How new technologies are pressing on European Utilities

Silicon Valleys’ renowned startups and new technology giants are dynamic, creative and uncompromisingly geared towards success. No other industry sector appears to be ahead of this rising competition. Following the exponential and revolutionary growth in the publishing and telecommunications industry, the automotive industry as well as the financial and energy sector are next to see radical changes. Especially in the German-speaking area, the latter have already reacted to increasing innovation pressure by setting up new business segments and creating new business lines without losing sight of their respective core businesses. In industries experiencing such rapid growth and innovation, the coined term survival of the fittest certainly applies – and established, mature corporations need to be aware that the key to their survival lies in the ability to innovate, take balanced risks and be open to new business models. One might say that these corporations recently perform as companies of two speeds.

Decentralised production of energy, for example wind and solar power in combination with increasingly liberalised markets, created a new type of consumer – the so-called ‘Prosumer’. In recent years, the innovation pressure has turned up the heat on once inviolable industries. In the past, tremendous investment costs have been the prime reason for high entry thresholds young companies had to face. Nowadays the focus shifted towards services and applications, which help customers to achieve cost savings, increased efficiency and improved energy understanding. New business applications like electro-mobility, digitalized infrastructure and Smart Homes both offer opportunities and create needs. However, it leads to competition between numerous innovative startups and globally operating corporations to meet those needs and to take those opportunities.

New developments in the field of Smart Home

Over the past several years the increasing trend towards digitalisation of homes can be witnessed. Switching the light on and off automatically and controlling air conditioning and other devices time-dependently is old hat, but what comes next might actually be a lot of fun. The trend clearly points towards interaction and connection of many different systems and platforms. New solutions will allow more personalised comfort while coming hand-in-hand with energy and cost savings. For example German car manufacturer Mercedes Benz co-operates with Google´s ‘Nest’ to enable such features as to automatically inform the air-conditioning at home about your arrival, so your apartment will be comfortable and cool the moment you arrive. Google, as Nest´s parent company, has its usual transparent and easily accessible approach, which enables an uncomplicated integration of Nest in miscellaneous applications.

For those who generate electricity themselves, Tesla will provide an aesthetically pleasing storage solution, which offers considerably improved energy self-sufficiency, decreased electricity procurement costs as well as access to additional budget revenues. That way, solar power generated on private household’s roofs can be feed back into the energy network in times of high prices or can be stored for personal need in times of low feed-in tariffs.

Values from experience for European energy companies

The success of US businesses consists of a combination of good access to finance, a culture of error tolerance, high speed, flexibility as well as the accumulation of talents, which are attracted from all over the world. I am still impressed by the openness and “Beta-Culture” in the US: If a product is ready, it is presented in front of colleagues, customers and sometimes even competitors no matter if it is perfect or not. European companies tend much more to perfectionism, which is slowing down the development process. But this is a deep rooted cultural difference and emphasize how difficult it can be for traditional European corporations to implement the US startup culture. Yet Corporate Venturing may be a working survival strategy for traditional companies in Europe. Read more about this topic in our blog post Corporate Venture – A Survival Strategy for Dinosaurs and Unicorns.