Governing sustainability transitions through business model innovation: Towards a systems understanding

Ronan Bolton,Matthew Hannon

doi:10.1016/j.respol.2016.05.003

Ronan Bolton, Matthew Hannon

Open Access

https://doi.org/10.1016/j.respol.2016.05.003

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Abstract

This paper examines the role of innovative business models in the transformation of socio-technical systems. Focusing on decentralised energy technologies, we explore business model innovation in the context of a transition towards a more sustainable energy system. We conduct an empirical study of two Energy Services Company (ESCo) models for the deployment of combined heat and power with district heating (CHP/DH) infrastructure in the UK. Based on these case studies we illustrate the different ways in which Local Authorities develop business models to create and capture value from more efficient resource use and to deploy sustainable technologies. Drawing from systems theories in the business model and socio-technical literatures, we analyse the interfaces between business models, energy infrastructure and institutions. We propose that a systems based approach to the analysis of business models as embedded in their socio-technical contexts can offer new insights into the dynamics and governance of sustainability transitions.

Highlights

IntroductionA growing body of literature on sustainability transitions is concerned with the long term transformation towards sustainability of socio-technical systems (e.g. electricity, transport, water infrastructure) relied upon to satisfy basic human needs (e.g. warmth, nutrition, mobility) (Smith et al, 2010; Markard et al, 2012)
A growing body of literature on sustainability transitions is concerned with the long term transformation towards sustainability of socio-technical systems relied upon to satisfy basic human needs (Smith et al, 2010; Markard et al, 2012)
It examines the ways in which the Energy Services Company (ESCo) model has been used by Local Authorities to develop combined heat and power with district heating (CHP/DH) systems in the UK

Summary

Introduction

A growing body of literature on sustainability transitions is concerned with the long term transformation towards sustainability of socio-technical systems (e.g. electricity, transport, water infrastructure) relied upon to satisfy basic human needs (e.g. warmth, nutrition, mobility) (Smith et al, 2010; Markard et al, 2012). In parallel a related strand of research has focused explicitly on business models and sustainable development, which contains a much stronger firm-level focus, examining how the development and implementation of novel business models can create and capture value from sustainable innovations (Boons and LüdekeFreund, 2013). This paper aims to further advance these efforts by drawing on systems theories in the business model and socio-technical literatures to examine how novel energy business models have been utilised to deploy sustainable technologies. It examines the ways in which the Energy Services Company (ESCo) model has been used by Local Authorities to develop combined heat and power with district heating (CHP/DH) systems in the UK. The move to a localised CHP/DH system represents a transformation of the current configuration of the socio-technical system, which the novel ESCo model has been used to govern and facilitate

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