The opportunity for startups in energy sector
The need for stable energy in the Middle East and North Africa (Mena) is clear, and the growing demand is perceived as both a necessity and a market opportunity. According to a report by Friedrich Ebert Stiftung, the region will increase its current energy consumption by 70 per cent by 2035. In parallel, entrepreneurship has been playing a considerable role in turning environmental constraints into opportunities for renewable and clean energy, with startups providing a testing ground for new ideas in the field.
At the World Energy Congress (WEC) last week, startups took centre-stage as winners of the latest Startup Energy Transition (SET) convened to discuss how they are working to tackle some of the world’s most pressing energy challenges through entrepreneurship and innovation, and the hurdles they face along the way.
Held in the GCC for the first time, WEC drew a crowd of giant players in the energy sectors, as well as investors, policy makers, thought leaders and noticeably, startups. Looking into the future of energy, the event explored the themes of sustainability, renewables, nuclear and electric vehicles.
One panel discussion showcased the role of entrepreneurs in pushing the boundaries in the energy sector, tackling pressing business challenges typically faced by energy corporations across the globe with a new lens.
Lack of awareness of the huge energy market potential and the need to apply startups’ knowledge in more advanced markets first, are some of the challenges Divine Nabaweesi, founder and chief executive officer (CEO) of Uganda-based Divine Bamboo faced while building her venture, which promotes the sustainable cultivation of fast-growing bamboo for the sale and production of clean charcoal and briquettes.
“Getting international recognition helped us to feel validated and to attract the right partners, also, exposure through marketing and social media channels helped us connect with the right people and created potential,” Nabaweesi said.
For Thomas Chrometzka, Head of Strategy at German-based Enapter, which designs and manufactures highly efficient hydrogen generators, the biggest challenges are scaling up businesses and secure mass production in a very short time in response to growing potential as it arises.
“There is a very strong market for startups [in the energy sector], and new initiatives are speeding up. Small startups are tackling bigger issues facing the industry,” said Andreas Kuhlmann, Chief Executive of German Energy Agency (dena). He emphasised that “organisations need to be careful they are not wasting the time of the startups through a long process, they need to recognise these are proofed companies and there should be some sense and rapid actions behind those long discussions”.
From an entrepreneurial perspective, the energy sector delivers many opportunities for new value creation. Moreover, entrepreneurship is increasingly being hailed as a way to resolve environmental problems through innovative energy solutions.
In the UAE, government policies and keenness of private organisations have created an encouraging environment for innovation and entrepreneurship. GCC governments have launched big budget funds and small-to-medium-sized enterprise (SME) support organisations to foster the entrepreneurship ecosystem, as well as educate their human capital on new innovative and disruptive technologies.
The growing demand for energy efficiency in GCC countries has been seen as both a response to the rising energy demand, and an economic strength that falls in line with strategic objectives of future government plans, such as UAE Vision 2021 and Saudi Vision 2030.
Despite the recognition and the support, the energy entrepreneurship ecosystem in the region remains in its infancy. The few startups that enter this field face a number of challenges, such as the scale of the energy companies, which requires dealing with multiple layers of decision making.
However, digitisation is helping smaller players overcome the challenges of entering the market; the forward-thinking digital approach adopted by some of the energy companies has helped to improve accessibility to such corporations, as both sides are beginning to recognise the benefits of embedding a particular technology into their operations.
The state-owned Abu Dhabi National Oil Company (ADNOC) has taken bigger steps towards embedding innovation and entrepreneurship in its operations. Speaking at the last edition of of the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), ADNOC Sultan Al Jaber, group CEO at ADNOC said firms must leverage the latest technologies.
The company signed a memorandum of understanding with the Khalifa Fund for Enterprise Development earlier this year to promote entrepreneurship among its own employees who are looking to enhance their skills and knowledge in the SME sector. Prior to that, it has backed both Pand.ai, a startup that builds intelligent chatbots to help companies improve conversion rates of site visitors into customers, and AIMLedge, which works to enable customers to easily develop and deploy customised deep learning solutions to work on proof of concepts. Both startups were winners of entrepreneurship platform startAD’s artificial intelligence (AI) version of its sprint accelerator programme Venture Launchpad last year.
According to Marwan Bin Haider, executive vice president of innovation and the future at Dubai Electricity and Water Authority (DEWA), 75 per cent of the energy sources in Dubai will be green by 2050, and it will become the least CO2 producing city in the world by then.
“After the launch of Dubai 10X, which called government bodies to disrupt industries, policies and legislations, we went back and announced the digital DEWA, which is all about solar energy storage, AI and digital services. We realised we need to work with startups. We came across challenges internally and externally to be able to do so, however, we had to make exceptions to make such partnerships a reality.
“We have to open up for startups, and make sure pilots are done in a way that does not affect the flow of business. On the other hand, startups need to focus on how to convert challenges to opportunities, as excitement alone will not boost business figures.”
Haider argued that the fourth industrial revolution is the maker, not the destination, emphasising the importance of having a purpose.
“Some entrepreneurs bring AI just for the sake of showcasing the technology, but did they create a new product? Did they sustain resources for the next generation? This is what matters.”
But while creativity and disruptive ideas are important, “we need to step out this bubble and discuss relevant challenges and bigger issues”, according to Hornback. Creating greater synergy between those who innovate and disrupt, and investors who can take a risk, tailoring technologies to turn Mena’s unique energy challenges into opportunities and demonstrating ways young companies can have an impact in the field is the way forward.