Energy entrepreneurship business models innovation: insights from European emerging firms

Michael Hamwi, ESTIA

The power sector stands at the edge of a transition phase in which the liberalization of energy markets has paved the way for a new set of actors to get involved and develop new business models. The emerging businesses seem to have a different logic than the centralized, large-scale and fossil fuel based energy utilities (Hannon et al., 2013). Energy entrepreneurs promote clean energy technologies and create innovative business models that associate commercial benefits and sustainability aspects. However, the process of finding out the appropriate business models poses challenges to new market actors, researchers and policy makers. In this regard, we explore how new entrepreneurs in the energy business sector create and capture value from innovative business models based on existing technologies. Several studies have examined the topic, (Richter, 2013a) has examined the emerging business models of energy utility, (Huijben and Verbong, 2013; Wainstein and Bumpus, 2016) outline the commercial firms and social initiatives. However, the senses on entrepreneurship was often absent. In addition, the major part of the literature is focusing mainly on energy efficiency or renewable generation and neglecting demand response business (Helms et al., 2016). This study combines the distributed renewable energy resources and demand-side management, including energy efficiency and demand response. The paper draws on the activity system business model (Zott and Amit, 2010) as an analytical framework in order to outline the key characteristics of the energy entrepreneurship business model innovation. This conceptual framework is suitable for new entrepreneurial business model design and has been validated by scholars as a key unit of analysis in the energy transition studies (Bolton and Hannon, 2016). The result can assist new market actors and professionals during their early development stage to construct new business models in the energy market. A qualitative exploratory approach has been employed to investigate three emerging firms in the energy markets. One case is from the Netherlands focusing on the distributed renewable energy generation and two cases are from France focusing on the demand-side management. As a result, the paper proposes a business model framework for energy entrepreneurship that is characterized by decentralized small-scale assets, service-oriented, end-user relationship and process focus, consumer co-provider, intermediary model and pay-per-use revenue. Furthermore, the regime barriers and the environmental impacts have been analyzed. The findings contribute to energy entrepreneurship and pinpoints the importance of business model innovation as a key driver for energy transition. Consequently, suggestions have been provided for researchers as well as practitioners to put this framework into practice.


Key words: Business model innovation, energy service, energy entrepreneurship, demand-side management, renewable energy, energy efficiency and demand response.


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