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 elaborate on 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 purely fossil-based energy system. We know how to run and optimize that system since decades and only incremental improvement would be seen every now and then.
The need to decarbonize though puts an entire 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 estimates in the latest “Clean Energy Innovation” report 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 demands further innovation getting the required technologies from lab and pilot stage 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 the clear purpose to enable a sustainable future through innovation energy solutions. We can help accelerate the adoption of new technologies by connecting technology developers with end customers, providing power and mitigating risks.
In the following paragraphs, we have a short glimpse into the various fields, in which we seek to make innovation happen.
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 are 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 can take a pioneering role in building and operating such power plants as currently visible in our engagement for the geothermal plant in Inwil.
Ever increasing shares of renewable power in the system also drive 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 to engage in e.g., day-night arbitrage and in the near future multi-day storage could enter the picture to cover “Dunkelflaute” situations. Axpo is already a battery developer and operator today and hence has a natural stake in this field (add link to project in Sweden)
Another area requiring focus is the electrification of ever more use cases. Electrifying is the cheapest and most efficient way of decarbonizing. New technologies allow electrification to gain foot also in previously considered “hard-to-electrify” sectors, such as heavy-duty transport, industrial heat and the likes. Axpo has a role to play here as reliable partner to pioneering industrial companies, enabling them to source electricity optimally and make best use of potential flexibility in the system (add link to Elektrotunnel Watt D’or price).
Yet, not every industry can be electrified, either because of immense energy density requirements (e.g. aviation) or when the carbon emission are related to the process itself (e.g. cement). 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 the power supply and hydrogen production and is also well-positioned to have a role in the trading and handling of molecules. (add link to our hydrogen activities)
2. Providing the Digital Foundation for the Energy System
The widespread adoption of renewable technologies has created a new challenge: managing the variability of 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. (add link to smart charging app from CKW)
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 (link to digital hydro and/or LINIA…)
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, give our people the right tools at hand and foster an innovation culture. (link Engineering Power Conference)
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’re in this together. If you’re interested to learn more, stay alert 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!
