A review of business models for decentralised renewable energy projects

Abstract

AbstractThe diffusion of renewable energy technologies has often been suggested as a means to reduce the emission of greenhouse gases, but emphasis tends to be placed on large scale projects. Adoption of renewable energy at the local level provides opportunities for both distributed energy schemes and domestic microgeneration. However, alternative models of ownership, governance and operation are not well developed. Locally managed energy solutions need to respond to varied end users' requirements to ensure that needs are met, so understanding of different types of end users is a prerequisite to the development of robust business models. This paper presents a review of existing models of decentralised energy generation in which actors such as community groups, energy cooperatives, charities and municipalities participate as owners and coproducers. End users can become involved in the design, development and delivery of energy services in a variety of ways. The focus is active user engagement through coconstruction, coproduction and coprovision of energy services. The following categories will be reviewed with reference to current understandings of both sustainable entrepreneurship and social enterprise: (a) energy service companies (ESCos) as commercial actors that undertake management of these projects, (b) energy cooperatives and (c) municipal energy. This analysis is used to reflect on and refine understanding of the relationship between technical, financial and operational constructs in models of decentralised energy generation which can contribute to social and environmental gains.