How will innovation change energy?

Among the challenges on Idea Connection, an online open-innovation platform, is a call for ideas for producing clean, affordable energy using nano-technology. As the energy sector turns to the “global brain” for innovative ideas, more such challenges are appearing, while companies explore how collaboration can stimulate novel approaches and technologies.

The industry is certainly focused on innovating. In 2013, energy (grouped with electrical machinery and apparatus) ranked second in terms of the number of patents filed with the European Patent Office, right below medical technology.

What the figures do not reveal is the proportion of patents developed through open innovation or collaboration. While hard data are hard to come by, some evidence suggests that the energy sector could be stepping up its efforts to use open innovation as a R&D tool.

Last year’s UK Energy Innovation Awards, for example, saw collaborative projects dominate the winners list. This was the case of the joint project of Glasgow-based Smarter Grid Solutions and UK energy company SSE Power Distribution to launch a smart grid that tracks power flows, thus bringing down the cost of balancing renewable generation and conventional network reinforcement.

Large exploration and production companies are also active. Shell, which launched its GameChanger open-innovation programme in 1996, also uses Shell TechWorks to investigate whether technologies used in other industries could be adapted to energy challenges. More recently, Statoil and GE issued an open challenge to reduce sand and water use in unconventional production.

Other companies are turning to collaboration platforms for sources of innovation. UK-based Skipso, serving cleantech organisations, sees most sector activity occurring in areas such as energy storage and energy efficiency, according to Carlo Soresina, its co-founder.

Overall, however, the energy industry is still relatively closed compared with fast-moving sectors such as consumer goods and information technology, which tend to rely more heavily on open innovation, according to the UK’s Big Innovation Centre. For the industry, barriers include the lengthy time horizons, the large-scale upfront investments and a limited appetite for risk.

Energy companies could learn from other sectors. Jonathan Johns, director of Climate Change Matters and an energy industry expert, cites the example of the wind-power industry. “A common platform approach—for example as used by the car industry for MPVs [multi-purpose vehicles]—with each providing its own market interpretation, has not occurred and maybe it ought to,” he says.

They can also learn from their peers. Co-innovation rates in the biofuels industry, for example, are much higher than in other clean technologies like wind—9.6% vs 3.9%.

Policymakers can help promote collaboration and open innovation by creating tax incentives for collaborative R&D, consolidating intellectual property rights regimes, supporting knowledge-sharing hubs or incubators, and engaging in multilateral technological initiatives.

As demand for power grows and carbon regulations tighten, new systems and technologies will be needed. To keep global warming in check, we will need them fast. Companies must, therefore, increase the rate at which they develop ideas—and open innovation and collaboration could be among the solutions.

This article is published in collaboration with GE Look Ahead. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Sarah Murray writes for GE Look Ahead.

Image: An employee fills a test tube with mineral oil from the Vankor deposit. REUTERS/Ilya Naymushin