Identification of Value Proposition and Development of Innovative Business Models for Demand Response Products and Services Enabled by the DR-BOB Solution

Abstract

The work presented is the result of an ongoing European H2020 project entitled DR-BOB Demand Response in Blocks of Buildings (DR-BOB) that seeks to integrate existing technologies to create a scalable solution for Demand Response (DR) in blocks of buildings. In most EU countries, DR programs are currently limited to the industrial sector and to direct asset control. The DR-BOB solution extends applicability to the building sector, providing predictive building management in blocks of buildings, enabling facilities managers to respond to implicit and explicit DR schemes, and enabling the aggregation of the DR potential of many blocks of buildings for use in demand response markets. The solution consists of three main components: the Local Energy Manager (LEM), which adds intelligence and provides the capacity for predictive building management in blocks of buildings, a Consumer Portal (CP) to enable building managers and building occupants to interact with the system and be engaged in demand response operations, and a Decentralized Energy Management System (DEMS®, Siemens plc, Nottingham, England, UK), which enables the aggregation of the DR potential of many blocks of buildings, thus allowing participation in incentive-based demand response with or without an aggregator. The paper reports the key results around Business Modelling development for demand response products and services enabled by the DR-BOB solution. The scope is threefold: (1) illustrate how the functionality of the demand response solution can provide value proposition to underpin its exploitation by four specific customer segments, namely aggregators and three types of Owners of Blocks of Buildings in different market conditions, (2) explore key aspects of the Business Model from the point of view of a demand response solution provider, in particular around most the suitable revenue stream and key partnership, and (3) assess the importance of key variables such as market maturity, user engagement, and type of blocks of buildings as drivers to market penetration and profitability. The work presented is framed by the expected evolution of DR services in different market contexts and the different relationships between the main stakeholders involved in the DR value chain in different EU countries. The analysis also relies on the results of interviews conducted at the fours pilot sites of the DR-BOB project with key representatives of the management, operations, and marketing. These are used to better understand customer needs and sharpen the value proposition.