Why Innovation Matters for Energy Companies

In my role as Head of Innovation for Switzerland’s largest energy utility, it’s no surprise that I consider innovation a crucial element for the energy sector. But let’s take a step back and explore why that is. Why is innovation important in the energy sector? The answer is surprisingly simple: Decarbonization. There would hardly be any need for innovation in a purely fossil-based energy system. We have known how to run and optimize that system for decades and only incremental improvement would be seen every now and then.

However, the need to decarbonize puts entirely new pressure on the system. The challenge is clear: we must move away from fossil fuels and transition to a cleaner energy future. Over the past few decades, significant strides have been made in developing solutions to tackle this challenge. Today, we have commercially viable technologies like wind, solar, hydro, nuclear, and batteries that allow us to decarbonize large parts of the economy. However, these advancements address only part of the problem.

The International Energy Agency, in its latest “Clean Energy Innovation” report, estimates that around 65% of the required decarbonization can be achieved with technologies that are either mature or in early adoption. The remaining 35% of decarbonization requires further innovation to transition technologies from the lab and pilot stages to mass-market adoption. That requires the right political frameworks, but also players who can speed up deployment with a mix of forward-leaning techno-optimism and conservative risk management. And that is what we’re good at. Axpo is not a technology developer, but we are a utility with a clear purpose: enabling a sustainable future through innovative energy solutions. We can help accelerate the adoption of new technologies by connecting technology developers with end customers, providing power and mitigating risks.

The following sections provide a brief glimpse into the various fields in which we drive innovation.

1. Completing the Puzzle of Net Zero Technologies

Achieving net zero requires addressing the gaps in our current technological toolkit. While many solutions — like wind, solar, and batteries — are mature and scalable, there are still critical challenges that demand targeted innovation.

One key area is new power generation technologies. Solar and wind are cost-effective and well-established sources, but they cannot fully meet the needs of the energy system, in particular in countries with less solar irradiation or limited wind speeds (or acceptance). To cover these gaps, we need scalable solutions that could include advancements in geothermal, ocean-based, nuclear fission and (well, maybe indeed one-day) fusion energy. Axpo is already taking a pioneering role in this space, as demonstrated by our engagement in the geothermal plant in Inwil.

The increasing share of renewable power in the system also drives up the need for new energy storage technologies. Grid-scale batteries are getting ever larger and will gradually move to longer storage times. In the past, the focus was on having an hour of storage to provide ancillary services. Now, a few hours are the norm, enabling participation in markets such as day-night arbitrage. In the near future, multi-day storage could help address prolonged periods of low renewable generation (so-called 'Dunkelflaute' situations). Axpo is already a battery developer and operator today and hence has a natural stake in this field.

Another area requiring attention is the electrification of an increasing number of sectors. Electrification is the cheapest and most efficient way to decarbonize. New technologies allow electrification to gain a foothold in previously considered “hard-to-electrify” sectors, such as heavy-duty transport, industrial heat and similar applications. Axpo plays a crucial role as a reliable partner to pioneering industrial companies, helping them source electricity efficiently and optimize system flexibility.

However, not every industry can be electrified — either due to immense energy density requirements (e.g., aviation) or because carbon emissions are inherent to the process itself (e.g., cement production). This is where green molecules value chains enter the show. To me this includes all molecule handling. From the production of hydrogen derivatives (e.g., ammonia, methanol, e-fuels) to the capturing, storage and utilization of carbon dioxide. Axpo has a natural role in power supply and hydrogen production and is also well-positioned to play a key role in the trading and handling of molecules.

2. Providing the Digital Foundation for the Energy System

The rapid adoption of renewables has introduced a new challenge: balancing supply and demand. While wind, solar, and batteries are transformative, they require a flexible energy system to function - at the transmission grid level as well as on the distribution grid level. This coordination task is largely a case for digital innovation in the shape of new emerging platforms and connected business models. Axpo can leverage its expertise in energy trading and flexibility management lead this field in Switzerland and beyond.

In addition, we see that digital technologies have tremendous potential in further reducing cost, while increasing safety and reliability in the construction, operations and maintenance of our existing infrastructure. Thanks to our large installed base of hydro, nuclear, solar and wind assets as well as leading digital solutions, we’re taking a leading role in the development of solutions in this space and are increasingly aiming to deploy these solutions also to third parties, helping the entire energy sector to move forward.

3. Empowering People Through Optimal Work Environment

After all, innovation is not just about energy technology. At Axpo, we also focus on improving our internal processes and organizational efficiency. As a state-owned company, every Swiss Franc of additional value creation directly benefits Swiss taxpayers and the cantons that own us.

We are thus committed to building the best technology backbone for an energy company, using state-of-the-art tools and insourcing key competencies where necessary. We instill a growth and product mindset, equip our people with the right tools, and foster an innovation culture.

Conclusion: Innovation at the core of Axpo’s purpose statement

All the above clearly underpins why innovation sits at the core of Axpo’s purpose statement. At the same time, it is important to make clear: We are not a technology developer by definition. We don’t have a large R&D organization. Instead, we are bridge builders and technology enablers. In the realm of energy infrastructure, we act as a link between those who create cutting-edge technologies and the industries and communities that rely on them. We are the company that can build power plants based on new technologies, provide innovative power contracts, and handle and trade molecules. This makes us an indispensable player in bringing the energy transition to life.

In the field of digital energy solutions, we play an active role in co-developing applications that integrate intelligence and flexibility at the consumer side. Whether through our smart charging solutions or household energy trackers developed by our CKW subsidiary, we aim to lead Switzerland in managing flexibility and to be a key enabler for the European energy transition.

In parallel, we modernize our own IT infrastructure, build a future-ready data ecosystem, and seamlessly integrate AI into our daily workflows.

We recognize that the energy transition is not something we can achieve alone. Axpo actively seeks partnerships with startups, academics, venture funds, and innovation hubs. We are in this together. If you’re interested in learning more, stay tuned for upcoming communications and meet us at events. This year, we are attending the Innovationsforum Energie to foster our position in the Swiss ecosystem as well as the Energy Tech Summit for broadening our network also in Europe.

We are looking forward to the exciting years ahead. Talk soon!