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Around the table there are animated discussions as we debate, analyse, and challenge each other as we discuss the latest in a series of Delta-ee reports on business model innovation. One thing we found ourselves repeatedly asking is: “Can innovative business models really catapult distributed energy and connectivity into the mainstream?” Bold moves by some –a diverse range of small companies not scared to have a goSo far some have promised a lot but not delivered – for example Lichtblick in Germany in 2010 - whose “virtual power plant” of mini-CHP systems stole the imagination of many - but fell far, far short of its 100,000 unit ambitious target. Others, such as SolarCity, with their market-leading “PV for free” model have grown rapidly. The company was only formed 8 years ago but has a reported 25% share of the burgeoning US PV market. Nest Labs is another high profile success. The silicon-valley based company didn’t exist five years ago but grabbed the headlines when it was snapped up by Google for $3.2billion. As well as selling smart thermostats, it’s tapping into the energy market through its ‘Nest Rush Hour Rewards’ demand response offering in the US. There’s a huge number of innovators trying to join these companies. For example a small social enterprise in Scotland called iPower - in partnership with CFCL - has started offering fuel cell to customers for free. With fuel cell usually costing the same as a family car, this is made possible by its “ESCO-lite” business model.Flow – started life as a technology developer of micro-CHP but then added an energy supply business to its portfolio. Flow will soon be offering an innovative financing proposition for their micro-CHP product and have recently extended a contract with a major manufacturing partner to produce half-a-million units.Insero – a small Danish company is proposing a business model that makes revenue from financing and influencing the operation of heat pumps as part of a smart grid and selling the end-users heat for their home.There are risks but flexibility and speed will help innovation succeedWe track a wide range of innovations in the distributed energy, heat and connectivity markets. Many will fail, but – as Nest and SolarCity have shown, some will succeed – and secure new opportunities emerging in the energy and connectivity markets. Innovation is risky, and can’t rely on a “rear view mirror” approach to the market. However, robust research to identify value creation opportunities – and building the customer into innovation - is a critical ingredient for success. Launching propositions in the market – and iterating rapidly around these – is the only way to ultimately become the next Nest or SolarCity.Innovative business models will play a critical role in catapulting distributed energy & connectivity into the mainstream - but only the most agile companies will survive.All comments welcome, or please get in touch directly: [email protected].
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