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Let the Music Play! An innovation culture might be necessary for the power sector to thrive

image credit: Rock music with Eskalera!, Photo by Francisco Moreno on Unsplash
Stephane Bilodeau's picture
Chairman and Chief Technology Officer Novacab Inc.

Dr Stephane Bilodeau, Eng., FEC has a PhD in Energy & Advanced Thermodynamics as well as a Master in Applied Sciences. He is a Fellow of Engineers Canada. In the last 20 years, he has driven...

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  • May 24, 2022
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This item is part of the Special Issue - 2022-05 - Innovation In the Electric Power Industry, click here for more

Innovation rhymes with transformation, collaboration, and more!

Transformational change

We are in critical times for the power industry.  And not only on the climate front, but also concerning the DER, cyberspace, the (geo)political crises, the supply chains struggle, the pandemic, and more.  Notably, the required Worldwide efforts to address climate change are leading to the rapid electrification of numerous end-users from transport to industry, driving a massive increase in power demand as well as the need to generate as much of it as possible from renewable sources. The result is a dramatic transformation of power systems globally.

According to the International Energy Agency, Electricity is the fastest-growing source of final energy demand, and over the next 25 years, its growth is set to outpace energy consumption as a whole. The rapid rollout of renewable sources such as wind and solar PV puts electricity at the forefront of clean-energy transitions, providing access to the nearly 800 million currently deprived and helping to cut air pollution and meet climate goals.

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Such a radical transformation also calls for new approaches - Innovation - to how power systems are designed and operated. Sunshine and wind are not always available, requiring a range of backup generation options as well as smarter and better-connected grids. The power sector now attracts more investment than oil and gas combined – necessary both to transform the generation mix and to upgrade aging infrastructure. 

Photo by Karsten Würth on Unsplash

The renewable electricity capacity additions trend is not on track to meet the IEA Net-Zero by 2050 Scenario - Acceleration requires to stop doing business as usual!

Annual additions to global renewable electricity capacity are expected to average around 305 GW per year between 2021 and 2026 in our main case forecast. This implies an acceleration of almost 60% compared to renewables’ expansion over the last five years. Conversely, annual renewable capacity additions in our accelerated case are a quarter higher than in our main case, reaching over 380 GW on average over 2021-2026.

However, the gap between both our main and accelerated case forecasts and the trajectory necessary to meet Net-Zero by 2050 remains significant. The IPCC just reported (https://www.ipcc.ch/report/ar6/wg2/) a month ago urgent to change from the "business-as-usual" scenario to avoid the worst of the consequence of climate change. Annual capacity growth under the IEA Net Zero Scenario during 2021-2026 needs to be 80% faster than in our accelerated case, implying that governments need to not only address policy and implementation challenges but also increase their ambition.

Average annual renewable capacity additions and cumulative installed capacity, historical, forecasts, and IEA Net Zero Scenario, 2009-2026

While innovating is of utmost importance to thriving in such a challenging environment, utilities face a tough undertaking when it comes to infusing innovation into the way they work

A multitude of external forces is reshaping the power sector and pressuring utilities to adopt a variety of differentiating innovative tactics to stay competitive.

Many power sector stakeholders still have work to do to advance their innovation strategies, with culture acting as a key enabler. In fact, in the Global Culture Survey conducted by Strategy&’s Katzenbach Center (https://www.strategyand.pwc.com/global-culture-survey), 87% of energy and utility professionals say their organization’s culture must evolve in the next five years to succeed. Additionally, 65% of respondents believe that culture is more important than strategy and operating model.

Using Technology radar could be an approach to identify the pathway forward such as those proposed by Itonics comparing technology readiness, impact, scope, and complexity. (https://www.itonics-innovation.com/itonics-trend-technology-radar).  While it gives interesting and relevant insights and should be used to feed an innovation program, but it's not sufficient. A comprehensive, structuring, and multi-prong (with a mix of solutions) approach should be considered. 

Technology Radar for Energy Management

With mounting competitive pressures and external crises, utilities may be tempted to conflate “innovating” with “becoming like a Silicon Valley tech company” and embracing an enterprise-wide culture of fast failure and experimentation, even though not all tech company’s cultural traits are desirable or transferable to the utility industry (and vice versa). Utilities are often characterized by cultural traits that run counter to those found in most innovative companies, with a relentless focus on safety, reliability, and operational excellence.  Many utilities pursue incremental improvements, are risk-averse, and follow established processes.

If utilities cannot simply, immediately, and broadly “replace” the cultural traits in their organization, how can they retain their respective competitive advantage in the market?  And how can they evolve while not losing sight of the culture that defines them today? Taking a look inwards instead of outwards for inspiration is key.

How do we ensure innovation can cross departments within the utility and not get caught in siloed inertia?

First, we need to acknowledge that a perfect storm of challenges, from the pandemic to the geopolitical context, has driven disruption, innovation, and even ‘a new reality in the power sector and at work in general. 

Multidisciplinary: this is the “get out of a silo portion” Various backgrounds, professionals, a mix of people working at the equipment level and others at the design level or event at the administration would come up with a much better solution than the “same old same old”. 

Sustainable thinking: Business as usual is currently the surest way towards failure. Resilience and sustainability should be part of every initiative.

Innovative: In fact, we should look for where and how we want it most applied.  Several utilities have innovation agendas or an innovation organization. But the most important component of the innovation agenda is its purpose. Having a clear goal in mind that underpins the activities is important to focus on ideas that get to implementation/outcomes. For example, one utility’s innovation agenda is driven by customer-centricity.  In short, we need to think out of the box. Old solutions should often stay where they belong: in the past.  New solutions, new approaches, and an inclusive and open mindset are required.

Collaborative:  No more siloed work.  In a complex world, in an ever-changing context.  It's an absolute necessity to collaborate with stakeholders from diverse backgrounds, responsibilities, authorities, etc.  We need, as much as possible, to work together rather than against each other inside the organization and outside as well.

This is the Mu.S.I.C.!

So, what do you really mean when you say “innovation”? Innovation should not only be a “nice to have” approach for bigger and smaller organizations but will be necessary to survive in the new world. working together.  This will need to be complemented by collaborative work from many stakeholders in a multidisciplinary approach to achieve results (not only financial but also environmental and societal) for a sustainable and resilient organization.  Siloed inertia is the pathway to the end… 

So, those who will be resilient, that will survive and even thrive will use the maximum of this MuSIC (Multidisciplinary Sustainable Innovative Collaborative: Mu.S.I.C). 

Shifting to a culture of innovation to reinforce strategic priorities and find new growth opportunities is a move some utilities are already making. But all should follow this path, innovating around improvements in operations or enhancing the customer experience are examples of alternative actions some utilities are taking. By reframing to an “innovative culture”, an approach that enables sustainable operation, customer-centricity, resilience, or safer operations, the path forward to shift the culture becomes much clearer to the entire organization and is more easily embraced.

And This is why we need to Let the Mu.S.I.C. Play!

Photo by Nainoa Shizuru on Unsplash

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Thank Stephane for the Post!
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Stephane Bilodeau's picture
Stephane Bilodeau on May 26, 2022

As a complement to the discussions and topics touched in the article, a study by PWC last year, with over 3200 participants from a diversity of industries, reveals the importance of a strong culture to be able to adapt to big changes:

A strong culture lines up with strong organisational adaptability.Survey respondents who strongly agree that during the year before the survey was conducted, their organisation had the ability to pivot and adapt quickly to change also strongly agree that: Culture is a source of competitive advantage 81%,Culture is an important topic on the leadership agenda 85%,The way people act is consistent with what we say about culture 85%, Our culture enables successful internal change initiatives to happen 88%

https://www.pwc.com/gx/en/issues/upskilling/global-culture-survey-2021/g...

 

Richard Brooks's picture
Richard Brooks on Jun 1, 2022

I'm thinking a copy of "Who moved my cheese" may find its way into the Christmas stockings of some old time Utility industry executives that hold on tightly to the past instead of riding the winds of change into the future.

Stephane Bilodeau's picture
Stephane Bilodeau on Jun 3, 2022

I agree, that some former executives (and maybe some current...) in the sector, cling closely to the past instead of surfing the Wind of Change.
It's one thing to like old music (and I do).  It's another thing to continue to behave the old way...  When we're facing big changes, if not a profound transformation!

 

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