Energy Impact Partners
Energy Impact Partners (EIP) is a global investment platform leading the transition to a sustainable energy future. EIP brings together entrepreneurs and the world’s most forward-looking energy and industrial companies to advance innovation. With over $1.5 billion in assets under management, EIP invests globally across venture, growth, credit and infrastructure – and has a team of more than 45 professionals based in its offices in New York, San Francisco, Palm Beach, London, Cologne, and soon Oslo.
He's vice president for innovation and commercialization. Pretty cool title. He had been director of strategy and business development at Comverge, an early pioneer of demand response that's now a part of Itron. She's associate vice president, again for innovation and commercialization. She had led strategic partnerships with Tesla and SunPower while at EnerNOC.
Evan Pittman and Maria Woodman now team up to create collaborations between the utilities and the innovative portfolio companies partnering with Energy Impact Partners. Evan and Maria are seeing the industry's future every day at their work; indeed, it's their job to do so. That's why the PUF team checked in with them to catch a glimpse of that future.
PUF's Steve Mitnick: Why is innovation so important for our industry?
Maria Woodman: If the past few months have been any indication, we are increasingly seeing the need to be nimble and responsive to changing conditions in the market, changing customer preferences, and changing dynamics when it comes to how work gets done.
We've also seen that the rate of technological change across domains like AI and digital infrastructure, and customer access to new information and new sources of data to drive decisions, is accelerating.
Coupled together, these trends indicate that utilities need to find mechanisms to keep pace. Having a strong foundation and practice of innovation within their organization is the way they can do that and keep pace with the changes happening in the world that impact their employees, customers, and shareholders.
Evan Pittman: One trend we're seeing come to light is an increasing need for what I'd call external innovation, which is essentially looking outside of our own four walls and even beyond our industry to find new ideas, new ways of doing things, and new ways of working together.
Innovation has always been about the fusing of different ideas from varied perspectives. But utilities are being forced to expand their aperture as multiple industries converge around the clean electron, with mobility companies going electric, oil and gas majors like Shell executing on M&A strategies to diversify toward cleaner fuels, and direct-to-consumer product companies making clean energy a central part of their value proposition.
To keep up with this change, utilities need new skill sets they didn't have in the past. Things like strong sales and marketing capabilities. That's only going to come when they can infuse some fresh DNA by understanding and emulating some of what's going on in the broader ecosystem, and adjacent industries.
They need to roll up their sleeves and figure out ways to work with startups and other enterprises, and work nimbly with them. That's where the competitive advantage within the realm of innovation is going to come.
It's going to accrue to those utilities who have built those nimble apparatuses, by which they can look out at the external world, figure out the right parties to partner with, then develop partnerships, work with those companies, and integrate those new technologies into the business at the pace the market is moving.
PUF: What are particularly impactful innovations you see out taking place?
Evan Pittman: There's one broad category, which is taking advantage of the trends in AI that Maria mentioned earlier, and the abundance of new data sources that are accruing about our assets and the environments in which our utilities operate.
We're getting an exploding number of data points, whether it's from IoT devices on our distribution networks, high resolution satellite imagery that is now commercially available, or images captured by drones.
Fortunately, we finally have the technology to process all that data. We're seeing a lot of trends around applying AI toward asset management, and toward directing our investment in our assets where it's most needed, as opposed to where the time schedule tells us maybe it's time to go replace something.
Examples within our coalition of that are Xcel Energy's partnership with EIP portfolio company, eSmart. Xcel is one of the leaders in experimenting with beyond visible line of sight drone flights, and they've collected a ton of images.
What they found is it's a challenge to get through all of that image data to inventory assets and pinpoint where the problems are on the system. That's where Xcel developed this partnership with eSmart, where eSmart is applying machine vision technology to take those thousands of backlog images, process them quickly, and automatically identify assets and any defects in assets.
They then surface those results to the inspectors who are looking through the image data so they can verify and give feedback to the AI. Through this virtuous cycle, we get to a point where one day Xcel and other utilities may be able to cut in half the cost of inspecting their transmission assets.
Maria Woodman: I'll focus on another area where we are seeing a lot of innovation in the utility space. That is around the convergence of changing customer needs and preferences, and the utility's role in ensuring safe, reliable delivery of power in light of increasing challenges, like weather-based events and aging infrastructure.
With both resiliency and changing customer preferences top of mind for many utilities around the country, we've been seeing innovative technology deployments where utilities can marry those two together to benefit both customer and utility.
A great example of that is one of our portfolio companies, Enchanted Rock, partnering with Entergy to provide resiliency-as-a-service to some of their C&I customers. The utility is installing behind-the-meter, natural gas backup generation that they own and operate on behalf of the customer.
The utility is able to recognize grid value from the ability to dispatch that asset, estimating what percentage of the capital costs they can offset for the customer, lowering the total cost of ownership and providing them that asset for their backup and resiliency.
You get this great alignment of incentives, where the utility is able to recognize grid value from assets that are sitting behind the customer meter, and in turn, they're offering customers reliability at a much lower cost than if they were procuring that product from the market.
We're seeing a lot of examples like that across all customer classes, C&I being one. But we've also invested in companies that we think can unlock a lot of value from that type of framework in the multifamily and residential spaces as well.
We believe that addressing challenges around resiliency and reliability, while simultaneously being responsive to individual customer needs, is going to be a place where we're going to see a lot of innovation over the coming years.
PUF: How do you go about looking at all that's out there?
Evan Pittman: EIP evaluates potential investments on two dimensions. We look at the financial attractiveness of the deal, and we look at the strategic impacts for our partners. When a new technology comes across our desk, the main question we ask on the strategic side is, will this technology be able to achieve product market fit within the utility space?
For us that means, is there a repeatable use case for this technology across the utility industry that fits into our utility's actual customer strategies, their digital transformation strategies, or their operational processes?
The key to success in the emerging energy technology space, certainly within the utility vertical, is about getting the timing right. You can have a great technology, but if it isn't meeting the utilities where they are in their innovation journeys right now, it's ultimately not going to be successful. That's what we scrutinize.
Maria Woodman: One of the things that has made EIP so successful thus far with our model is that it's not just us at EIP who are evaluating that potential strategic value of investments. It's important for us to get input from the subject matter experts at our utility partners to evaluate all of those things that Evan just laid out.
It's one thing for us to have a hypothesis and bring that forward. But the beauty of our model is we are able to work with the folks that sit within our utility partner's organizations, and understand, is this a technology that is going to move the needle on their goals around growth, or challenges they're having around reducing O&M costs? That is a core part of EIP's ability to identify those companies that can be change makers.
PUF: How can EIP and your member utilities create, and more important, maintain an innovative culture so you can look at these aspects, know which ones you want to take a bet on, so to speak, and get involved?
Maria Woodman: I'll start with one thought. One of the things that makes EIP and our partners successful, and is an advantage that the utility industry has, is that we are very collaborative.
Across the industry, there are many different trade organizations and groups where utilities can share best practices about what works, and what doesn't work. An important part of innovation efforts that we have seen be successful, is sharing wins.
It's making sure you're celebrating what works, and then equally, making sure you're sharing the battle scars, what didn't work, because we do sit in an industry that can uniquely collaborate because of this regulated model we have.
That lends itself toward being an environment that can be friendly toward innovation. Sharing of wins and success stories is an accelerant for any organization to be thinking about, when thinking about innovation. Success breeds success.
Culture change is an important part of innovation, so the more you can celebrate success stories and elevate those, maybe hungry young managers who are making impactful change in their organization, the more likely you are to have that proliferate.
We certainly see that when we're able to share success stories across our coalition. Other utilities, then, their ears perk up and they say, maybe we should think about doing that as well.
Evan Pittman: Another aspect here is developing a certain organizational comfort level with experimentation and measured risk taking. It's important to create a culture and planning process that support small investments of time or resources in projects that have uncertain outcomes.
Part of the challenge is we've tended as an industry to evaluate projects in isolation - and to wait until we're relatively certain that something's going to work out before we try it. This means we miss opportunities to introduce new products to our customers or to drive costs down sooner. We move slower than the pace of the market.
Instead, we need to recognize that to keep up with the pace of consumers and technological change, we need to be comfortable with experiments. We need to try things, launch prototypes, and get real world performance data or customer feedback - evidence that can tell us if something's going to work or how we might tweak it to make it work.
And we need to think of innovation projects as a portfolio. Any one project may not pan out but when a few work out spectacularly, the collective investment of time and resources is well worth it for our customers.
We might even celebrate our failures as long as the project adhered to the principles of continuous adaptation and failing fast. This is where a dedicated innovation team can add a lot of value - creating that centralized view of the organization's innovation efforts, sharing best practices around agile development, and measuring the return on the innovation project portfolio.
All in all, we're encouraged by the signs of cultural change that we're seeing around our industry right now. Everyone can look out the window and see the changes that are afoot and get that sense of urgency. Folks are leaning in to learn about new technologies and business models. It's a good time to be in the business of innovation.