TY - JOUR

T1 - German Utilities and distributed PV

T2 - How to overcome Barriers to Business Model Innovation

AU - Richter, Mario

PY - 2013/7

Y1 - 2013/7

N2 - The transformation of the energy industry towards a more sustainable production of electricity increases the importance of distributed generation from renewable sources such as solar photovoltaic (PV). German utilities have largely failed to benefit from this development and lost 97% of the distributed PV generation market to investors from outside the electric power industry. Recent studies indicate that utilities have to react to prevent revenue erosion and loss of profits. This study identifies threats and opportunities of distributed PV generation for utilities based on a series of interviews with German utility managers. The key finding is that utilities do not perceive distributed PV as a threat to their current business models nor do they see it as a potential market for them. Relating these findings to the existing literature on transformation processes in other industries leads to the conclusion that the solution for utilities lies in changing their perspective on distributed PV. Utilities could greatly benefit if they did not treat PV as just another source of electricity generation in competition with traditional sources (as they do today), but as a strategic gateway into the emerging distributed generation and service market. Distributed PV could function as a basis for further business model innovation in new growth markets such as energy efficiency and distributed storage. Specific recommendations are provided and a modular value proposition is suggested to help utilities to turn distributed PV from a threat into an attractive business opportunity.

AB - The transformation of the energy industry towards a more sustainable production of electricity increases the importance of distributed generation from renewable sources such as solar photovoltaic (PV). German utilities have largely failed to benefit from this development and lost 97% of the distributed PV generation market to investors from outside the electric power industry. Recent studies indicate that utilities have to react to prevent revenue erosion and loss of profits. This study identifies threats and opportunities of distributed PV generation for utilities based on a series of interviews with German utility managers. The key finding is that utilities do not perceive distributed PV as a threat to their current business models nor do they see it as a potential market for them. Relating these findings to the existing literature on transformation processes in other industries leads to the conclusion that the solution for utilities lies in changing their perspective on distributed PV. Utilities could greatly benefit if they did not treat PV as just another source of electricity generation in competition with traditional sources (as they do today), but as a strategic gateway into the emerging distributed generation and service market. Distributed PV could function as a basis for further business model innovation in new growth markets such as energy efficiency and distributed storage. Specific recommendations are provided and a modular value proposition is suggested to help utilities to turn distributed PV from a threat into an attractive business opportunity.

KW - Sustainability sciences, Management & Economics

KW - business model innovation

KW - Utility

KW - Solar Energy

KW - photovoltaic

KW - Energy Transition

KW - Renewable Energy

KW - Business model innovation

KW - Energy transition

KW - Photovoltaic

KW - Renewable energy

KW - Solar energy

KW - Utility

KW - Entrepreneurship

UR - http://www.scopus.com/inward/record.url?scp=84873587777&partnerID=8YFLogxK

U2 - 10.1016/j.renene.2012.12.052

DO - 10.1016/j.renene.2012.12.052

M3 - Journal articles

VL - 55

SP - 456

EP - 466

JO - Renewable Energy

JF - Renewable Energy

SN - 0960-1481

IS - 7

ER -