The “green” message is clear: use less energy and leverage renewable energy sources. From the use less perspective, the concept seems simple, however population growth and income increase due to globalization are causing a swell in energy consumption, mainly in the form of coal, gas, and oil. The U.S. Energy Information Administration (EIA) published their Annual Energy Outlook 2011 looking at the state of energy by 2035 and projected a growing reliance on liquid fuels of 44% by 2030 – a trend that is not sustainable. The way we consume energy needs to change as the world is facing a major crossroad in consumption and supply. But the biggest opportunity for innovation may not just be in new sources and delivery optimization but in the way companies seek to source and collaborate on building those breakthrough innovations. This in fact, maybe the biggest opportunity that will shift the way we consume and source energy in the future.
With respect to renewable resources, alternative energy sources, such as wind, biomass and solar power continue to increase in funding and capacity, but in 2011 only made up 16% of the global energy consumption. The energy industry is indeed different from other industries in that constant innovation is highly necessary to keep up with overall growth and build a sustainable future. But how exactly are big energy companies innovating? Looking further, a few unique challenges are faced by big energy, and unique ways in which companies are refactoring their approach to innovation to meet growing demands.
Cost drives the energy market, as corporations and governments are constantly on the search for the cheapest form of energy, which may not necessarily be the most sustainable. Although there may be an ample supply of coal in the United States, the environmental cost of burning such fuels is quite high as toxins and greenhouse gases are emitted, while extraction is becoming increasingly expensive and difficult. Oil carries many of the same problems as coal with the added risk of environmental disasters, such as the infamous oil spill in the Gulf of Mexico.
With regards to the US, the country’s high demand for energy has brought about numerous challenges, such as dependence on foreign fuel in nations. When looking energy challenges in America, CAN, a non-profit research organization, stated, “without stable and predictable energy prices, business leaders, farmers, and especially large industries cannot effectively plan, hire, and remain competitive in a global market.” Dependence on energy affects all parts of the country, from government policy to small businesses.
The recent high-profile bankruptcy of Solyndra, a solar panel manufacturer that received a $535 million loan guarantee from the US Department of Energy, highlights some of the challenges with energy innovation. Innovating in the energy market is risky and may require millions of dollars towards a project or company that could easily fail.
New Approaches To Innovation
China Light and Power (CLP), a leading power company in the Asia-Pacific region, focuses their innovation initiatives on the foundation of the company, employees and corporate culture. Engages employees spread across continents, an innovation program called innov8, powered by Brightidea seeks to tap the intelligence of employees to find efficiencies and sustainability in day to day operations, but on a large strategic scale as well. Targeted campaigns encourage employee involvement with support from top management and creative branding and marketing for each campaign. “innov8 gives us the platform to connect, collaborate and innovate across geographic boundaries,” Joe Locandro, CIO of CLP has stated. One campaign, Earth Heroes, looked to its employees for ideas on eliminating waste that could be contributed to Hong Kong’s Energy Efficiency & Conservation program. It utilized Brightidea’s and spurred interest through a variety of marketing mediums including posters featuring the company’s top management as action heroes. CLP donated HK$5 to green initiatives in the Asia-Pacific region for every idea submitted. Another campaign, Sustainability Jukebox, expands the range of people involved by bringing employees from Hong Kong, Australia, and India to collaborate within a dual-language interface on various sustainability strategies for the organization. CLP has been recognized as a leader for its various efforts, and to learn more about their innovation program, a full case study is available here.
GE launched the largest open innovation challenges in history, Ecomagination, also powered by Brightidea, which sought ideas on new clean and energy efficient technologies with $200 million set aside for funding. The challenge was a huge success for both GE and the winning technologies, matches small startups with resources and expertise, innovative ideas got a platform to be heard and developed further. Over 50M in funds have already gone into effect to develop breakthrough energy solutions.
Some GE Ideas that have been funded are in further development:
- Xergy’s new green compressors can be used in household cooling devices like refrigerators and air conditioning systems to reduce energy consumption by 65%.
- Suntulit’s air conditioning control system uses data such as room temperature and occupants of a room at any given time to learn user needs and offer ways to reduce utility bills by as much as 30%.
The United States Government has also increased their commitment to cleaner energy by presenting challenges in search of new technologies and alternative forms of energy. The Energy and Agriculture Departments recently announced $12.2 million in awards for research projects that work towards making biofuel more cost-effective, as biofuel could reduce the country’s dependence on foreign oil and create new jobs. Another challenge, The L Prize, looked for an energy-saving lighting alternative to the common light bulb with Phillips winning the first $10 million prize with its energy efficient light bulb that could help save the US almost $4 billion a year on energy bills. The US Energy Department has also launched the Energy Innovation Portal, an online portal showcasing renewable energy technologies from the Department of Energy Labs, which are available for licensing and development at a fraction of the normal cost through their energy innovator challenge.
It is essential that we not only continue to invest in these technologies to reduce energy consumption and leverage renewable resources, but also that we do it in an efficient and cost effective manner. Creating pathways for smaller innovative start-ups to connect and secure funding, a la GE’s Ecomagination, as well as home-grown initiatives to spur innovation at all levels of the organization like China Light & Power, have the power to transform the way we innovate our energy solutions. With the right strategic visibility, executive support, and proper tools to facilitate targeted goals, organizations can and must continue to lower the risk associated with embracing an open approach to sourcing and developing sustainable energy solutions.
image credits: http://challenge.ecomagination.com/
James Pasmantier is an innovation management expert with over 12 years of experience and the Vice President of Professional Services at Brightidea. He oversees the success of all client innovation campaigns, in particular focusing on best practices and large-scale rollouts.