Article 11 of 20 – Prioritising business model innovation: What needs to change in the United Kingdom energy system to grow low carbon entrepreneurship?

So, here we are over half way through the “20 articles thing” and if I get “there” early, I’ll probably shift the target…

Today’s paper was a bit of a departure for me, a necessary one. I don’t think enough in terms of business models, business model innovation (as opposed to tech and social stuff), value chains and so forth. Partly because it’s dry, not always totally intuitive, and also – perhaps – because being good at this stuff has brought our species to where it is…

Hall, S., Mazur, C., Hardy, J., Workman, M., & Powell, M. (2020). Prioritising business model innovation: What needs to change in the United Kingdom energy system to grow low carbon entrepreneurship? Energy Research & Social Science, 60, 101317. doi:10.1016/j.erss.2019.101317

It’s an important topic and the researchers have done a clever, novel and as-far-as-I-can-see valid way of finding out useful information. This is the “decision theatre”-

The decision theatre method differs in that it provides a framework for participatory, discursive, and qualitative decision making albeit, often informed by the more quantitative approaches cited above. (Hall et al. 2020: 2)

It reminds me a bit of the Delphi technique…. Specifically they asked at least some of the right people to-

The research team designed a series of four decision theatres. The first decision theatre was run in May 2017 in London, with participants from UK ‘present utilities’, i.e. established energy companies and some new entrant challenger utilities based in the UK. The second decision theatre engaged participants from the UK Policy and Regulation community and also ran in London, in October 2017. The third decision theatre sampled internationally active utilities and investors with an interest in the UK but mainly based in Europe.

This “International Perspectives (Europe)” decision theatre was undertaken in November 2017 in Berlin. The fourth and final decision theatre also sampled international participants in the UK market, but this time based predominantly in North America; “International Perspectives (US)” took place in January 2018 in Chicago. The European and US decision theatres were supported by the United Kingdom Foreign and Commonwealth Office, Science and Innovation Network who were primarily responsible for recruiting participants, for the United Kingdom events the Energy Research Partnership recruited (Hall et al. 2020: 3)

And the findings are a bit interesting.

The most important changes the UK Present Utilities sample created were:

“We need an electric vehicle strategy that recognises whole system cost and opportunity”

“We need a simpler institutional framework to support the energy transition”

“The regulatory framework needs to adapt so that new products and services can emerge”

“New markets need to develop to allow customers to benefit from flexibility, while maintaining an acceptable social contract ”

“There must be long term certainty about UK carbon pricing that is compatible with the Paris agreement”

“We need a national strategy for the electrification of heat”

(Hall et al. 2020: 5)

I wasn’t always entirely convinced by some of the conclusions, but they are the experts on this, not me… This was good-

Finally, across all decision theatres the complexity of the regulatory framework was highlighted. While there are moves from the UK regulator to simplify retail market rules towards a principles-based framework [74], there was a clear desire to see a similar move across the energy value chain. However, this approach was perceived to have uncertain system wide outcomes. Though recent work has shown real danger of regulatory capture by incumbents [41], it was unclear how a move to principles as opposed to prescriptive regulation could cope with the diversifying risks faced by the consumer, along with the diversification of market platforms for flexibility and other services.

(Hall et al. 2020: 9)

This is probably one I will want to come back to.

Good references to – these ones were the stand out

S.T. Bryant, K. Straker, C. Wrigley, The typologies of power: energy utility business models in an increasingly renewable sector, J. Clean. Prod. 195 (2018) 1032–1046, https://doi.org/10.1016/j.jclepro.2018.05.233.

[26] M. Steen, T. Weaver, Incumbents’ diversification and cross-sectorial energy industry dynamics, Res. Policy 46 (6) (2017) 1071–1086

[39] P. Johnstone, P. Kivimaa, Multiple dimensions of disruption, energy transitions and industrial policy, Energy Res. Soc. Sci. 37 (2018) 260–265.

[41] M. Lockwood, C. Mitchell, R. Hoggett, C. Kuzemko, The governance of industry rules and energy system innovation: the case of codes in Great Britain, Util. Policy 47 (2017) 41–49.