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Innovating for our Survival: Part 1: Are We Spending Enough?

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Kimberly Getgen's picture
CEO, InnovationForce

Kim Getgen is reinventing the innovation process to help utilities transition to clean, reliable power faster. As Founder and CEO of InnovationForce, she is building a patent-pending SaaS...

  • Member since 2022
  • 6 items added with 3,295 views
  • May 2, 2023

This item is part of the Innovation in the Power Industry - May/June 2023 SPECIAL ISSUE, click here for more

Those who have spent any amount of time innovating inside the energy industry know how difficult the task can be. Like other industries, utilities face regulatory and risk mitigation pressures. Unlike other industries, utilities are a critical infrastructure provider that must meet the highest levels of system reliability and safety standards to deliver the highest societal benefits. 

According to the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment Report (AR6), the number one cause of the climate crisis is carbon dioxide and for at least the last two million years, we are seeing unmatched concentrations of the gas. Experts from the World Resource Institute called the IPCC’s final installment the world’s “best available scientific assessment of climate change.” They also called the report “grim reading.”

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Utilities are in the critical path to solving the carbon emissions problem. Power generation, buildings, industry, and transportation are responsible for close to 80% of carbon dioxide emissions. If utilities work with their regulators and communities to find ways to safely remove fossil fuels from the power generation mix, we can rapidly electrify these carbon-intensive activities with clean energy. We can also offer new forms of resiliency by incorporating renewables into the mix. However, this transformation will require unprecedented levels of innovation - the likes of which many argue the utility industry has not seen in recent decades because they have been traditionally underfunded.


Note: This figure was taken from May 11, 2022 webcast hosted by Lawrence Livermore Labs with many industry players sharing their research on the state of innovation in the energy industry and the presentation can be downloaded here.

Innovation can be the antidote to mitigating the negative effects of climate change. But we will not be successful unless systematic changes are made to regulatory structure and business models to make it easier for utilities to take risks and invest in innovation.

Utilities are also saddled with the additional responsibility of leading the rapid shift away from fossil fuels safely, without compromising system reliability. Therefore, urgent systemwide transformation must be built in parallel to guarantee a more climate-resilient future. This change will not be easy, but it will be well worth the risk.

This series looks at the complexities of innovating inside energy utilities to address the systemic change needed to lead the clean energy transformation in 2023. We ask four important questions:

  1. The spend: Are we spending enough on innovation?
  2. The pace: Is innovation taking too long?
  3. The collective: Can innovation be more inclusive and higher performing?
  4. The urgent need: What happens if we don’t change now?

Are We Spending Enough?

In the first part of this series, we examine the question, "Are we spending enough? The National Science Foundation reports that utilities invest 0.1 % of their net revenues into Research and Development (R&D) programs (see Table 2) and in our own surveys of frontline innovators, the number one barrier was “not spending enough”. The data supports why the utility sector is often cited as a “laggard” in innovation when compared to other industries.



Figure 1: McKinsey


“The concern we are spending too little in the US is very real – and R&D is a hard sell if we are only looking to seek short term ROI alone and over other benefits… the evidence would suggest that speedier action on a larger scale would serve the public interest (source NRRI).”

Time to Think Differently?

It would be naive to think the investment question isn’t a complicated issue. Investment is tied to how utilities are regulated and this topic on its own is complex. Regulation must align utilities’ interests to serve both their customers and the greater societal interest at large.

At the core, we must ask, what is the right mix of regulation, incentives and mandates required to drive the right level of investment to unlock our innovation programs’ full potential to meet the clean energy needs capable of 2030 and beyond? It may be time to think differently, for example:

  • Allowing utilities to profit (reasonably) from new technologies – especially when these technologies can also drive societal benefits in alignment with deescalating climate change is needed urgently today.
  • New methods of accounting treatments and business models that consider the shorter life cycles of digitally based and more disruptive technologies that will be needed if utilities will be responsible for orchestrating the societal need for safer, faster decarbonization efforts.
  • Encouraging utilities to provide oversight and measure the outcomes of innovation pilots and prototypes could support higher levels of investment and accountability.

It’s time to reverse course and start meaningful conversations inside utilities and with regulators today to reframe what the future could look like:

  • Is the downward trend in utility-funded R&D a legitimate concern for the communities and society at large that you serve? 
  • What are the strategic initiatives that would form our innovation portfolio and how long would these innovations take to move to production? How will we measure success? How would they benefit customers, community, and society at large?
  • What happens if we don’t change? What is the cost of “business as usual”?
  • What information should regulators have to adequately evaluate the merits of an innovation program or R&D investment? How should they treat the inherent uncertainties in the benefits and costs?
  • How can the value of innovation be measured? What are the major challenges for regulators in evaluating and overseeing a utility’s investments in innovation? What information do regulators need from utilities to change “business as usual”?


In 2014, Bill Gates wrote an essay about who should pay for innovation in the energy industry. He answered the question the way:

“Why should governments fund basic research? For the same reason that companies tend not to: because it is a public good. The benefits to society are far greater than the amount that the inventor can capture. One of the best examples of this is the creation of the Internet. It has led to innovations that continue to change our lives, but none of the companies who deliver those innovations would ever have built it.”

As we stated at the beginning of this article: decarbonizing will not be easy, but it will be well worth the risk. Today there is too much at stake not to invest in our utilities’ future ability to aggressively drive decarbonization programs. The role utilities play in the clean energy transition is far too vital for society to leave them out of the innovation conversation. And, to make the safe and rapid infrastructure changes needed to support more sustainable options, utilities must be allowed to experiment with and buy more technologies faster. With rapid experimentation, engineers can guide the safe and reliable infrastructure changes needed to make the transition clean energy requires.

Going from “laggard” to reaching higher levels of maturity on the innovation capabilities curve will include operationalizing innovation programs for effectiveness by using transparent metrics, reporting and data-insights that can provide oversight to place higher levels of confidence in increased investments. We now have new ways to measure innovation and provide more oversight to regulators, communities, and shareholders. With this transparency into the innovation program, utilities can share their efforts and learnings about how their investments will be used to drive infrastructure change faster – and time is of the essence. 

In the second part of the series, we will explore the pace of innovation and the timeline for transformation looking at the mega trends forming in the “fifth and six waves” of the long-term innovation lifecycle. This is where the expected digital transformation and the clean energy transition will occur. But will the impact of the delayed investments in the utility R&D sector open the door for industry disruption? We attempt to explore this further.

Tell us what you think! Are we over or under investing in innovation? What is your utility doing? Are incentives or mandates helping or hurting? How do you engage your regulator in the innovation discussion?

Let us know and be sure to register for Energy Central’s PowerSession™ webcast May 31:  Innovation 2.0 – The Human Side of Leading Innovation inside Today’s Modern Utility where we will be joined by Harvard Business School professor Dr. Linda Hill, co-author of Collective Genius: The Art and Practice of Leading Innovation whose TED Talk on innovation has been viewed nearly 2.8 million times and the innovation team at Portland General Electric. This will be a can’t miss Energy Central PowerSession!

Matt Chester's picture
Matt Chester on May 2, 2023

This is a great perspective. Innovation doesn't happen in a vacuum, and it's no coincidence that some of the greatest leaps in innovation (look no further than when we landed a man on the moon) are when many stakeholders came together and recognized the value of those investments. 

Julian Jackson's picture
Julian Jackson on May 4, 2023

It was a bit of a shock to find out that utilities spend so little on R&D. I also agree with Bill Gates  :-) research is a public good.  This is going to mean that the industry is not just way behind the curve of the global menace of climate change, but the rising Asian tiger nations, led by China.  I wonder what their R&D is, I bet it is more than us?

Mark Allen's picture
Mark Allen on May 4, 2023

The current funding models for regulated utilities is such that spending on R&D by utilities, even if fully or partially funded by government, becomes hard to rationalize to customers looking at higher bills. Secondly, the push towards renewables precludes any research into other alternatives that could be viable and potentially as clean as current options. It's like looking to breed a faster horse when what was needed was the automobile. If your research doesn't fit the government's model you don't get the funding. We really need to step out of the current mindsets and allow true innovation to grow on its own without restrictions - something that is also hard to do because there are those who will abuse government funding.  

Kimberly Getgen's picture
Kimberly Getgen on May 17, 2023

Mark - I love the thought that we "need to step out of the current mindsets and allow true innovation to grow without restrictions" and understand your point that there are some that will abuse government funding. I agree. We have been trying to advocate that by monitoring innovation programs pilot by pilot (use case by use case) and measuring how these are progressing/performing, we can provide transparency and oversight into the projects being worked to boards, shareholders, employees, regulators and funding sources. Perhaps with transparency we can innovate with fewer restrictions (although budget/funding is always a constraint). 

Rick Engebretson's picture
Rick Engebretson on May 6, 2023

Perhaps "theories about innovation" are a distraction from "knowing and admiring innovation when we see it."

Since the 1970s (even long before) I was presented overwhelming opportunities for innovation when I was afforded a place in the huge lab at the U of MN. of Prof. Otto Schmitt, who invented digital electronics and much more. Later at the Laboratory for Biophysical Chemistry and later at the NMR Lab. Etc., etc. My learning capabilities have always been stretched to the limit.

In recent years since I've seen incredible innovation systems developed that have reshaped the world. Some good examples include "(formerly) Atmel (now Microchip) AVR microcontrollers" offering great learning kits with great documentation -- this led to the "Arduino" family of development boards and accessories galore. Another example is the "Linux" operating system.  Too many more examples to mention. Successful innovation systems always have demonstrations, forums, and helpful interaction.

My efforts for "on-farm" fuel and electric power production were well received by top utilities in the 1990s. I do now see relevant innovation peeking out of corner spaces. But the hostility toward food and energy producers seems more dangerous than the climate threat.

Please, show me some relevant, successful "innovation system."

Kimberly Getgen's picture
Kimberly Getgen on May 17, 2023

Rick, I agree "successful innovation systems always have demonstrations, forums, and helpful interaction" - I call this "ecosystem innovation" and I have found Dr. Linda Hill's book Collective Genius a great teaching tool here (see her section on Ecosystem innovation). When I spoke to Linda one year ago on this topic, she told me that she believed ecosystem innovation was the future and it is really hard to get it right which is leading her to write the follow-up which should be in print very soon! 

In the energy space, we must innovate in ecosystems with our solution provider partners because they have the access to funding to take on product development "at risk" (often coming from venture-backed startups with VC funding). Utilities do not have those same type of budgets. 

An example of ecosystem innovation is Portland General Electric's Connected Utility lab see the article on Energy Central here or see their video on our website 

Rick Engebretson's picture
Rick Engebretson on May 20, 2023

I really like your term "innovation ecosystem" and the referenced Energy Central article that uses an air traffic control system analogy. My brain doesn't work at such "strategic innovation" scale, but I can translate your effort to my "innovation toolbox" scale. Much like I don't have a clue what a bio-diverse ecology is doing, but I certainly admire and try protect it knowing it has been working long before I showed up.

Good luck.

Rich Dzikowski's picture
Rich Dzikowski on Jun 6, 2023

When we talk about any regulatory or other authorities, we have to keep in mind that behind them are people who basically have no interest or idea about innovation. The most important thing that interests these people is the tip of their own nose. If such an official receives information about a possible innovation, he considers it a disruption to his orderly daily routine until he receives instructions from his superiors to treat it differently. 
The "Dunes" and "Ivanpah" solar power plants in California can be cited here as a concrete example. In the Bloomberg report from 2020 :
"A $1 Billion Solar Plant Was Obsolete Before It Ever Went Online." this is clearly seen. 

In the years before, "miracle solar power plants" were touted all over the world that would save all of humanity. But what is a solar power plant really worth if it is fired by up to 40% natural gas when the sun fails to shine?

This was just one example where massive amounts of taxpayer money were used to fund these projects without being fully informed. 

Accordingly, "innovations" were waved through here that are supposed to serve the general public but do not. As long as this monster of bureaucracy decides on such things, hardly anything will change. 

David Pressler's picture
David Pressler on Jun 21, 2023

Applying FOAM insulation onto buildings so as they create more energy than being used will eliminate the BILLIONS spent on wind and solar fields with wires and poles going to homes that should already be green energized?  Each building will become a generator.  The future of homes today Northport Florida Tornado proof quonset green energized homes.

TARU SUMAN's picture
TARU SUMAN on Jun 21, 2023

very great insights. there is need for further more and more innovation which are economical, user friendly, easily accessible and environment friendly

Kimberly Getgen's picture
Thank Kimberly for the Post!
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