The aggregate R&D spending of 16 major European electricity suppliers increased in 2014, according to a study by the European School of Management and Technology in Berlin.
Much of this was down to a €107 million increase in R&D spending by French utility company EDF, while Engie, formerly GDF-Suez, and Iberdrola in Spain, increased their R&D investment by €28 and €10 million respectively.
Since 2007 Iberdrola has tripled its research budget and spending exceeded €170 million in 2014.
In 2014, EDF’s research budget was €650 million. The company is currently investing in a new research centre on the Paris-Saclay campus, which will be the largest industrial research and vocational training centre in Europe.
The R&D budgets of other big European companies were static, while some, including Germany’s E.ON and RWE groups made significant cutbacks.
The report says 14 of the 16 electricity companies increased their overall innovation performance and some companies in the energy distribution sector have set up or financed incubators and accelerators, or invested in start-ups.
“The last couple of years saw a mushrooming of new organisational forms of innovation,” the report says. Electricity utilities are moving, “from the classical model of managed innovation to diverse innovation.”
Start-ups help these companies to improve service and reduce costs, for example, through electronic replacements for conventional payment methods and the deployment of smart meters.
Utility companies have also established corporate venture arms. Iberdola, for example, has set up Perseo, through which it has invested €50 million in new technologies and start-ups since 2008. Utility companies CEZ, EDF, and Engie also have their own venture capital programmes, while E.ON and RWE have opened offices in Silicon Valley to tap into digital innovation there.
About the index
The ESMT Innovation Index 2014 – Electricity Supply Industry, measures innovation activities of 16 major European utilities from 2007 to 2014. In addition to R&D expenditure and patenting activity, the index examines for process innovation, productivity and sustainability.
To read the full report, click here.
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