Working paper / Electricity
New business models in the electricity sector
The electricity sector is facing a new wave of changes supported by new business models, two of which are key to our understanding of the ongoing transformations. The first model secures ex-ante investments into fixed cost generation assets with guaranteed long-term revenue streams. It is typical of investments into green generation, be they wind or solar, onshore or offshore, utility-scale or individual prosumer, within regulated schemes or private bilateral contracting. The second model is built with the light asset approach typical of the digitalisation era. It favours particular product characteristics for targeted customers and has many variants: aggregators as new intermediaries; digital platforms bypassing intermediaries; direct peer-to-peer exchange such as blockchain; fleets of consumption, generation and storage devices managed ‘behind the meter’, such as mini-grids or off-grid. Between the two, transmission and distribution grids will have to reinvent, as much as regulatory frames will permit, to create efficient loops of deeper interaction with the active users of the grids in operation and investments.