Earlier this year Centrica celebrated the two-year anniversary of its innovations unit. Launched with a £100 million purse, the energy giant sent Centrica Innovations out to the market to invest in, incubate and develop new and emerging technologies that could become pivotal to how the wider group operates.
Two years on, and with a slew of new, home energy management-focused investments under its belt, Sam Salisbury, director at Centrica Innovations Labs, is confident that the company has learned a great deal.
“I’ve really learned that there’s a tremendous amount of opportunity at intersections where people don’t usually work together,” he says, pointing at the potential crossovers between Centrica’s consumer- and business-facing units which are otherwise separate. Investments in energy management systems and e-mobility could just as easily be hugely beneficial to both divisions.
Salisbury also insists that Centrica has made great strides in its ability to partner with small tech companies, particularly when it comes to integrating them and their wares into the business. He says that the company’s previous efforts had been “painful”, but this is an area where it had had to improve.
And Centrica hasn’t been short of opportunities to practice. The innovations unit has, in the space of two years, invested in blockchain specialist LO3, EV software developer Driivz and, most recently, home energy management duo GreenCom Networks and Mixergy.
The premise for these investments is relatively simple, and should serve as a stark warning for vertically-integrated energy companies the world over that aren’t already doing likewise. Existing business models are coming under threat and Salisbury says that without the massive research and development capabilities that other sectors can enjoy, energy companies will have to think outside of the box. “We’re being forced externally to find the next relevant innovation and technologies that will support the business models we’re trying to generate now,” he says.
Centrica’s initial approach is two-pronged. Geographies are important and Centrica Innovations has boots on the ground in San Francisco, New York, London and Tel Aviv scouting for investment opportunities.
Its second consideration is to think of things thematically and this, Salisbury says, is where things get a little more in-depth.
Tackling society’s big challenges
“We like to start being led by a need,” Salisbury says, pointing towards two of Centrica’s biggest topics of interest to date in mobility and active aging. “We’re trying to think of how we can accelerate the decarbonisation of the transport sector… and help people stay in their homes with more active and fulfilling lives.
“Those are big challenges that are society is facing, and that’s where we like to start,” he says.
Once those considerations have taken place, they are matched to Centrica’s long term ambitions, skills and capabilities. While the group’s business units might be strictly focused on year-to-year activities, Centrica Innovations works on a medium-term, three to five-year horizon.
“We try to have a bigger vision of what we’re trying to achieve and then look at who can contribute to that vision and who we can assemble together to create a big solution for our customers,” Salisbury says.
Centrica’s e-mobility ambitions are a prime example. Salisbury says the firm wants to be a “one-stop-shop” for the decarbonised transport sector, with a range of solutions for consumers and fleets alike. This requires not just the power to charge vehicles, but to circumnavigate grid constraints and account for other complications such as billing.
While Centrica’s experience and history makes it a dab hand at power markets, bringing an end-to-end solution for EV charging infrastructure might be somewhat outside of its skillset. Centrica’s investment in Driivz plugged specific gaps and allowed the company to wrap its offering neatly together, culminating in the launch of a special purpose e-mobility division earlier this year.
Ultimately, Centrica Innovations is putting the consumer at the heart of its investment strategy, with the company’s ultimate goal of enhancing or augmenting the service it provides.
Domestic flexibility is another key theme for the firm moving forward, which Salisbury described as a critical area for its two home markets in the UK and US. Those two markets’ hopes of decarbonising power, heat and transport look set to send consumption soaring, leaving markets with the unenviable choice of costly grid reinforcements or managing domestic power consumption en masse.
“Certainly my view is we need to find out how to make the homes more self-sufficient. If that’s where we need to get to, then as an energy supplier we have to be developing more solutions for our customers,” Salisbury says.
It’s for that reason that Centrica’s Local Energy Marketplace trial in Cornwall could become a vitally important demonstrator project in years to come. Around 100 homes and businesses are to be brought into a virtual power plant comprising small-scale solar installs and various means of energy storage, allowing local residents and businesses to trade electricity between themselves. The final installations are taking place now and will be followed by a selected introduction of LO3’s blockchain platform.
But as consumer energy demands become more disparate, is Centrica – and for that matter, other energy innovators – at risk of losing focus?
Salisbury admits that he’s reluctant to deviate from his current focus areas of e-mobility, domestic flexibility and active aging, but is equally upfront about the fact that the sheer pace of change in the sector means that he inevitably will.
Centrica’s next focal point will be to look more closely at younger demographics and how they engage with the energy sector. “I think we could really uncover some new opportunities with younger families and younger people that will build on our assets and capabilities in the same way that we have around active aging,” he says, indicating that more announcements could be on their way this summer.