GE Chairman and Chief Executive Jeff Immelt announced the fund in San Francisco earlier today, (13 July), inviting researchers, innovators and startups around the world to compete for the money and become part of a huge virtual team tackling the technology hurdles to deploying 21st century power grids. “Innovation is the engine of our nation’s effort to transform the way we make, move and use power,” said Immelt. “We want to jump-start new ideas and deploy them on a scale that will modernise the electrical grid around the world.”
$100 million of fund will come from GE, with the four venture partners, Emerald Technology Ventures, Foundation Capital, Kleiner Perkins Caufield & Byer and RockPort Capital, putting in the remainder.
Modernising the world’s ageing electricity infrastructure is vital to integrate rising volumes of renewable energies, such as wind and solar and raise the efficiency of grids. Existing systems were designed near a century ago for a one-way centralised distribution of energy to consumers, and lack the two-way communication technologies needed to enable flexible management of energy flows. Now, Immelt says he want to see the application of the latest monitoring technology, to build in intelligence, and ‘digitise’ electricity. This, “will transform how electricity is created, dispensed and used,” Immelt said.
To attract researchers around the world, GE plans to grant five awards of $100,000 each to individuals or companies for breakthrough technologies, services and business models that will speed the development of a more flexible and robust 21st century grid and accelerate the global shift to a clean-energy economy. But the vast bulk of the $200 million pledged by GE and its partners will be channelled to promising startups and concepts through venture investments and other commercial partnerships. “We want to use the industrial clout of GE to bring these technologies to market faster,” said Immelt.
The ecomagination competition seeks to drive new ideas, to market by providing a critical mass of growth capital for individuals and companies with ideas at a time when many public sector clean-energy projects have been slow to deploy and bank lending to companies has nearly dried up in the global squeeze on credit. GE executives acknowledged the importance of public sector smart grid initiatives, but insisted on the need for industry to step up the pace. “This challenge is about taking action. We are collaborating to harness the power of business to forge progress today,” Immelt said.
The $200 million private-sector bet on harvesting technology breakthroughs by reaching out to a global community of innovators is one of the most munificent examples to date of open innovation. Instead of working in proprietary labs, or with a small number of partners, companies increasingly are experimenting with ways to pool the world’s collective brainpower.
GE’s venture capital partners point to the grid as the backbone that will accelerate energy innovation in the 21st century. “Global power grids make up the largest networks in the world. In most cases, the technology on which they are based is essentially 100 years old. The opportunity to reinvent how energy is produced, distributed and consumed is extraordinarily large and is critical in the battle against climate change,” said Paul Koontz , General Partner at Foundation Capital.
As part of its initiative, GE and its venture partners called on governments to support the private sector’s drive to innovate by eliminating regulatory barriers to trade in clean energy technologies, protecting intellectual property rights, and maintaining strong public support for R&D.
The drive to modernised grids is likely to take a decade, with new technologies gradually being grafted onto existing grids. Smart meters, for example, are already being deployed in some regions to help consumers reduce their energy consumption and costs. But while they are a key building block for smart grids, there are no standards in place.
Other elements of the smart grid include intelligent sensors and control systems to enable energy providers to better balance variable sources of energy - in particular intermittent renewable sources such as wind and solar power - and to manage peak loads, and new storage technologies to allow energy to be stored and fed into existing power systems as and when needed. Currently, only 2.6 per cent of the electricity generated worldwide is stored before use.
The Grid Challenge is part of GE’s five-year-old ecomagination initiative; a programme dedicated to driving innovative new products and services in clean energy technologies. To date, the company has invested $5 billion in clean-tech R&D and developed more than 90 products and services under the programme. There has been a handsome return: in 2009, revenues from ecomagination products and services rose 6 per cent to $18 billion.
GE’s smart grid products include a sleek battery charging station for electric cars called, “WattStation” and new range of appliances, including microwaves, cookers, hot water heaters and dryers - equipped with communication technology. Some of the appliances go into a low power mode when utilities signal that overall grid power consumption is up, and return to normal power when consumption is down. Others have on-board displays to indicate when electricity is cheap. The WattStation and appliances will available later this year.
Until now, the ecomagination initiative has focused mainly on internal research, products and services in everything from jet engines to wind turbines - but not on innovation with external partners. GE’s venture partners pointed to the importance of helping entrepreneurs scale their smart grid ideas quickly. “There is no lack of entrepreneurship or technology – but there are scale issues in getting this technology to market,” says Ray Lane, managing parnter, Kleiner Perkins Caulfield & Byers. This project marries GE’s massive scale to deal with complexity, with the kind of entrepreneurship we can attract.”
Experts say governments, utilities and business will need to work closely on developing large-scale demonstration projects that ensure 100 per cent reliability of smart grids before fully revamped systems are deployed. Upgrading the grid is particularly challenging because electricity supply is linked to national security, and its distribution is publicly regulated.
While hard to pinpoint how long it will take to forge a smart grid, Immelt and GE’s venture partners said they are convinced that highly capable innovators, including individual researchers, entrepreneurs and small and medium-sized companies, will come forward with solutions from around the world.
Smart grid demonstration projects already are underway and testing technologies in Korea, Japan, US, UK, Denmark, Australia and Abu Dhabi.
GE, which spends $4 billion annually on research and development, including $1 billion on clean technologies, invests heavily in its own smart grid technologies. But with the possible technology solutions wide open, company executives decided it would be able to innovate faster by “going fishing” around the world for bright proposals. Immelt said the company would try to “prompt” innovators on its ecomagination website by noting areas of research that may be fertile for discovery.
The ecomagination competition is open to anyone aged 18 years or older and all legally formed entities and runs from July 13-September 30. The competition seeks proposals in three, broad categories: Making power (that is, renewables), moving power (grid efficiency) and using power (eco homes/eco buildings.) Winning entries will be announced in October.
A committee of representatives of GE businesses and the partner venture firms will select candidates for commercial partnerships. A separate, independent judging panel, including challenge advisor Chris Anderson of Wired magazine, GE executives, leading academics and technologists will select the winners of the $100,000 awards. Members of the general public can also participate by voting for the idea that they believe will have the most impact on the smart grid of the future. The winner of the public vote will receive $50,000
For more information, see http://ecomagination.com/challenge