Business models for distributed energy resources: A review and empirical analysis

• Published in: Energy policy 2017-10, Vol.109, p.230-248
• Main Authors: Burger, Scott P., Luke, Max
• Format: Article
• Language: English
• Subjects: Alliances; Business; Business model ontology; Business models; Commercial energy; Customer services; Demand analysis; Demand response; Deployment; Distributed energy resources (DERs); Distributed generation; Electricity; Electricity consumption; Empirical analysis; Energy management systems; Energy policy; Energy resources; Energy services; Energy sources; Energy storage; Innovations; Landscape; Market shares; Photovoltaic cells; Photovoltaics; Policy making; Regulators; Resource management; Revenue; Services; Solar; Solar energy; Solar power; Storage; Technological change; Thermal storage
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2017.07.007

This paper presents a novel, empirical analysis of the most common business models for the deployment of demand response and energy management systems, electricity and thermal storage, and solar PV distributed energy resources. We classify the revenue streams, customer segments, electricity services provided, and resources for 144 business models. We use this assessment to identify a set of business model “archetypes” in each resource category. Our analysis leads us to five observations that have important implications for policymakers and regulators. First, our analysis highlights that business models are deeply embedded in myriad policy and regulatory frameworks. Second, current DER business models are driven more by regulatory and policy factors than by technological factors. Third, the relatively small set of well-defined DER business model archetypes suggests that the determinants of success within a given archetype may include executional capabilities, culture, and other activities that are not captured in our framework. Fourth, continued cost declines, technological innovation, and changing policy and regulatory landscapes mean the business models of tomorrow will likely look very different than the business models of today. Finally, DER business models compete within archetypes for market share in providing a limited set of electricity services. •We present an analysis of 144 distributed energy resource business models.•We highlight the policy dependencies of characterized business model archetypes.•Regulation and policy are key drivers of business model structure.•We find that business models are dynamic, changing with time, technology, and policy.•We call for regulation and policy proceedings to account for business model implications.