The way we produce and supply energy, also known as the energy value chain, is undergoing a major shift these days. For utilities, what were once easily predictable, low-risk and safe investments are quickly turning into liabilities. As one analyst recently told the Economist, “Never in recent history has the deployment of capital been more difficult than it is right now within the energy industry.”
As utilities adjust to operating in uncertainty, they must face the disruption of their traditional business model and take on new roles in the energy value chain.
A new report from the ENTRUST project has detected 10 emerging business models for utilities, inspired by examples of finding new ways to add value in the face of disruption and digital transformation. In each one, the way utilities operate and innovate in the new energy paradigm looks a little bit different.
Learn how each business model works in the infographic below.
Utilities: an Outdated Business Model
Apart from the competition, utilities and retailers have a great internal challenge: to stop working with an outdated business model.
The model of the traditional energy companies was divided – with the mentioned liberalization of the market – in three fundamental branches:
- and commercialisation
Energy supply and distribution are becoming more decentralised as renewable sources become cheaper, new actors enter the value chain and end-users start becoming their own power producers.
The old actors (fossil fuel power plants, TSOs, DSOs and energy services retailers) must make way for new independent operators, energy brokers, renewable energy companies, ESCOs, and storage operators.
So what does the role of the utility look like in this transformed value chain? And how does innovation factor into each new utility business model? ENTRUST highlights technological and operational changes first and foremost, followed by new opportunities for interconnection and customer engagement.