Much has been made of the potential for telecoms giants to drastically change the energy sector, but Telefonica has perhaps gone the furthest with its Alpha Moonshot initiative which wants to tear down a century-old power transition model and deliver a “paradigm shift” in energy.
Telefonica’s Alpha programme was established in January 2016 with the specific aim of addressing some of the most pressing societal issues facing the world, predominantly through conceiving and incubating solutions that make the most of breakthrough technology. An innovation facility has been set up in Barcelona to pursue the ambitious multi-year project.
Alpha Energy is one of two so-called ‘Moonshots’ that Telefonica describes as being ‘in flight’, however more projects are under consideration. Candace Saffery was chosen to lead the energy initiative earlier this year and has immediately set about making early strides.
Saffery’s first aim is to establish a team, the core of which will be based out of Telefonica’s office in Barcelona. Then it will be that team’s aim to establish partnerships with energy firms the world over to help alleviate what Saffery regards as one of the biggest obstacles to the energy transition; a lack of collaboration.
“To really get there we need to stop acting like islands in energy and start to really collaborate, to bring the best minds together, the best concepts together and drive scale in emerging markets,” she says.
This lack of collaboration – or at least incumbents being open to collaborative approaches, possibly as a result of how distinctly competitive energy markets have become – is preventing isolated or islanded innovations from truly taking hold. Saffery says there is great work happening in energy-related start-ups that is simply being overlooked.
But that’s not to say that incumbent energy firms are doing enough on energy innovation or R&D. Far from it. It’s just that this work is being conducted in “pockets” of utilities that Saffery says makes it difficult for them to open up. “I think as we start to realise this is a massive problem, a massive opportunity, then the more we collaborate and the more we realise this paradigm is shifting then we will create that momentum,” she says.
This momentum can then be carried to tackle further obstacles, such as regulation and policy. As soon as large companies get behind the energy transition and take their customers with them, Saffery is of the belief regulation will be quick to catch up.
Lessons from the last decade
Saffery speaks with experience, having worked in the US’ renewables sector for more than a decade. Although her background gave her experience working for environmental law firm EarthJustice, she was instrumental in the founding of US solar firm Sungevity, which was the first to use satellite imagery to measure rooftops as a yardstick for their PV potential in 2007. A decade later Google was doing the same.
That experience made Saffery realise the impact innovation and technology can have on an industry, pointing in particular to its ability to “drive markets” towards a particular end goal or destination.
From Sungevity, she leapt to Pure Energies, a solar firm based out of Toronto that focused on removing a lot of the acquisition costs solar firms were having to foot in order to do business. New lead generation algorithms were developed and innovative ways of categorising customers envisioned, ultimately leading to NRG acquiring the business in 2014.
A year later Saffery moved to utility-scale wind developer NaturEner, where she had her first taste of some of the grid connection issues which have so constrained renewables. NaturEner worked its way around its own issues by going a few steps further than most renewables firms to actually establish its own balancing authority in the States, essentially solving its own integration issues through a suite of reliability products and services.
This experience, Saffery says, provided her with the first real vision of the paradigm shift that was occurring in the energy sector. “In the early 2000s it was really on hardware costs and then it moved to accessing the market and as the scale came up, it was really integration challenges. I think that's where we're landing today as far as more and more intermittent is coming online, there's more grid disruption, more public choice over renewables and controls. The utilities haven't caught up yet. They're getting there, hopefully, but it's been up to the generator to creatively get round that and invest actually a lot of money in forecasting and balancing,” she says.
The new paradigm
Saffery is aiming to combine her expertise with Telefonica’s experience of navigating a similarly disruptive evolution. The advent of mobile phones, wireless communications and the internet forced Telefonica to abandon the old analogue technologies with such speed that some markets skipped them altogether. It’s becoming abundantly clear that emerging markets stand to do exactly the same with electricity generation and leapfrog conventional fuels to renewables.
As a result, Telefonica’s great stated aim is to target the 2.5 billion people in the world that have either no or unreliable access to electricity and ensure that they are not left stranded as the energy transition takes hold. While Telefonica is still in the early stages of identifying precisely what role it will take, Saffery is confident that combining the right level of targeted investment with the company’s data and networking expertise will be a “very powerful connection” for the sector.
And it’ll have to be powerful if it’s to meet Alpha Energy’s stated aim of reinventing the electricity distribution system.
Saffery is insistent that a paradigm shift is needed to create a distribution system that’s fit for modern power generation. “If you look at the current model, it's over a century old so there hasn't been a lot of innovation or transition since it was initially conceived and deployed. We've got over 100 years of infrastructure and modelling that is now coming up against [changing] public demand,” she says.
Telefonica’s idea for future power distribution networks owes a lot to three words; intelligent, adaptable, flexible. Peer-to-peer trading networks will create a far more democratised power system, driven predominantly by how consumer attitudes are changing. And their changing for the better.
“We've had a very bizarre relationship as a user with energy, in that… there really wasn't a deep relationship between the user and the utility model until it broke. This has really changed.
“The big part is the public has started to demand clean power and efficient use and good pricing, and the industries have started to shift to create a lot more markets for localised generation. And so the model, that shift has to happen where we go from centralised and inflexible to decentralised, which enables customer choice,” Saffery says.
And are the utilities waking up to the change at hand? “I think they're starting to, because in many utilities they have these branches now of innovative teams that are coming up with new ideas,” Saffery says, however she is adamant there are much bolder lessons to learn, specifically in the sophistication with which telecoms companies have learnt to transmit and deliver data. Energy companies need to aspire to do precisely the same with their commodity.
This will be enabled, quite drastically, through what Saffery terms as the “digital grid”. Smart power routing, flexible load management, storage and wireless energy transfer – all technology which Saffery describes as “just around the corner” – is achievable, it just requires capital investment and the right players aligned.
"We can get to a place where we have a convergence between the energy industry and the energy users, to move into a really dynamic and influential relationship."Candace Saffery, Alpha Energy
A successful shift
Alpha Energy’s aim is to get those players aligned through the partnerships it is currently sourcing. Then, Saffery says, it will dive “deeply” into the nitty gritty of emerging technology and begin some in-the-field testing. First up are peer-to-peer energy trading networks and Alpha Energy is in the midst of putting together engineering teams with the aim of producing some prototypes before the year’s end. Intelligent routing and automatic balancing within mini-grids, for use specifically in emerging markets to begin with, is the first technical challenge it wants to resolve.
But Saffery’s overall idea of success is far longer-term and, ultimately, far more ambitious. “We're asked actually to think about changing the world. So when I put that hat on, we can get to a place where we have a convergence between the energy industry and the energy users, to move into a really dynamic and influential relationship,” she says.
This will incorporate an energy market that is more informed about its product, one that directs and prioritises load and demand, and one that involves stakeholders that are entirely in tune with the energy transition in general.
It’s an ambitious aim and, without more specific targets, one that may be difficult to justifiably reach. But with the sheer scale and experience of Telefonica behind it, predicting just how high its moonshot programme could reach could be a futile exercise.
Saffery remains confident that the combination of the two could deliver the real change required for an energy distribution sector fit for the 21st century. “I think the convergence of those two sides - a really informed user market and an industry that has to respond to that - will bring us to a place where we'll be powering all of our industries and homes with clean reliable power.”