Utilities aren’t typically known for pushing the envelope with innovative technologies or ideas – they want to keep things safe and cost-effective. A new survey suggests that they might need a little prodding, either in the form of regulation or compliance.
National Grid Partners, the corporate venture capital and innovation arm of one of the world’s largest utilities, today announced the results of its first-ever Utility Innovation Survey. The poll of nearly 220 industry innovation leaders explored the top priorities at US energy utilities, and more than half said it’s critical to boost electric capacity given skyrocketing demand to electrify transportation and heat. But respondents also admitted the industry’s traditionally slow-moving culture has led them to deprioritize innovation and shy away from working with startups that can offer technological breakthroughs.
Notably, nearly three quarters (72%) of utility leaders surveyed say innovation at their organization is primarily driven by regulation or compliance. Despite a heavy focus from the industry and from government, only 19% of utility innovation leaders named net zero goals as a top priority at their companies.
Nearly three in 10 respondents named compliance as their top priority; this was followed by reliability, which 20% of respondents named first. When asked about their innovation priorities, respondents listed net zero third, behind digital transformation of their operations and boosting efficiency.
“Regulators historically have set the terms that drive innovation for our industry—for instance, by rewarding operators to build new infrastructure but not to take risks and deploy new software-based solutions,” said Steve Smith, Chief Strategy and Regulation Officer at National Grid. “At the same time, it’s incumbent upon utilities to think and act more boldly, without waiting for third parties to take the lead. That’s precisely why we convened the NextGrid Alliance: To accelerate the development and deployment of breakthrough technology at the speed and scale the market demands.”
Overall, just 26% of those surveyed said they identify “fresh” ways of thinking and operating from startups. Instead, utilities are primarily looking inward for innovation, with more than four in five (82%) saying their own employees are the top source of ideas. And even when utilities do identify innovations, “pilot hell” — whereby new technologies scale slowly — is persistent, the survey indicated.
Survey respondents also indicated a few ways regulation can shift utility priorities. Nearly half (48%) saw insufficient incentives and scarce resources as the top challenges to innovation, indicating room the improve on the regulatory environment front. Nearly two-thirds of those surveyed (66%) agree upcoming disclosure laws will change how they do business. Respondents also identified carbon capture (76%), smart grid (69%) and mass electrification (69%) as emerging technologies with the most promise.
National Grid Partners conducted the research using an online survey prepared by Method Research in late winter 2024. It was distributed by RepData and National Grid Partners to 219 directors, vice presidents and other executives involved in innovation at US energy utilities.
