Written by: Hando Sutter | CEO
For me, innovation means doing something differently. An example from daily life: when I clean my room with a brush and then at some point I turn on the vacuum cleaner. I clean up faster and more efficiently. But innovation can also be changing a business model in the energy sector. For quite a while now, Enefit is not the only electricity producer and seller in Estonia. For example, there is a roofing material that produces energy for your home. It’s a completely new business model and technology as conventional power plants, transmission cables, system operator and distribution grid for bringing electricity home are disappearing.
I believe that everyone can be involved in innovation, no matter what is their job or job title
Every day you can think about how you can do your job better. Aside from the area where I work, Uber is a good example of innovation. I use Uber everywhere in the world. For example, in Mexico, it is the same Uber as in Tallinn. The app is the same, you don’t even have to interact with a taxi driver or pay in cash, and everything is done with ease. In addition to convenience, the customer’s victory lies in the increased competition in the provision of taxi services, which leads to lower prices.
For me, one of the most powerful examples of innovation in recent times is the solar park currently being built in the United Arab Emirates. It is not a classic solar park, it produces steam from the sun. The steam is accumulated and then electricity is produced with conventional generators. So basically it’s a dispatchable solar power plant. At the same time, the production price of electricity produced there is significantly cheaper than the production price of electricity produced from oil shale, of course — this solar power plant is also located “a bit” more south of Estonia.
Another example of energy innovation: The offshore wind farm being developed on the coast of Scotland will produce hydrogen. With wind power, hydrogen will be produced and the energy is transmitted in the form of hydrogen. It is similarly stable, stored energy that can be used at the right time, not just when the wind is blowing.
Closer to home and to Enefit
We have one great project in Estonia mine. If this world’s largest oil shale mine is depleted at one point, we plan to recycle it as a pumped-storage hydroelectric power station. In other words, this is basically a large battery, the presence of which becomes more and more important as renewable energy is added to the energy system. We have thought about what will happen after the mine’s oil shale supply is depleted.
It is a fact that Estonia has better access to power consumption data than any other EU country, perhaps even the best in the world. We are already using this data to provide useful services to people. But there is certainly more potential. In Estonia, more than 50% of our clients have spot packages in Estonia, which is more than in any other country in our region. The consumption of these customers can be cleverly managed and thereby help customers reduce costs. Similarly, smart consumption helps to reduce the environmental footprint, because if you consume more electricity at cheap hours, it will come largely from renewable sources.
I’ve been using Enefit’s Smart Home solution for over a year, it is a very good solution. This is exactly the direction in which the energy world of the future is heading. I can assure you that thanks to this solution, I have really saved on electricity costs by avoiding expensive hours. If I can control my own power consumption today via a mobile app, then in the future it will be algorithmic and the computer will do the work for us.
Enefit’s energy trading unit already uses an algorithmic trading tool to trade energy in the wholesale market. We have five markets where we can use it: the day ahead, intraday, balance and two frequency markets. Algorithmic trading is necessary as we have more and more production assets, including non-dispatchable renewable energy production, and an increasing number of consumer portfolios in different countries. Man and his brain are simply no longer sufficient to manage all of this, as there is an increasing amount of data to consider when making transactions. Hundreds of transactions are executed daily through algorithmic trading, and it allows us to more rationally offer our production assets to the market and, ultimately, to make the best deals for our customers.
When thinking about what prevents innovation, it is above all a matter of thinking openly
We are usually so busy with our routine and standard activities that it is difficult to think outside of the box. In fact, we should always be thinking that things can be done better. You don’t have to be afraid to do it differently. It also concerns cooperation. Today, as an energy company, we work with Microsoft to develop energy solutions for our customers. If we take the circle of Enefit’s partners today, it is significantly different than it was 10 years ago. We need to be open to any kind of cooperation with companies in different sectors, both start-ups, and large global companies. This is a good ground for innovation.
We need to encourage people to think with their own heads and experiment. On the one hand, every thought is worth thinking about, but from the whirlwind of many thoughts, we need to ensure that the best ideas are put into practice, otherwise, we will remain at the level of the story. We can be very agile, we have a lot of thoughts, we organize brainstorming — but at one point we have to decide where to contribute and move on. And then bring the result home. Agility, on the one hand, and very hard discipline, on the other hand, must go hand in hand to get somewhere, or else we will just dream. It is well written by Gary Pisano, a professor of business administration at Harvard in his article The Hard Truth on Innovative Cultures (2019).
We are currently running an idea competition Enefit Idea Hub The Pitch, where we are looking for good ideas on three topics: smart mobility, smart services, and smart city. One common denominator in these topics is that the energy world is becoming more complex. On the one hand, it is scary, on the other, it offers new opportunities. With the competition this year, we are looking for ideas on how to build a smart middle ground between energy producers and consumers. Five years ago, for example, cooperation between the automotive and energy sectors was not very necessary, today it seems to us to be indispensable. It is also necessary to bring into the energy industry ideas from other sectors, which can provide useful and life-enhancing solutions to our customers.
In conclusion
We are at a very exciting stage in the development of Enefit, where a lot is changing in our day-to-day activities and we have every opportunity to be a leader, not a drag. Innovation is not a word for us, but a daily activity to make our industry more efficient, but also to deliver better customer-oriented solutions. Everyone in Enefit and our partners today has the opportunity to create new products and solutions that will truly change the world of our customers in Estonia and beyond. This is a fierce opportunity and we will try to make it a reality together.
