Change, not only to technology, but more so to the role of the client and electricity offtaker, has sparked a “new wave of innovation in the power sector.” Falling margins increase the urgency for gas power operators to adapt to the needs of offtakers and grid operators. Letting small firms develop innovative solutions and snapping them up once the solutions are proven is one way, often adopted by large and more risk averse players.
IREN Group, established in July 2010 through the merger of Enia and Iride, is taking the long view as it seeks to empower its customer. “Innovation is first of all knowledge, knowing what is available in a market and how it can be applied. For us this has meant not only technology generation but changing the role of the client,” Enrico Pochettino, IREN Group’ s head of internationalization and innovation told the industry at PowerGen Europe in Milan. The role of offtakers are no longer passive, hence IREN is “testing solutions to empower and relate to the customer.”Falling margins in electricity wholesale markets and greater supply intermittency drive the need for flexible operations to make best use of existing plant assets.
Giuseppe Brancato, managing director for Axpo Servizi Produzione Italia pointed out that the Italian utility is looking at ways to “reconsider our plants in order to develop flexibility. To do this in some cases we have placed within the same plant independent units which allow us to improve ramp uptime.
Regulation no longer longterm
Utilities with large portfolios across Europe, had to painfully adapt to new realities as their fossil power plant can no longer operate as they were initially designed. Rather than providing baseload capacity, the new role is load-following. Regulation is meant to support innovation to help facility plant retrofits to boost flexibility- yet it’s not always that easy.
Lorenzo Giussani, head of strategy at A2A, the largest Italian multi-utility company remarked “we have seen a number of countries in Europe that have changed the rules dramatically and as a result returns that were promised have changed on investments.” In his view, and many agree, innovation has now become a “basic condition” for power operators.
The changing regulatory landscape has resulted in some major losses for power providers in recent years, yet there is some optimism that it can present opportunities for innovative companies.
“The challenge for us is to be always competitive in a world where the rules are always changing. In the last years the opportunity cost is changing. The cost of doing something wrong is not as large as missing out on opportunities. What we are trying to do is to identify the topics that will shape the future,” Massimo Derchi, managing director at Erg Renew, commented.
Snapping up small, innovative players
A different approach to innovation – adapted by some key operators – snapping up innovative firms. Large players let new technologies prove themselves in the market, before buying into them.
“There are two elements that are important when selling to electricity markets: the first is obviously price but the second is staying competitive going forward,” said Massimo Sabbioneda, head of marketing Alpiq InTec.
“Acquisition is one approach, whereby we have strategically acquired companies with proven success. We purchased Flexitricity first and more recently bought another company focused on peak shaving,” he said, suggesting this allowed Alpiq InTec to approach more integrated solutions for European markets as the energy landscape is evolving fast.