Navigant Research Blog

European Utilities Have Increased Their Activity in New Energy Platforms: Part 2

Alexandre Metz — February 8, 2018

The energy industry is experiencing a profound transformation as the sector moves towards the more intelligent, more distributed, and cleaner use of electricity. Utilities’ traditional business models are being challenged by disruptive firms offering new services leveraging new technologies. In the previous post, I described how European utilities have significantly reinforced their strategic interest in new energy platforms. In this post, I highlight the key regional differences in new energy platform activity between North America and Europe. In the final post, I will argue that some of the new energy platforms have been highly active recently as European utilities strive to build their portfolio of digital services.

Key Regional Differences

Major differences can be drawn between North America and Europe: European utilities tend to acquire or invest in North American companies whereas they are mostly partnering in Europe (see the following figure).

(Source: Navigant Consulting, Inc.)

Activity in North America mostly consists of investments and acquisitions. California leads the way, attracting nearly two-thirds of partnerships, investments, and acquisitions announced in 2015-2017. Examples include investments in distributed energy resources (DER) management system provider AutoGrid and urban mobility data analytics company StreetLight Data, and acquisitions of EV charging platform provider eMotorWerks and battery storage systems integrator Green Charge Networks.

Additionally, European utilities have been strengthening their presence in California. Building upon the acquisition of EV charging platform provider Oxygen Initiative, Innogy set up Innogy e-Mobility US. The Los Angeles-based entity is responsible for expanding the utility’s Electric Mobility solution offering in the US. Similarly, Total Energy Ventures relocated part of its team from Paris to the San Francisco Bay Area to be closer to the local startup community, which accounts for half of its investment portfolio.

States such as California, New York, and Massachusetts benefit from qualified talent and access to capital. Many startup founders are alumni from leading US universities who developed their initial product in partnership with a research lab at their universities. Additionally, the US incubator, accelerator, and investor ecosystem is recognized as one of the most active in the world, thereby attracting startups looking for financial and advisory support.

Most of the activity in Europe relates to partnerships. The geographical proximity partially explains this trend, as European utilities typically test energy services in their core market before expanding. Enel has been building an EV charging network totalling 2,700 stations in Italy as of October 2017 and plans to nearly double the network capacity by the end of 2018. E.ON partnered with Google to expand Project Sunroof to Germany. Homeowners in selected German cities can purchase solar panels, energy storage, and system management software from E.ON—and the utility guarantees the financial returns estimated by the online tool.

New Trends

One new trend is the rising number of investments and acquisitions realised with companies based in Europe. The total number of deals concluded in 2015-2017 nearly matches the figure for North America (21 vs. 25), making Europe an attractive region for startup activity. This shift is also related to the trend of startups building upon successful business deployment in Europe and expanding to North America. Netherlands-based EV charging infrastructure developer EVBox, acquired by ENGIE in 2017, is now expanding to the US.

In conclusion, European utilities’ activity in North America remains focused on investments in, and acquisitions of, new energy platform companies. In Europe, although the majority of activity still consists of partnerships, an increasing number of investments and acquisitions has occurred over the last few years.

In the final post, I will argue that some of the new energy platforms have been highly active, as European utilities are striving to build their portfolio of digital services.

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