RWE-owned Innogy has joined forces with leading global equity crowdfunding platform OurCrowd in a bid to discover new start-ups that can provide innovative products and services in the energy market. Power Engineering International caught up with Innogy CEO Peter Terium as he headed for the launch in Tel Aviv, Israel on Tuesday.
The partnership will combine the strength of OurCrowd’s network and ability to scout investment opportunities in Israeli start-ups and match the business objectives of Innogy to provide innovative products and services beyond the energy market.
OurCrowd, a platform that connects investors and start-ups around the world, will help funnel Israeli technology startups that support Innogy. This partnership aims to help Innogy achieve its goal of enabling people to improve their quality of life by changing and enhancing the energy sector worldwide (and in Europe and Germany in particular) through decarbonisation, decentralisation and digitalisation.
Power Engineering International (PEI): Are there any start-ups already coming under this partnership’s radar?
Peter Terium (PT): “Yes we have over the last two years developed an outpost here. We have a team in Tel Aviv and have already established contacts with seven start-ups we hope to incorporate. Unfortunately, the commercial terms are not yet at a stage where we can name any names but we are happy with what we have experienced here in Israel.”
PEI: Before crowdfunding what other innovative products have Innogy been involved with?
PT: “We are interested in new energy areas, what in general involves big data. Our second area of interest is about the smart and connected home and third focus is the urbanised environment; involving concepts related to logistics, e-mobility and energy or electricity in large city environments.”
THE APPEAL OF CROWDFUNDING
PEI: RWE and Innogy are a transformed business. You have previously said that you want the company to be the holistic energy manager of the future. That means providing solar panels on your roof, a battery in your shed, a heat pump in your cellar, and the ability to manage this complex energy system for the consumer. Is this crowdfunding venture an extension of that vision?”
PT: “We saw a major disruption coming for the energy industry. The old time where conventional power plants were producing electricity that was transported and distributed to customers, they will disappear. We see more and more customers having their own decentralized energy supply whether from solar panels or a battery in their cellar and we see an ongoing drive towards decarbonisation. So, global initiatives to pick carbon out of the system will support further renewable generation that is very volatile. In that environment, the system is going to be more complex and needs more digitisation to manage the whole energy system in the future.”
PEI: Does Innogy have involvement with any on-site or decentralized energy technologies at present?
PT: “A recent acquisition we have performed is Belectric. They are in large and medium scale generation, solar electricity generation, also we offer our customers small solar panels for residential roofs as well as small battery systems.”
PEI: What is the appeal of crowdfunding for Innogy, part of such a long-established parent company like RWE?
PT: “The partnership model of crowdfunding is beneficial to both parties. This crowd funding company has a very good deal flow and pipeline of start-ups and that was interesting for us as we don’t have to completely take stock and screen the market ourselves.
We can bring to them strategic insight in the energy sector. We can also offer 23 million customers as a platform to perform pilots, to establish prototypes to roll out to market and we have of course a lot of technical knowhow in the energy value chain that can be used to validate what start-ups present to OurCrowd.”
OUT OF THE COMFORT ZONE
PEI: In many ways, given the context of where Innogy-RWE sat amid the structure of the old energy market, this is pioneering territory, and a leap of faith. How difficult is it to drive into new frontiers like this and develop the business in an entirely new direction?
PT: “It’s certainly getting out of your comfort zone. But if I look at the events in Germany and the decision to step out of nuclear after Fukushima, and the initiative of the German government to put the Energiewende or energy transition on the top of their agenda, this has already disrupted the big energy players like RWE and E.ON. So, we know how it is to feel uncomfortable and out of the comfort zone and we are using that crisis to create momentum for going forward.
Its resulted in a major effort to change the culture of the company and the latest manifestation of that is to set up an innovation network, which we have worked on for two years which has outposts in Silicon Valley, London, Berlin and not least in Tel Aviv. What we are seeing in the last two years is the people in our core business really embracing the initiatives, ideas and cooperation we have been doing with start-ups.”
THE ENERGIEWENDE CONTRADICTION
PEI: About German energy policy, you said in a previous speech, ‘without good planning and management, the Energiewende will fail due to its own internal contradictions’. Do you still hold to that view and do you think there is a possibility Chancellor Merkel’s government backed the wrong horse in phasing out nuclear too quickly? When you see the difficulty the country has in meeting its emission targets, should they have instead phased out coal?
PT: “There is still in Germany a 95 or 96 per cent support of the fact that nuclear is dangerous and a belief that we have to come out if it. So, this is beyond common sense arguments, this is about fear about a potential risk which can never completely be excluded. The clear conviction of German society is that it is a bad thing, with a by-product of waste that you don’t know where to store so you have to get out of it.
I know it’s in conflict with CO2 emission ambitions but it’s a high-ranking priority in German society so that’s why the end of nuclear is inevitable. You don’t go back to nuclear you just do more of renewable.”
“My exact words when I commented on the Energiewende is technically its possible but the question is its whether it socially acceptable. the social acceptance of Energiewende depends on one hand on the build-up of wind parks in areas where people don’t like it, the build-up of transmission lines through forests and impact on the landscape and last but not least it will depend on the cost of it. So, social acceptance is an aspect of social cost as well. If it’s managed well which is the responsibility of the politicians the Energiewende is doable but it depends very much how politics drives those issues that I mention forward.”
PEI: Your predecessor as head of Innogy, Dr Fritz Vahrenholt recently told an audience in London that ‘a serious diversion away from Energiewende would amount to an admission of strategic blunder and therefore consequences for the political establishment. Therefore, in the federal parliament, apart from one or two people, no one is opposing the policy.’ Do you understand the potential for opposition to this policy as household electricity prices climb along with potential counterproductive damage to the environment?
PT: “There certainly is opposition but it’s a minority position. The support of the energy transition is not as overwhelming as stepping out of nuclear but it’s still a vast majority. 75-85 per cent of German society support the fact that to save the environment we need to move out of fossil fuel. There are naturally local points of resistance. If you build a wind farm the people in that immediate environment will not appreciate it, but that’s a very local resistance. In general, the support is still there.”
PEI: Some have argued, with the sheer amount of wind parks that need to be provided for German energy security and the possible disfiguring of the landscape, that the road to hell is paved with good intentions. Is that simply scaremongering on the part of anti-wind interests?
PT: “I understand the argument but just don’t accept it as a majority position – in the places where it (wind power plants) is resident we need to interact with the stakeholders in the environment. A lot of the fear is not based on facts. Noise and health impact (often charged by anti-wind power interests) are not there but it’s important that those who plan and build a wind park have an open exchange with the people in the environment and to disclose what exactly are the facts about the wind farm.
On the other hand we see that more and more wind is being built in the North Sea, where there are not a lot of environmental issues with neighbours and I see further development of solar PV-generated electricity. When the efficiency of the panel goes up we will see applications like the organic solar cell tech that Heliotek produces, further develop. We are, by the way, an investor in Heliotek. Lastly, we need more interconnection so we can exchange electricity across borders when needed.”
READINESS OF UTILITY-SCALE STORAGE
PEI: How soon do you think utility-scale storage can be sufficiently economical and scalable to potentially marginalise fossil power even further?
PT: “I think the path towards utility-scale storage will be pretty long. We’ll first see consumer-based storage and if I might make a comparison with crowd funding lot of customer based storage can also be of help to the system.
The solution doesn’t lie with storage alone. We will need to have a more intelligent management of the whole energy system and we need to enable users to consume electricity when it is abundant and not consume it when it is scarce and when you multiply that by the millions of users that could be the biggest offset to the volatile generation of electricity.”
PEI: So you believe storage, at utility scale, is still a long way off?
PT: “They are getting closer. But utility scale battery storage is technically, physically and cost wise still quite a long way ahead of us.”
PEI: Do you think Innogy, and by extension RWE, through strategizing the way it works with new offerings and by being a system enabler between centralised and decentralized energy generation, will reverse this decline seen since the start of the recession and bounce back to its former greatness?
PT: “It will take another few years to return to the greatness of an almost 120 year-old company but clearly our strategic vision and belief is this is the right step forward and the first responses from both the capital market as well as from our customers and stakeholders has been very positive. It is at least a company that has smelled the coffee and is actively moving towards it rather than complaining and shedding tears about what has happened. It is actively getting to grips and taking control of its own future.”
PEI: Finally, do you enjoy being in your role, when you consider that in the history of power utilities, there has never been a more challenging environment? You must have appreciated it was a high-pressure role you were taking on when becoming head of RWE in 2012?
PT: “I love challenges and I have had a lot of them and there are still a lot of them ahead for me. But to inherit an almost 120-year-old company with significant issues and to turn it around and put two very healthy companies back on their feet has been part of that challenge. Not only is Innogy a very healthy company moving forward but so also is RWE, due to the financial restructuring. It is now in (sufficient) shape to contribute to the further transition and the ramp down of conventional generation.
It has sufficient war chest to participate in the commoditisation of the conventional generation sector. It’s great to have as a starting point a company that can shape its own future and look forward to the challenges ahead.”
Additional Information: Innogy’s Innovation Hub established an outpost in Israel to engage with innovative start-ups in its areas of interest (Smart & Connected, Urban Solutions, Disruptive Digital, Big Data and Machine Economy/Blockchain), aiming to collaborate and invest in accordance with its open innovation strategy.
The Innogy Israel outpost is managed by Mickey Steiner, who has a wealth of experience in the Israeli hi-tech industry and is based in Tel Aviv.
In a statement, Jon Medved, Founder and CEO of OurCrowd said: “This partnership will give our portfolio companies a quality gateway to the European markets, with one of the most innovative and well positioned new breed of utilities. The Innogy mission is to inspire people, offering solutions and making lives easier – something that we at OurCrowd believe in passionately.”
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