Conceptualising domestic energy service business models: A typology and policy recommendations

Donal Brown,Stephen Hall,Mari Martiskainen,Mark E Davis

doi:10.1016/j.enpol.2021.112704

Donal Brown, Stephen Hall + Show 2 more

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https://doi.org/10.1016/j.enpol.2021.112704

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Journal: Energy Policy	Publication Date: Nov 22, 2021
Citations: 17	License type: cc-by

Affiliation: University of Leeds, University of Sussex

Abstract

Energy service business models (ESBMs) are potentially critical to reducing household energy demand and mitigating climate change. These models are predicated on a shift from the ‘throughput’ sale of energy commodities, towards providing ‘useful’ or ‘final’ energy services. However, the conceptual delineation of these models and their different variants remains opaque in the literature. In this paper, we seek to clarify this issue through the identification of a typology of ESBMs. Through a series of 53 interviews and 7 stakeholder workshops we explore contemporary domestic ESBM examples in Europe. We find that while more basic energy supply contracts are commonplace, models which deliver energy saving performance or final energy services are rarer. We subsequently identify barriers to the adoption of these business models, before proposing 13 policy recommendations. We conclude that the ‘energy throughput orthodoxy’ which has governed liberalised energy markets will need to be challenged for these models to have a significant future impact.

Highlights

Buildings, and especially homes, are the largest single consumer of energy and producer of greenhouse gas (CO2e) emissions in most advanced economies (IEA, 2020a)
Residential Energy service business models (ESBMs) in Europe Our analysis identified a typology of six ESBMs: energy supply contracts (ESC); energy service financing (ESF); energy performance contracts (EPC); energy services agreements (ESA); energy as a service (EaaS); and managed energy services agreements (MESA)
Conclusion and policy implications This paper has sought to clarify the conceptual understanding of ESBMs, introducing a new typology and a review of emerging domestic examples in Europe

Summary

Introduction

Especially homes, are the largest single consumer of energy and producer of greenhouse gas (CO2e) emissions in most advanced economies (IEA, 2020a). Electricity systems across Europe are decarbonising (European Environment Agency, 2021); heat systems are electrifying; and electric vehicles (EV) are being adopted at an exponential rate (IEA, 2019). These factors – including the requirement for home EV charging – means decarbonising homes is a key objective to meet ambitious climate targets. In the European Union (EU), the Energy Performance in Buildings Directive (EPBD) requires that emissions from European homes be drastically reduced by 2030, and near eliminated by 2050 (EC, 2018) This challenge means new homes must meet near zero energy building standards (NZEB), existing homes must be retrofitted to increase energy efficiency, heating systems must transition to low/zero carbon sources, and renewable ‘prosumers’ with solar photovoltaics (PV) and batteries (Parag and Sovacool, 2016) must become commonplace

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