Please activate JavaScript!
Please install Adobe Flash Player, click here for download

Global Futures Report 2013 - Business Model Possibilities

36 Business Model Possibilities Interviews revealed many interesting possibilities for business models in the future that could channel the future investment flows sug- gested in the previous section. Of course, private companies have been developing new models for renewable energy business and investment for many years already. In the coming years and decades, companies will continue to be successful with these models, while many new models will also emerge. It is difficult, of course, to say which models will succeed in the long term. In developing countries, experts pointed to demographics as an important factor, and cited innovative social and economic ideas by the younger generation as a setting within which renewable energy would grow. Across all coun- tries, a selection of interesting possibilities follows, some of which are already being tested or used in commercial practice today.21 (See endnotes for specific examples of some of these models.) n Third-Party Energy Services. Third parties and utility companies will install, own, and operate solar PV on behalf of residents or building owners. A variety of companies will offer leasing and vendor-finance options. Third parties will bundle renewables investments with energy efficiency improvements, high-efficiency end-use equipment, and/ or local energy storage for a true “energy services” business. Some companies will specialize in micro-grids that serve multiple buildings with electricity and/or heat, and offer a variety of models such as like energy-service, leasing, or co-op ownership. And as energy supply becomes more capital-equipment based at a local level, rather than commodity-based at a centralized level, companies will begin to offer households per-kilowatt capacity-based pricing plans (perhaps with kilowatt-hour (kWh) caps or time-of-day restrictions), beyond tradi- tional per-kWh pricing—akin to the transition of mobile phone plans from per-minute billing to fixed billing plans with limits.22 n Mobility Services. Electric vehicle leasing companies will offer pricing plans based on the distance driven, including energy and battery costs. Fleet rental companies will provide short-term vehicle use in concentrated urban areas through smart-cards and member- ship, with vehicles charged through company-owned distributed renewable generation. Electric vehicles will become integrated with household-based renewable energy systems and packaged together with such systems. Electric vehicle “power integrator” companies will sell large blocks of energy storage and control- lable charging (demand-response) to utilities, and contract with thousands of vehicle owners for intermediated charging control. Automakers will integrate renewable energy into their business by becoming producers of renewables-derived fuels, for example synthetic natural gas for use in natural gas vehicles. Automakers will also partner with local governments and property developers to build electric-vehicle charging infrastructure.23 n Property-Assessed Clean Energy Loans. Cities will borrow funds from investors and lend these funds directly to local property owners for additions of renewable energy and for energy efficiency improvements. Owners will repay the loans over long time frames, for example 20 years, through added amounts on local property tax assessments. A number of cities in the United States are already piloting this model (called “PACE”) for both residential and commer- cial properties. One unique feature is that loans can be transferred to new owners if properties are sold, unlike conventional mortgage finance.24 n Utility Business Models. Utilities will offer on-the-bill financing for end-user investments. Utilities will use smart metering to cre- ate new consumer power-pricing models that offer rates based on time of use, capacity, reliability, and degree of curtailment allowed, among other characteristics. Utilities will tailor pricing models to the kinds of local-power infrastructure present on the consumer side. Local-scale utility companies, some based on the co-op model, will provide electricity and/or heating on the scale of a community, dis- trict, or small city, with most of their generation coming from local renewable sources. Emerging grid-based energy storage providers will sell energy storage services to utilities, end-users, or renewable generators, either through existing ancillary services markets or through bilateral contracts.25 n Community and Cooperative Ownership. Local communities and cooperatives will invest in renewable energy systems under joint-ownership models that also reflect new social models for energy services. This has started already in some parts of Europe, Japan, and the United States, and experts foresaw much wider use of community and cooperative models in the future. One “local power” expert cited examples of communities that have invested in local wind turbines, and have come to view wind power “as a normal part of life, not alien … especially if local inhabitants are part owners and see benefits from turbines locally.” Cooperative models for multi-family or multi-building residential heat supply will also proliferate in the future, said experts.26 n Industry and Retailer Involvement. Industrial firms and retail- ers whose businesses depend on high levels of reliability will sign long-term power-purchase agreements with renewable energy generation companies for guaranteed availability and stable long- term pricing. These firms will also continue to purchase increas- ing quantities of green power products offered by a growing array of competing providers (in those jurisdictions where retail power competition is allowed). In retail products, a range of consumer labels and certifications will indicate the origin of embedded energy in products, such as the “WindMade” label indicating renewable energy content.27 n Rural Energy Services. In rural areas of developing countries, many new business models will emerge for provision of energy ser- vices, building on existing models and business activity. One expert noted that, “renewable energy companies [operating in rural areas] will more and more see themselves in the role of ‘energy service’ companies,” rather than seeing themselves merely as technology providers. African experts foresaw a host of new business mod- els bringing lower costs in the future that would spur rural use of renewable energy. For example, consumer-oriented organizations will increasingly train households how to build household biogas plants using the households’ own labor and materials, and pur- chasing only technical components. These experts saw such “anti- turnkey” models proliferating in the future.28 (See also developing countries in Chapter 5.) RENEWABLES GLOBAL FUTURES REPORT 03 investment futures: flows, investors, and business models

Pages Overview