Sustainable energy innovation in power utilities: Understanding transformation toward new sources of value creation and capture

Guillermo Ivan Pereira, Eva Niesten, Jonatan Pinkse

Research output: Contribution to conferencePoster

Abstract

An energy transition driven by sustainable energy innovation is largely accepted as the main way forward to mitigate the impact of the energy sector on climate change and contribute to a low carbon economy. Incumbent power utilities are focal actors in this transition given their embeddedness in the existing electricity infrastructure. Their long-term involvement in what until recently was a relatively stable industry has been considered as contributing to path-dependency and a generalized inability to incorporate new technologies and transform their business models to accommodate the disruptive forces arising from technological developments, climate and energy policies, and a shift in customer’s expectations and interaction. Some of these disruptive changes, like the growth of distributed solar installed at the customers premises, brought forward the idea of a utility death spiral, associated with the reduction in revenues resulting from customers becoming partly independent for their power needs. A death spiral of the utility sector remains one of the possibilities, which would result from a complete inability of utilities to reconfigure their business model and how they capture and create value.

The complex processes of the incumbents’ response to the energy transition suggest far more nuanced adaptation trajectories when it comes to engaging in sustainable energy innovations. Existing literature largely focuses on understanding and mapping the characteristics of new business models for sustainable energy innovation, often focusing on a specific firm behind the innovation, or on the general characteristics of a business model for a specific sustainable energy innovation. By establishing the characteristics of the business model as the outcome of the analysis, these studies generally fall short on identifying how new business models for sustainable energy innovations evolve, for which an in-depth understanding of the business ecosystems can contribute significantly.

We frame the utilities’ business ecosystem as the range of relationships established by the utilities with other organizations, generally geared towards either enhancing competitive advantage or knowledge development. Considering the ecosystems’ evolution over time can provide insight into how the boundaries of the utility business model shifts as its interrelationships with firms evolve. Understanding the trends, patterns, and characteristics of these shifts over time can contribute to unveiling if and how utilities are preparing to redefine their business model to pursue sustainable energy innovations. A study of utilities’ business ecosystems is therefore a relevant source of knowledge on the tenets of organizational shifts to pursue transformative sources of value, and redefine their sources of value creation and capture and can be a seen as the foundation in which new business models are tested and implemented.

Through this project we aim to analyze transformative change from the perspective of power utilities, as incumbent and key stakeholders in the energy transition. The findings of this research are expected to contribute to a better understanding of sustainable energy innovation business models to create and capture new value, and to guide policy makers in the development of energy and industrial innovation policy that meets the needs, and considers the characteristics of different energy innovations for achieving sustainable development targets.
Original languageEnglish
Publication statusPublished - 4 Nov 2019
EventTowards a Global Research Agenda for Transformative Innovation Policy 2019 - Valencia, Spain
Duration: 4 Nov 20195 Nov 2019

Conference

ConferenceTowards a Global Research Agenda for Transformative Innovation Policy 2019
CountrySpain
CityValencia
Period4/11/195/11/19

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