Board (ESB), Energias de Portugal (EDP), innogy, Origin Energy, Singapore Power (SP) and Tokyo Electric Power Company (TEPCO). Together, they boast a combined portfolio covering more than 40 countries and representing over $148 billion in net income, with access to over 73 million end-user customers. Energy startups from around the world were encouraged to apply. With only 12 to be selected, the bar was set high. To qualify for Free Electrons, applicants had to satisfy five key criteria: a pilot-ready working prototype; minimum sales growth potential of $ 1 billion; quality management; an innovative value proposition; plus, a credible business plan.

In testament to the dynamism of the energy sector, the rigorous requirements did nothing to stop over 450 startups applying from 51 countries. Now, with selection for 2017 complete, the first cohort of 12 finalists has been announced. Its diverse mix features innovators in grid operations and renewable energy, as well as electric vehicles and home energy management. Truly global, the cohort come from eight different countries: United States, Israel, Germany, Ireland, Portugal, Switzerland, India and the United Kingdom. For 2017, the program includes three international week-long modules, with the first in Silicon Valley itself, the second in Lisbon, Portugal, and the third, Dublin, Ireland. The benefits of participation are also tangible in monetary terms. The final 12 have already received a combined total of over $57 million in funding and almost $24 million in revenue. As a bonus, the startups will also compete for up to $200,000 in prize money.

Apple headquarters (Joe Ravi, Wikimedia)

For the partnering utilities putting up the money, the initiative offers a collaborative vehicle to simultaneously scale and de-risk investment. In times of market flux, future proofing is attractive, explains Hendrik Tiesinga, Program Manager of Free Electrons: “The sector is very aware of the changing utility landscape, hence the provocative name Free Electrons—a time in the near future where the marginal costs of electricity (driven by cheap renewables) will be close to zero. Utilities involved see Free Electrons as one way to prepare for this future, engage with innovative startups and reinvent themselves in the process.”

Though the individual utilities might operate in different geographies and markets, they are facing common challenges: deregulation, rapid adoption of renewables, the rise of the Internet of Things and digitization of energy. From a utilities perspective, tech represents both a threat and an opportunity. For the tech-based innovators, however, an energy sector in transition is pure opportunity. The two make for a perfect match.

SEE MORE: Where are the energy unicorns? by Chris Dalby

about the author
Jim McClelland
Editor + journalist for supplements to The Times + Sunday Times, also quoted in Guardian, Sunday Telegraph. I blog for such as GE + Gap. Active on social media. Specialisms include Sustainability.