Customers are the drumbeat of a utility’s business and innovating on their behalf fuels advancements for decarbonization, efficiency, and grid modernization. Regulatory frameworks provide guidelines that help shape responsible innovation, ensuring that new technologies and processes do not compromise public safety in new areas like the grid edge that are becoming more complicated. Additionally, new technologies like generative AI can play a role in supporting customers at help centers or even driving a higher level of grid analytics at the edge as customers electrify more appliances, their cars and participate as prosumers in generation. This is where the truly big, and sometimes disruptive, ideas will occur.
In this third and final installment for Energy Central’s Innovation series, we share learnings from our May Power Session “De-Risking Innovation for Regulated Utilities” on the topic of innovation and regulation. Be sure to listen to the recording where we had an all-star panel from Southern, PGE, PG&E, Liberty Utilities, National Grid, and Dr. Linda Hill.
Balancing Act: 4 Best Practices for Your Innovation Program Important to Regulators
Innovation and regulation often seem like opposing forces. However, when harmonized effectively, they can drive progress and ensure safe, sustainable growth. We share 4 ways your utility can navigate this dynamic landscape.
It’s About the Customer
Clearly outline the specific benefits customers will receive from proposed innovations. This could be cost savings, improved reliability, greater sustainability options, or enhanced customer control. Quantify these benefits whenever possible to demonstrate the value proposition. Show how the proposed innovation aligns with existing regulatory goals or broader policy objectives. This might include clean energy targets, grid modernization efforts, or promoting energy efficiency.
Ecosystem Collaboration Lowers Risks
Decades of research by Dr. Linda Hill in her book Collective Genius reveals that collaboration within ecosystems is crucial to mitigating risk in any industry, but I would argue it is particularly true in the regulated energy industry. Ecosystem collaboration allows for the pooling of expertise, the sharing of best practices, and leveraging each other's strengths to significantly reduce the financial and operational costs and risks associated with pioneering new products or services for utilities. It’s a fine example as to the importance of industry collaborations like Energy Central, NRECA or Utility2030 Collaborative, and industry driven R&D hubs like CEATI and EPRI.
By building strong relationships within the ecosystems, utilities working together can identify potential pitfalls early and enable preemptive problem-solving and resource optimization. Furthermore, by building strong relationships within the ecosystem, companies can gain access to a safety net, distributing risk across a network of stakeholders who are equally invested in success. This interconnected support system not only reduces individual risk but also accelerates the overall innovation process, leading to more sustainable and impactful outcomes.
When multiple stakeholders, including startups, established firms, academic institutions, and government bodies come together, they create a dynamic environment where innovative ideas can be tested and refined more effectively. This collective approach not only accelerates the innovation process but also enhances resilience against market uncertainties and technological disruptions. Ultimately, collaboration within ecosystems transforms potential risks into opportunities, driving sustainable growth and long-term success.
Standardizing the Innovation Process Also Reduces Time and Risk
This important point was well covered in Parts 1 and 2 of our series, but deserves a mention here because it is foundationally important to standardize and create a consistent framework for evaluating and implementing new ideas. By following a defined methodology, organizations can ensure that each innovation is rigorously tested and validated before deployment. This approach minimizes the uncertainties and variability associated with trial-and-error methods before the impact the customer. Additionally, standardization allows for better comparison of results across different projects, enabling more effective learning and scaling of successful innovations.
Transparency and Documentation is Required to Be Trusted with Investments
As the saying goes, it took Thomas Edison 10,001 attempts to finally get to the lightbulb. While Thomas Edison is commonly credited with inventing the lightbulb, it's not quite that simple. The development of the lightbulb was a gradual process with contributions from many inventors. At Menlo Park, his team experimented with thousands of filament materials, finally landing on a successful high-resistance carbon one in 1879. This wasn't just a glowing novelty; it burned for over 1,500 hours, a game-changer for practicality. Edison's innovation wasn't just the bulb, but the systematic approach that brought long-lasting electric light into homes and businesses.
What worked to innovate in 1879 still works today, and we now know that it takes multiple experiments and learnings before a utility can feel ready to take an idea into production. If the pilot and field trial learnings are not being properly documented by the teams working on them, we lose the valuable learnings. As more grant and rate case money is being used to fund innovation, utilities must be prepared to meet the needs of more documentation where the learnings can be transparently shared. Because the teams that conduct field trials may change, it’s the responsibility of the innovation or R&D owner to make it simple for this documentation to be archived and stored centrally, in a content management repository specifically designed for innovation.
Conclusion
Successful innovation programs bring together utilities, solution providers, and regulatory bodies to collaboratively address industry challenges. This collective approach ensures that innovations are not only groundbreaking but also practical and compliant.
By presenting a clear case that prioritizes customer benefits that align with regulatory goals, and manages risks effectively, utilities can build a strong foundation for successful discussions about innovation with regulators. Creating transparency, documentation and collaborating across ecosystems can help utility innovators navigate the complicated interplay between innovation and regulation. Leveraging standardized and modern ways to innovation through fostering collaboration ecosystem, utilities can ensure they are delivering the best customer benefits and driving cultures of learning fast to set new benchmarks for safety and efficiency.
This article is the final part of a three-part series on utility innovation. Find part 1 here, and part 2 here. Be sure to check out the recorded webcast on “De-risking and Accelerating Innovation Inside Regulated Utilities” here.