Business Model Innovation for Distributed Solar Energy
For a faster conversion of the Swedish energy system, the established electric utility companies need to develop their ability to adjust and adapt their business models from production centered to customer and service centered business models. We investigated the thirty largest electric utility companies in Sweden and their solar energy offers to private customers. Only half the number of these companies had such an offer at all. Among these utilities, which offers solar panels and "self-produced" solar energy, many of these companies, request so much technical information (the dimensions from ground to gutter, measurements from ground to roof nook, distance between roof rails, roof clearance in degrees, roof direction or weather line of ceiling, incoming fuse size, range from solar modules to inverters, if any tongue-in-groove board under the roof tiles and the presence of lash protection) that presumably only technically trained and highly enthusiastic customers may be interested for these offers.
Our conclusions of the survey are (as also published in Ny Teknik 2018-03-28):
- Electric utility companies must understand that most interested customers today have limited technical knowledge but a high motivation to invest in solar energy.
- The companies’ services must be based on customer needs and collaborate more generously to obtain relevant data on which quotations are based.
- In the future, companies need to develop and use software that can support data management, such as the visualization of solar panels at the customer's roof.
- Electric utility companies must communicate based on customer interest. For example, they will not ask how much investment is planned but rather present clear estimates about the savings the customer can make through his investment in solar energy.
- When the solar market matures, when companies create more coherent business models and customers find themselves in safe hands, the number of households in Sweden who choose solar energy will increase to the benefit of the environment.
- And for companies that take the customer seriously - and not asking them to climb the roof - there is money to earn. But, the Swedish electric utilities really need to shape up.
In the second part of the study, we have investigated how the most proactive companies organized themselves to change their product-centered business models into more service-centered business models. The change is hampered by a dominant, and a long-term successful business model that is difficult to change and reset, for example. investments in large-scale energy production, an existing (large) organization with IT systems, procedures and processes developed to support the sale of large-scale power generation, an anonymous customer relationship and cognitive barriers, i.e. mind-set with managers and staff who have been employed for a long time at the company. In this internal environment, the change is driven by internal intrapreneurs who, based on a sustainability vision, have the ability to put solar energy into a long-term strategic context, as well as adapt and integrate solar energy business model activities into the company's current business model. By destabilizing and challenging the current business model and then propose and act on new opportunities, the intrapreneurs navigate towards a more service and customer-centered business model.
Publications related to the project:
Wadin, J. L., Ahlgren, K., & Bengtsson, L. (2017) Joint business model innovation for sustainable transformation of industries–A large multinational utility in alliance with a small solar energy company, Journal of Cleaner Production, 160, 139-150.
Wadin, J.L., Ahlgren, K & Bengtsson, L (2018) Transformation of the energy industry – from production and value chain-based toward service and network-based business models: navigating in the new sustainable energy landscape, in Ivanaj, S, McIntyre, J and Ivanaj, J (Eds) CSR and climate change implications for multinational enterprises, E Elgar publ, pp. 286-303.
Ahlgren, K. (2018) Travelling Business Models: On adapting business models to new contexts. PhD thesis. Media Tryck, Lund.
Ode, K. A., & Wadin, J. L. (2019) Business model translation—The case of spreading a business model for solar energy. Renewable Energy, 133, 23-31.
Ahlgren, K., & Louche, C. (2018) Business Model Innovation for Sustainability: A Translation Perspective, In Academy of Management Proceedings (Vol. 2018, No. 1, p. 18512), Briarcliff Manor, NY 10510: Academy of Management.