Hydrogen, which can be used to store energy, produce electricity and fuel vehicles, is one of the innovation priorities for French energy giant Engie (€70 billion revenue). This is a company that prides itself on its diversity however, explains Stephane Quere, Innovation Director at Engie, with activities stretching from Europe to Africa and Asia, and businesses from gas distribution to security systems. Some of the main priorities for Engie are decentralised systems (“the world will go from 99% centralised to 50% decentralised”) and digitalisation.

Stephane Quere, the man in charge of innovation at Engie, took on this challenging role just under three years ago. He had been with the company for nearly five years already, heading up urban development (it was still GDF Suez at the time). Before that, he spent five years leading sustainable development at Suez (which merged with Gaz de France to become GDF Suez in 2008). It should come as no surprise then that innovation at Engie led by Quere is embracing a cleaner, smarter, far less centralised energy system.

Among the company’s innovation priorities are: solar, storage “and all the software needed to manage that”; territories (think “regions”) and mobility; and home comfort. Within these, hydrogen (or “power-to-gas”) emerges as one area of focus that isn’t highlighted by every utility. The draw of hydrogen is its flexibility, explains Quere: “We can produce it through renewables plants, store it like we store gas, mix it with gas to use in transport or burn it to re-produce electricity.” He expects costs to come down like they did for solar.

Engie is about much more than hydrogen however. This is a company that seems to do it all, everywhere. In 2015, Engie counted €70 billion in revenues from no less than 70 countries and 150,000 employees. It offers everything from gas and electricity to facility management, lighting and mobility plans. What makes Engie stand out is its diversity, but also how it is plugged into local infrastructures. “Some IT companies come to us to help them better understand how a city or region is working,” says Quere. The future for Engie is digital and service-based, local yet global.

Q: What kind of transformation do you see taking place in the energy sector and how do you fit in?

A: We are both a utility and an ESCO, or energy services company. I think our activity in energy services is the biggest in Europe. We face a lot of changes because some time ago, all customers wanted to master their energy consumption; now they also want to master energy production. We’re going towards a more decentralised system, a territorial economy that relies on local resources. What makes this possible is the new technologies with which you can produce energy and digitalisation.

Q: How do you distinguish yourselves from other utilities?

A: Engie is now one-third gas (mainly transport, distribution and sales), one-third electricity (mostly production and sales) and one-third – and this is key today – services. We offer services to industry, cities and individuals. These include district heating and cooling, but also facility management, services for buildings, security systems, lighting, mobility solutions in the context of urban planning, systems management and so forth.

We are very international and diverse, also in terms of how we produce energy. Nuclear is minor in our mix. We are in 70 countries. France today makes up less than half of our revenues and Europe less than 70%.

Q: Where is your innovation effort focused?

A: One focus area is everything about the decentralised system, meaning solar, storage and all the software needed to manage that. A second area is territories and mobility. And the third is home comfort and the individual.

I would pick out mobility as interesting because it is now completely linked to energy, through electricity and hydrogen. Hydrogen is a big topic for us because we can produce it through renewables plants, store it like we store gas, mix it with gas to use in transport and burn it to re-produce electricity.

When it comes to decentralised systems, we are looking at mini-grids but also energy communities: what kind of systems would allow energy that individuals produce but don’t use to be shared? Another topic is the link to buildings: not just facility management, but how can the building be a part of this new energy system? Finally, the overarching topic is really the territory [region]: what is happening at the scale of the territory?

Q: How do you foster innovation at Engie?

A: We have two main sources of innovation that we try to work on at the same time. The first is our employees. We have 150,000 of them and we encourage them to innovate. There is the traditional way that we have used for 30 years – Innovation Trophies – that reward innovations employees have come up with out in the field.

In addition, two years ago, we launched an “ideation process” that lets any employee that has a new business idea push this idea. We have a platform for that. If we find the idea interesting, we put its owner plus a team in a professional incubator outside the company working full-time on the project. The objective is to generate some turnover after one year i.e. they have to prove the business model.

We now have 20 live projects. The topics are very diverse. One is about peak shaving. Another is about setting up a decentralised system for solar energy production with storage in Africa. There are more technical projects for industry. Other topics include a system for services for a new district, mobility and air quality. So far, the projects are coming from France, Belgium, the Netherlands and Brazil, and we have several coming up in the UK.

Q: Are these home-grown innovations ultimately part of Engie?

A: The employees can choose at the beginning if they want to stay or create their own company. So far, one company has been created and in this case, since Engie has paid for the incubation, it has a right to invest, to a share. To be honest however, so far most are choosing to remain employees so the innovations will be new Engie products.

Q: You said you had two sources of innovation. If your employees are one, what is the other?

A: Our second source of innovation is external. We try to be as close to local ecosystems as possible. We encourage our colleagues everywhere in the world to meet start-ups, go to pitches, organise events etc. The idea is to have contacts between our operational people and external start-ups to do business together.

We also launch calls for projects. They originate from specific business units with specific needs – technical or commercial. We’ve launched 45 calls on topics from mobility solutions to e-health to ways of defrosting wind turbines. So far we’ve had about 1000 replies and made almost 30 commercial deals. Sometimes we’re the customer for a start-up; other times we bring the start-up to our customers.

Q: So how would you sum up your innovation strategy?

A: Innovation is short term for us. When it’s more than 2 or 3 years it’s research. Meaning that if we meet a start-up that’s at a very early technology readiness level (TRL), they will work with our research department. When the project is ready to sell, that’s when we deal with it. Then it’s innovation.

The other tool we have is a new investment fund. We have a €115-million corporate fund called “Engie New Ventures” which is investing in start-ups that are linked either to a strategic partnership we want to have and/or to the three strategic topics I listed at the beginning. For example, we’ve just invested in Symbio FCell, a company dealing with hydrogen and in Heliatek, a German company making organic photovoltaic film. We support enabling technologies, such as through our investment in Sigfox, which is about the Internet of Things, if they match our strategic interests.

Q: What are the most disruptive, exciting innovations you see coming?

A: The development of digital is really impressive. We already use it so it’s not really new but there are new aspects coming all the time. We think hydrogen is a very interesting topic. Everybody is looking for a way to store energy and it’s a way of using the excess electricity produced from renewables. You can convert it into hydrogen, which you can store and use to produce electricity again. But there are other areas. We are a big user to the Internet of Things – think sensors – for building systems, city systems too.

Q: When you think about energy storage, do you primarily think about hydrogen?

A: It’s one of the ways. You have batteries of course and for the time being that’s what’s working. We also use district cooling systems to store electricity. You can use geothermal. But we think that one topic which has not really been explored a lot is hydrogen.

Q: From what I understand the main problem of hydrogen is that it is still too expensive.

A:  There will be a technical evolution. That’s why we’ve invested in a start-up working on hydrogen and why it’s a topic for our research centre. We are on the watch for what’s happening and I think things could change. Look at what happened to solar production. Today, producing electricity with a solar plant is cheaper than producing electricity with a new nuclear plant. So things change.

Q: What kind of a role do you envisage for hydrogen in the energy system?

A: We don’t know yet. It can be anything. It can be hydrogen vehicles, electricity production, or hydrogen mixed with gas used as gas. There are many possibilities.

Q: How do you see the energy market evolving?

A: It depends on the place. Most of the studies show that we will go from a 99% centralised world towards a world where half is centralised, half decentralised. You have regions without a grid in Africa and India. Last year we created an Africa business unit and we recently built a solar plant in India. I think there are a lot of opportunities in some new regions like these. We will not abandon the existing ones – yes, there are still opportunities in Europe – but there are new areas of interest coming up now that we can produce autonomous systems.

Q: How do you view the competition? Many people say traditional energy companies are too big and slow to seize the new opportunities in the energy system.

A: The key is to be on these new markets. Yes, it’s not the same competition as 20 years ago. But a strength that we have – mostly due to the energy services business – is knowledge of how a regional economy works.

We’ve been working with cities and regions for a long time. In France alone, we’ve been working with cities for 150 years. We know how they deal with things. Our business is local. Like all utilities, we are where we do business. And that’s a very strong point. Some IT companies come to us to help them better understand how a city or region is working.

Q: You said at the start that digitalisation is a big trend. Yet a Boston Consulting Group (BCG) consultant recently suggested that despite their aspirations, utilities often lack employees with digital skills. How do you think you fare on this front?

A: On digital? In France there is an award for the most digital company. The 40 biggest listed companies in France compete for a prize. Last year we were third and this year we are first. I think Orange is second. Of course we are not perfect but in terms of digital awareness it’s definitely something that exists.

Editor’s Note

Stephane Quere is one of the panellists at the InnoEnergy Business Booster event in Barcelona 23-24 November, an annual meeting place for startup energy entrepreneurs, investors and incumbent utility companies. Energy Post readers get a 30% discount when they register for this year’s event, click the banner below for more details.