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Policy Brief / Energy

Business Models in an Evolving Industry: the view of a former practitioner

Author(s): LAVOINE, Olivier

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ABSTRACT

Highlights

  • The electricity network business model that emerged during the liberalisation era is not optimal in the context of the current transformation of the electricity system. An evolution towards an “insurance-type” business model is necessary, where the network is remunerated on the basis of the services provided and not only on the ground of the physical investment performed.
  • The present organisation of the wholesale market reflects a financial approach to the generation and does not ensure the long-term signals necessary to induce the investments in the generation capacity needed to cover demand. In this context, the provision of ancillary services is an increasingly important outlet for non-subsidised electricity generators.
  • Despite frequent claims, energy storage and demand response are two businesses that still struggle to emerge and prove their economic profitability.
  • New business models based on the processing and exploitation of massive amounts of data on electricity generation, consumption and network usage are promising. Building on these data, innovative services can be developed and offer the optimisation of energy consumption and expenses, the management of local grids, etc.