Collaborative innovation ‘doesn’t just automatically happen’

By Stuart Stone

Experts from water, network and energy firms offer a snapshot of the state of pan-utility partnerships and outline the barriers that still exist.

To deliver net zero and best serve customers and other stakeholders, innovation is critical. And in a diverse pan-utility landscape, firms across energy, water and networks have long been aware that collaboration is key to unlocking that innovation.

Challenges around the slashing of carbon emissions by 78% by 2035, and becoming net zero by 2050 – as well as ongoing hurdles around futureproofing aging assets combined with the need to support vulnerable customers, for example – will only be overcome in partnership.

According to Tony Conway, director of Conway Strategic Water Consulting and former executive director of United Utilities,  the current emphasis on collaborative innovation is unprecedented.

“In my 40 years or so in the water sector, I’ve never known a time when there’s been such a focus on innovation and working together,” he tells Utility Week Innovate.

To kick off a six-part ‘Unlocking Collaborative Innovation’ content series celebrating best practice, sharing inspiration and examining different pressing pan-utility challenge areas to be addressed at Utility Week Live, Utility Week Innovate and experts from the UW Innovate Advisory Board lift the lid on exactly why collaboration is so important to innovation, which factors are driving it, and what the sector needs to do differently in order to foster a more collaborative culture.

What’s shaping collaborative innovation?

According to Western Power Distribution (WPD) policy manager, Paul Jewell, shifts in the government’s net zero ambitions and  concrete policy targets around decarbonisation – such as the phasing out of petrol cars and rollout of heat pumps – are fuelling renewed efforts towards collaborative innovation.

“The year 2030 means no more internal combustion engine vehicles being sold,” he explains. “Everything that’s new will be electric of some sort… I’m asking my team how we are going to deal with that.”

Jewell adds that the transition between price control periods has also reshaped attitudes across energy networks.

“At the start of RIIO-ED1 in 2015, electric vehicles were a bit of a novelty and a curiosity,” he explains. “We knew there was a carbon plan, we knew we had to decarbonise, but the focus of what we were seeing was grid scale generation – we weren’t looking to the big future.

“Now, as we’re coming to business plan for RIIO-ED2 – from 2023 to 2028 – we’re in a different place because the government has moved on.”

Head of innovation at Northern Gas Networks (NGN), Richard Hynes Cooper, adds that there’s been a similar shift in focus between RIIO-GD1 and RIIO-GD2.

“RIIO-GD1 was focused directly on challenges that the networks face,” he says. “RIIO-GD2 is more specifically focused around innovation, which allows us to provide evidence to support an energy systems transition and actually help networks to decarbonise and specifically ensure that consumers in vulnerable situations aren’t negatively impacted.”

From a water industry perspective, the CEO of non-domestic water retailer Everflow, Josh Gill, adds that open collaboration and innovation across the sector’s retail market has been facilitated and encouraged by the industry regulator.

“One of the things that Ofwat is very good at is actively promoting retailers and wholesalers to collaborate with each other to come up with solutions for the market and its customers rather than preventing those through unnecessary red tape,” he explains.

Looking to the future

While the appetite for collaborative innovation is clear, multiple barriers to innovation in action remain. There are structural and legal issues which make it hard for organisations to collaborate – particularly when the organisations are of different scales. The intellectual property rights for publicly funded innovation projects are a particular hot potato. “I’m still speaking with people saying that IP ownership and the rules around it are unacceptable,” says WRc associate and British Water ambassador Steve Webber. “It offers no protection, allows companies in effect to grab innovation royalty free, modify it, move it on and hand over to others to develop. I think we should look at the overall roadmap for the supply chain, from sharing innovation through to adoption.”

Northern Gas Networks’ Richard Hynes Cooper adds that while his firm has witnessed “fantastic innovation”, it needs to be opened up to network challenges and opportunities by using established knowledge, practical skills and procedures in areas such as IP.

“Those innovations funded by customer money present the challenge we have around IP,” he says.

Likewise, Hynes Cooper adds that data and “digital health” solutions also pose a follow-on challenge when working with new innovators and SMEs.

“We’ve got some fantastic opportunities with really small, agile, operations – so rather than it being a cruise liner, we’ve got small businesses that can pivot and change with our ever-changing demands. But we’ve also got companies that are six people in size that don’t have ISO 27001 accreditation – so when it comes to doing cybersecurity and data and digital, and our data protection protocols, it’s a challenge.”

It is clear that while the appetite for deep and genuine collaborative innovation is shared across utilities, the structures are not yet fully in place to deliver it. The Energy Innovation Centre’s chief executive Denise Massey looks forward to a future where partnership run deeper than they do today: “There is a next step which is how would they become joint ventures opposed to collaborations? How do we end up with collaboration, one team, managed by one person from a network, where everybody’s accountable to that person?”

Clearly, there is still work to be done – and Utility Week Innovate and the Innovate Advisory Board will be highlighting the challenges and potential solutions over the weeks ahead. We’ll also be showcasing the very best examples of collaborative innovation in action – and you can see many of the projects and meet their leaders in person at Utility Week Live, 17-18th May at Birmingham’s NEC.

Collaborative innovation – when and where it’s already happening

Between companies in the same industry: Energy Innovation Centre chief executive, Denise Massey has seen collaboration in energy sector innovation “move massively” recently. However, she caveats that contrasting cultures and competition in energy still pose barriers to collaborative innovation – something that energy supplier Ovo’s head of smart metering, Joe Mills, believes poses a key challenge.

“We certainly see that there is collaboration across retail businesses, but I think it could go a lot further as there are often issues around competitive companies being able to collaborate and be really effective,” he says.

Yet from what he’s already seen from water retail, UK Water Industry Research (UKWIR) CEO Steve Kaye believes that collaboration and competition can “coexist”.

“If we can collaborate on big projects or common challenges, and do the lower technology readiness level stuff together, when something’s proven, companies can still implement those solutions, still hit their outcome delivery incentives and endeavour to be top of the league,” he says.

Between companies and their supply chains: Kaye adds that Spring – the water sector’s much anticipated innovation centre of excellence – has been launched as a new platform to facilitate “near to market” innovation similar to that fostered by the EIC in energy.

While this demonstrates one of many pan-utility strides in engaging SMEs in innovation projects, firms still regularly face challenges.

Discussing barriers in her firm’s efforts to collaborate with SMEs, Scottish and Southern Electricity Networks’ Oxfordshire programme director, Mel Bryce, explains that issues on some of their projects revolve around the structure of innovation funding and hurdles that have to be overcome in order to get SMEs and social enterprises on board.

“Sometimes there’s a perceived hierarchy within projects and in order to work really collaboratively that has to be addressed and worked through so that everybody is on a level playing field,” she continues. “Otherwise that can lead to slow progress when trying to get that shared vision and understanding as a consortium.”

However, Conway emphasises the shared onus on enabling collaborative innovation and a need for clearer communication and articulation from both SMEs and utility firms. “It’s a case of each party looking at things from the others’ perspective – wearing the other person’s shoes – to have that value-adding dialogue.”

Spanning sectors: According to Northumbrian Water’s head of innovation, Angela MacOscar, earning her “innovation stripes” in fast moving consumer goods – “a very, very different sector, and, as it says on the tin, a lot faster” – has been essential in thinking creatively around innovation in water.

“Bringing in some of the contacts that I have from my past life, and some of the different cultural aspects, has been a brilliant opportunity,” she explains. “Where I see the richest beds for innovation for our sector are not in our sector or supply chain, but actually in other sectors that perhaps have more research and development spend.

“I want to be looking at medicine, defence, other sectors that are a lot more lucrative, and perhaps running a bit faster,” she adds. “We can import this stuff into our sector probably a few years down the line. That’s where I want to be looking for new nuggets.”