New business models. Innovative business models. Disruptive business models… Today, these terms are used often by those referring to the energy industry and the fundamental changes it’s undergoing (i.e. becoming more distributed, more customer centric, more service orientated…). It sounds exciting, cutting edge, and – more importantly for some - investable. But what is the truth around the evolution of business models and their application in an increasingly dynamic and changing industry like ‘energy’?
The truth is that a “business model” – simply put – is just a company’s way of making money. Can you really have a “new” or “innovative” or “disruptive” business model when you are involved in the supply of very traditional commodities for heating and power?
This was a question we asked ourselves while completing a recent study into the role of business models and finance to further the commercial deployment of fuel cell micro-cogeneration. As an extremely efficient energy solution that could heat and power millions of Europe’s homes and Businesses, fuel cell has much potential as a key technology for a future decentralised and low-carbon energy system.
The study for the Fuel Cellls and Hydrogen Joint Undertaking showed that, for example, a lack of standardised data for how stationary fuel cell systems operate in the field was having a really negative impact on how re-insurers viewed the technology. This then negatively impacted on the ability for financiers and customers to accept this emergent technology, and subsequently drove up prices for the end user.
We also found considerable room for innovation in the core business models that exists for the cogeneration application of fuel cell, especially where the latest end user data and digital techniques could be deployed. This could enable significant multiplier effects helping minimise the cost of sale, increase the understanding of customers, and improve of efficiencies in the value chain.
Of course, customers aren’t interested in fancy business models but are interested in solutions that can make their lives easier, save them money by reducing their energy bills, satisfy a legal requirement, or meet their comfort needs for heating and powering their homes. Fuel cell micro-cogeneration is, of course, very capable of delivering on these fronts.
The original version of this post can be found at http://powerofheat.eu/blog.