You are working in the new business development team of the company Solvent, a software company founded

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You are working in the new business development team of the company “Solvent”, a software company founded in Gothenburg, Sweden by three experienced former executives in the energy market. Before they incorporated Solvent in the year 2016, the three founders had worked for major energy providers in IT, software development, and sales/CRM management. Since its foundation Solvent offers cloud-based software for energy providers in the area of sales and customer relationship management. Unlike the market-leading sales and CRM tools (e.g. Salesforce, SAP), Solvent’s system is specifically designed to the needs of energy providers. Solvent’s customers base covers mainly small and medium-sized energy companies in northern and central Europe. The software supports the energy providers in organizing their sales and service teams to access the latest customer data, to create tailor-made offers for customers, and to plan/track sales campaigns. The software offers innovative features such as sales forecasts, visualized sales pipelines, AI-based lead management recommendations, automated contract drafting, and a seamless mobile experience. To expand their current business and to ensure long-term growth, the company Solvent built up a small new software development team in 2020. The aim of this new project was to exploit software opportunities in the renewable energy and energy storage market. After two years of intense market research, technology analysis and development work, the team completed a first marketable version of a cloud computing and AI-based software that helps producers of renewable energy (particularly wind and solar power) to optimize the storage and trading of their renewable energies. They named the new software enpilot. Energy production plants (e.g. wind farms) and electricity storage systems (e.g. stationary large battery systems) need to be planned, built and operated. There are several players involved here:

Battery manufacturers are companies that produce the large industrial batteries required for use in a power plant. These companies tend to be very large. A prominent and growing player in this market is Tesla. Battery manufacturers usually offer their batteries together with a battery management system (BMS). A battery management system is a combination of electronics and software acting as the “brain” of the battery. The most basic functionalities of a BMS are to make sure that battery cells remain balanced and safe, and provide important information (e.g. available energy). The battery manufacturers often sell the batteries to so called battery integrators that assemble complete turnkey stationary battery systems to the requirements of the end customers in different applications (e.g. power plants owners).

The hardware to generate the power (e.g. solar panels, wind turbines) is supplied by different energy OEMs and suppliers. Some of them just focus on the core hardware, others offer more complete solutions including battery storage and control systems. Project managers and consultants are employed by larger companies with less technical knowledge that are interested in investing in energy production sites. Project managers are engineering firms taking all steps in the planning and approval process. Some of these firms also act as general contractors in the building phase and coordinate the different hardware suppliers, construction and installation companies.

Self-evidently, large energy providers tend to do the planning and project management in-house. The owners of the power plants are often also the plant operators. But again, if the power production sites are initiated by institutional investors, investment funds or local cooperatives, the power plants are usually run by contracted operators.

Since the liberalization of the energy market in many European countries, there are three main actors in the production and commercialization of electricity:

The energy producers, the energy traders, and the grid operators. Energy producers operate the energy generation sites/plants and are interested in cost-efficient power production. They need to make accurate predictions of their production in order to sell their electricity at best prices to the different markets. In case of inaccurate forecasting, the energy providers feed in too little or too much power to the grid and have to pay the balancing power costs as a “penalty”. Most large energy producers also commercialize and sell their energy via their own trading units or trading firms. Small energy producers, however, use energy traders to sell their power to the different electricity markets. There are many independent energy traders focusing on commercializing the energy of small and decentralized energy producers on different energy markets. These traders very often pool several small energy producing units to larger virtual power plants. Energy traders have a high interest in accurate predictions of energy production, energy storage and are also very much interested in market predictions. The grid operators need to guarantee that the supply covers the demand at any place at any time. It is forbidden that an energy producer or an energy trader also acts a grid operators as there are some conflicts of interests between the three parties. While the energy transition is a strong and unstoppable trend, the shift to renewable energy production creates both new challenges and opportunities. On the one side, the power production in photovoltaic systems and wind parks is volatile which imposes significant challenges for load management (balancing supply and consumption by (not) feeding in energy to the grid to prevent blackouts). On the other side, the prices for electricity are very volatile, for example in day-ahead and intra-day trading of electricity at the European Energy Exchange (EEX) or at the market for balancing power. This offers opportunities for energy producers to achieve higher prices by selling their electricity at the right time on the right market. In a situation with volatile supply and market prices, energy storage is a key factor in the transition to a sustainable energy system. In addition to pumped hydro storage, heat storage and power-to-gas; battery electricity storage is an important technology to support a fast expansion of renewables in the energy mix. Batteries can store surplus energy when supply is high, and prices are low. Batteries can then release energy when supply is low, and prices are high. The cost for stationary battery systems have already fallen rapidly, and this cost trend is going to prevail in the foreseeable future. Therefore, battery storage installations have started growing rapidly. It is projected that the worldwide cumulative capacity in 2030 may reach between 300 and 500 GWh. This storage capacity will be used both, in smaller home storage systems and in industrial / large-storage systems. Some of these installations are connected to renewable energy production sites, others are operated independently from energy production sites. Currently, industrial systems and large storage-systems operate mainly in the market of ancillary services to ensure that the grid is balanced by providing operating reserves. Most of the home storage systems are exclusively used to increase the rate of self-consumption of the self-produce power – rather than feeding it into the grid. These operations are called “single-use” because they just exploit one application and commercialization path for energy. However, single-use applications miss to exploit the entire range of economic opportunities. It is very likely that most energy producers could achieve significantly higher revenues for their energy if they could switch between markets in an optimal way. In order to maximize the returns on their installed storage capacity, energy producers are striving for “multi-use” applications. Energy storage will be increasingly used to access multiple applications in different markets (for example providing frequency containment reserve for the balancing market and selling energy at the intraday energy exchange). A key challenge for multi-use applications is the coordination of energy production, storage, and sales. This optimization task is particularly challenging for energy generation by renewables since it is weather-dependent. It is hard to predict how much energy will be produced. In addition, the prices for the different uses of energy are not easy to predict. All this leads to a financial planning uncertainty for the energy producers. This is the problem that the new software enpilot aims to solve. With their SaaS software, the company Solvent plans to accelerate the energy transition by making the use of produced energy more plannable for the suppliers. The enpilot software is an “autopilot” for energy storage. It is a real-time optimization software that optimizes the deployment, storage and trading of renewable energy for different applications and markets. This helps the target customers (energy providers and energy marketers) to respond flexible to market dynamics, to maximize the revenue generation and, by this, to facilitate the integration of renewable energy into the grid. The users of enpilot will be enabled to switch into a multi-use system by accessing several commercialization opportunities for their (stored) energy. The main SaaS customers for enpilot are the large energy providers and traders that use/have access to large container-scale energy storages (most likely in combination with renewables) with a minimum output power of around 1MW and a minimum energy capacity of 1MWh. The most commonly used type of energy storage are lithium batteries. However, the enpilot software is not limited to lithium batteries but can be used for optimizing any type of energy storage. Other potential customers are the energy trading firms.

The enpilot optimization tool is based on three models, all of them using machine learning methods (neural networks, genetic algorithms):

1. A digital twin of the power generation site (e.g. energy production for different wind forces)

2. A digital twin of the energy storage units (e.g. deterioration of batteries)

3. A market model of the electricity market The models contain multiple technology and market-related parameters that can be easily changed to adapt the optimization software to different types of production sites, battery storage technologies, regulations, or power market conditions.

This makes enpilot applicable worldwide, regardless of the technological infrastructure and the regulation of the energy market. The key models will be fed by the users’ internal data (from the energy production and storage units) and external data provided by several service providers and data acquisition/storage systems via encrypted and secure connections. Enpilot uses weather forecast data, real-time data from the energy stock exchange and from the balancing power market, and finally, data on the overall installed base of battery storage in a given country, region or balancing circle. The different models are applied in combination to enable predictions of the energy production, the energy storage, and the market prices (“model predictive optimization”). These projections are then used to derive real-time recommendations on which energy quantities should be sold at which time on which markets to maximize the revenues (and the profit) for the energy producer. The optimization model guarantees stable/executable recommendations and high-speed optimization with feasible data requirements. To ease the integration of the new software into the existing (back end) systems of the energy producer, enpilot offers a flexible API. In addition, the enpilot users can adapt the software fast and easily to their strategic and commercial objectives via intuitive user interfaces. The modularity of the optimization tool offers the possibility to turn optimization routines and features on and off. Self-evidently, enpilot runs on cloud computing. All information is provided via intuitive user interfaces (e.g. dashboard showing the actual status of energy production and energy storage). It is planned to integrate a proprietary interface to the energy stock exchange. This will offer the opportunity for automatized and direct selling and buying transactions between the enpilot users and the energy markets. As an experienced new business expert at Solvent, you have been asked to manage the market implementation of the enpilot software in Scandinavia and Germany first and, afterwards, to pursue the international expansion in Europe (primarily UK, Italy, France and Spain). The CEO has scheduled a meeting for next week with you. He wants to know whether you are willing to take the job or rather continuing as new business developer. You need to consider the risk and challenges involved in this new product implementation project. You strongly believe that the risks and challenges associated with innovation implementation are directly related to the level of innovativeness. The more innovative a given new product or service is, the more challenging its commercialization and the higher the risk of resistance from company-internal and external stakeholders.

Questions

1) Please assess the innovativeness of the new SaaS software enpilot

a) Please rate the degree of innovativeness of enpilot on the following 10-point-Likert Scale

b) Justify and to explain your assessment. Please discuss different factors making this innovation more (or less) innovative. Please include all relevant facets or dimensions of innovativeness into your discussion.

2) Perform a stakeholder analysis for this innovation. A stakeholder analysis is a technique by which you identify the key persons, groups or organizational units that influence or will be influenced by the innovation. They may be inside or outside the focal company and may have negative or positive attitudes depending on the effects the innovation would have on their interests.

a) Please make a list of all groups of internal and external stakeholders who matter for the implementation and commercialization of the enpilot software. Try to identify a minimum of five stakeholders. The following questions may guide you:

- Which organizations, groups or individuals are affected by enpilot?

- Which organizations, groups or individuals can benefit from enpilot?

- Which organizations, groups or individuals may perceive enpilot as a threat?

- Which organizations, groups or individuals have influence or power to support or to block the successful market introduction of enpilot?

b) Position the stakeholders in the following matrix according to the degree of their influence / importance for success (low to high) and their attitude towards the innovation (against or for). Mark each stakeholder group with a dot and provide the name.