IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i5p4417-d1084918.html
   My bibliography  Save this article

How a Grid Company Could Enter the Hydrogen Industry through a New Business Model: A Case Study in China

Author

Listed:
  • Danlu Xu

    (Center of Entrepreneurship and Innovation, State Grid Zhejiang Electric Power Company, Hangzhou 310051, China)

  • Zhoubin Liu

    (Center of Entrepreneurship and Innovation, State Grid Zhejiang Electric Power Company, Hangzhou 310051, China)

  • Rui Shan

    (Department of Environmental Sciences and Engineering, Gillings School of Global Public Health, University of North Carolina, Chapel Hill, NC 27599, USA
    Carbon Baseline LLC, Shanghai 200062, China)

  • Haixiao Weng

    (Carbon Baseline LLC, Shanghai 200062, China)

  • Haoyu Zhang

    (Carbon Baseline LLC, Shanghai 200062, China)

Abstract

The increasing penetration of renewable and distributed resources signals a global boom in energy transition, but traditional grid utilities have yet to share in much of the triumph at the current stage. Higher grid management costs, lower electricity prices, fewer customers, and other challenges have emerged along the path toward renewable energy, but many more opportunities await to be seized. Most importantly, there are insufficient studies on how grid utilities can thrive within the hydrogen economy. Through a case study on the State Grid Corporation of China, we identify the strengths, weaknesses, opportunities, and threats (SWOT) of grid utilities within the hydrogen economy. Based on these factors, we recommend that grids integrate hydrogen into the energy-as-a-service model and deliver it to industrial customers who are under decarbonization pressure. We also recommend that grid utilities fund a joint venture with pipeline companies to optimize electricity and hydrogen transmissions simultaneously.

Suggested Citation

  • Danlu Xu & Zhoubin Liu & Rui Shan & Haixiao Weng & Haoyu Zhang, 2023. "How a Grid Company Could Enter the Hydrogen Industry through a New Business Model: A Case Study in China," Sustainability, MDPI, vol. 15(5), pages 1-21, March.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4417-:d:1084918
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/5/4417/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/5/4417/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Pereira, Guillermo Ivan & Niesten, Eva & Pinkse, Jonatan, 2022. "Sustainable energy systems in the making: A study on business model adaptation in incumbent utilities," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    2. Martin Bichler & Hans Ulrich Buhl & Johannes Knörr & Felipe Maldonado & Paul Schott & Stefan Waldherr & Martin Weibelzahl, 2022. "Electricity Markets in a Time of Change: A Call to Arms for Business Research," Schmalenbach Journal of Business Research, Springer, vol. 74(1), pages 77-102, March.
    3. Petrollese, Mario & Valverde, Luis & Cocco, Daniele & Cau, Giorgio & Guerra, José, 2016. "Real-time integration of optimal generation scheduling with MPC for the energy management of a renewable hydrogen-based microgrid," Applied Energy, Elsevier, vol. 166(C), pages 96-106.
    4. Azadeh Shomali & Jonatan Pinkse, 2016. "The consequences of smart grids for the business model of electricity firms," Post-Print hal-02022695, HAL.
    5. Pablo David Necoechea-Porras & Asunción López & Juan Carlos Salazar-Elena, 2021. "Deregulation in the Energy Sector and Its Economic Effects on the Power Sector: A Literature Review," Sustainability, MDPI, vol. 13(6), pages 1-23, March.
    6. Michael Pollitt, 2021. "Measuring the Impact of Electricity Market Reform in a Chinese Context," Working Papers EPRG2111, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    7. Hiteva, Ralitsa & Foxon, Timothy J., 2021. "Beware the value gap: Creating value for users and for the system through innovation in digital energy services business models," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    8. Robert L. Fares & Michael E. Webber, 2017. "The impacts of storing solar energy in the home to reduce reliance on the utility," Nature Energy, Nature, vol. 2(2), pages 1-10, February.
    9. Rikap, Cecilia, 2022. "Becoming an intellectual monopoly by relying on the national innovation system: the State Grid Corporation of China's experience," Research Policy, Elsevier, vol. 51(4).
    10. Maciejowska, Katarzyna, 2020. "Assessing the impact of renewable energy sources on the electricity price level and variability – A quantile regression approach," Energy Economics, Elsevier, vol. 85(C).
    11. A. M. Vicedo-Cabrera & N. Scovronick & F. Sera & D. Royé & R. Schneider & A. Tobias & C. Astrom & Y. Guo & Y. Honda & D. M. Hondula & R. Abrutzky & S. Tong & M. de Sousa Zanotti Stagliorio Coelho & P., 2021. "The burden of heat-related mortality attributable to recent human-induced climate change," Nature Climate Change, Nature, vol. 11(6), pages 492-500, June.
    12. Alavi, Farid & Park Lee, Esther & van de Wouw, Nathan & De Schutter, Bart & Lukszo, Zofia, 2017. "Fuel cell cars in a microgrid for synergies between hydrogen and electricity networks," Applied Energy, Elsevier, vol. 192(C), pages 296-304.
    13. Gautam Gowrisankaran & Stanley S. Reynolds & Mario Samano, 2016. "Intermittency and the Value of Renewable Energy," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1187-1234.
    14. Ngar-yin Mah, Daphne & Wu, Yun-Ying & Ronald Hills, Peter, 2017. "Explaining the role of incumbent utilities in sustainable energy transitions: A case study of the smart grid development in China," Energy Policy, Elsevier, vol. 109(C), pages 794-806.
    15. Jing Liu & Thomas Hertel & Noah Diffenbaugh & Michael Delgado & Moetasim Ashfaq, 2015. "Future property damage from flooding: sensitivities to economy and climate change," Climatic Change, Springer, vol. 132(4), pages 741-749, October.
    16. Akimoto, Keigo & Sano, Fuminori & Homma, Takashi & Oda, Junichiro & Nagashima, Miyuki & Kii, Masanobu, 2010. "Estimates of GHG emission reduction potential by country, sector, and cost," Energy Policy, Elsevier, vol. 38(7), pages 3384-3393, July.
    17. van der Zwaan, Bob & Lamboo, Sam & Dalla Longa, Francesco, 2021. "Timmermans’ dream: An electricity and hydrogen partnership between Europe and North Africa," Energy Policy, Elsevier, vol. 159(C).
    18. Anaya, Karim L. & Pollitt, Michael G., 2017. "Going smarter in the connection of distributed generation," Energy Policy, Elsevier, vol. 105(C), pages 608-617.
    19. Richter, Mario, 2013. "Business model innovation for sustainable energy: German utilities and renewable energy," Energy Policy, Elsevier, vol. 62(C), pages 1226-1237.
    20. Helms, Thorsten, 2016. "Asset transformation and the challenges to servitize a utility business model," Energy Policy, Elsevier, vol. 91(C), pages 98-112.
    21. Galina Alova, 2020. "A global analysis of the progress and failure of electric utilities to adapt their portfolios of power-generation assets to the energy transition," Nature Energy, Nature, vol. 5(11), pages 920-927, November.
    22. Luburić, Zora & Pandžić, Hrvoje & Plavšić, Tomislav & Teklić, Ljupko & Valentić, Vladimir, 2018. "Role of energy storage in ensuring transmission system adequacy and security," Energy, Elsevier, vol. 156(C), pages 229-239.
    23. Anna M. Brockway & Jennifer Conde & Duncan Callaway, 2021. "Inequitable access to distributed energy resources due to grid infrastructure limits in California," Nature Energy, Nature, vol. 6(9), pages 892-903, September.
    24. Li, Chengzhe & Zhang, Libo & Ou, Zihan & Ma, Jiayu, 2022. "Using system dynamics to evaluate the impact of subsidy policies on green hydrogen industry in China," Energy Policy, Elsevier, vol. 165(C).
    25. Christoph Mazur & Stephen Hall & Jeffrey Hardy & Mark Workman, 2019. "Technology is not a Barrier: A Survey of Energy System Technologies Required for Innovative Electricity Business Models Driving the Low Carbon Energy Revolution," Energies, MDPI, vol. 12(3), pages 1-13, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pereira, Guillermo Ivan & Niesten, Eva & Pinkse, Jonatan, 2022. "Sustainable energy systems in the making: A study on business model adaptation in incumbent utilities," Technological Forecasting and Social Change, Elsevier, vol. 174(C).
    2. Omar Shafqat & Elena Malakhtka & Nina Chrobot & Per Lundqvist, 2021. "End Use Energy Services Framework Co-Creation with Multiple Stakeholders—A Living Lab-Based Case Study," Sustainability, MDPI, vol. 13(14), pages 1-24, July.
    3. Ebrahim Navid Sadjadi & Roemi Fernández, 2023. "Relational Marketing Promotes Sustainable Consumption Behavior in Renewable Energy Production," Sustainability, MDPI, vol. 15(7), pages 1-18, March.
    4. Michael Hamwi & Jérémy Legardeur & Iban Lizarralde, 2016. "Energy Product Service Systems as core element of energy transition in the household sector: The Greenplay project," Post-Print hal-01404187, HAL.
    5. Michael Hamwi & Iban Lizarralde, 2019. "Demand-side management and renewable energy business models for energy transition A systematic review," Post-Print hal-02448505, HAL.
    6. Frei, Fanny & Sinsel, Simon R. & Hanafy, Ahmed & Hoppmann, Joern, 2018. "Leaders or laggards? The evolution of electric utilities’ business portfolios during the energy transition," Energy Policy, Elsevier, vol. 120(C), pages 655-665.
    7. Phamthi, Vananh & Ngominh, Trung, 2022. "Disruptive Innovation & Chance for Latecomer Firms in E-Commerce: The Cases of the YES and PINDUODUO," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2022), Hybrid Conference, Opatija, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Hybrid Conference, Opatija, Croatia, 17-18 June 2022, pages 364-376, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    8. Bistline, John E.T. & Young, David T., 2020. "Emissions impacts of future battery storage deployment on regional power systems," Applied Energy, Elsevier, vol. 264(C).
    9. Steffen, Bjarne & Karplus, Valerie & Schmidt, Tobias S., 2022. "State ownership and technology adoption: The case of electric utilities and renewable energy," Research Policy, Elsevier, vol. 51(6).
    10. Khan, Hafiz Anwar Ullah & Ünel, Burçin & Dvorkin, Yury, 2023. "Electricity Tariff Design via Lens of Energy Justice," Omega, Elsevier, vol. 117(C).
    11. Pereira, Guillermo Ivan & Specht, Jan Martin & Silva, Patrícia Pereira & Madlener, Reinhard, 2018. "Technology, business model, and market design adaptation toward smart electricity distribution: Insights for policy making," Energy Policy, Elsevier, vol. 121(C), pages 426-440.
    12. Friedrich Chasin & Ute Paukstadt & Patrick Ullmeyer & Jörg Becker, 2020. "Creating Value From Energy Data: A Practitioner’s Perspective on Data-Driven Smart Energy Business Models," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 72(4), pages 565-597, October.
    13. Alexandros Arsalis & George E. Georghiou & Panos Papanastasiou, 2022. "Recent Research Progress in Hybrid Photovoltaic–Regenerative Hydrogen Fuel Cell Microgrid Systems," Energies, MDPI, vol. 15(10), pages 1-24, May.
    14. Ute Paukstadt & Jörg Becker, 2021. "From Energy as a Commodity to Energy as a Service—A Morphological Analysis of Smart Energy Services," Schmalenbach Journal of Business Research, Springer, vol. 73(2), pages 207-242, June.
    15. Herbes, Carsten & Brummer, Vasco & Rognli, Judith & Blazejewski, Susanne & Gericke, Naomi, 2017. "Responding to policy change: New business models for renewable energy cooperatives – Barriers perceived by cooperatives’ members," Energy Policy, Elsevier, vol. 109(C), pages 82-95.
    16. Petersen, Claire & Reguant, Mar & Segura, Lola, 2024. "Measuring the impact of wind power and intermittency," Energy Economics, Elsevier, vol. 129(C).
    17. Karami, Mahdi & Madlener, Reinhard, 2018. "Business Model Innovation for the Energy Market: Joint Value Creation for Electricity Retailers and their Residential Customers," FCN Working Papers 15/2018, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    18. Barjak, F. & Lindeque, J. & Koch, J. & Soland, M., 2022. "Segmenting household electricity customers with quantitative and qualitative approaches," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    19. Li, Changsheng & Shen, Bo, 2019. "Accelerating renewable energy electrification and rural economic development with an innovative business model: A case study in China," Energy Policy, Elsevier, vol. 127(C), pages 280-286.
    20. Specht, Jan Martin & Madlener, Reinhard, 2019. "Energy Supplier 2.0: A conceptual business model for energy suppliers aggregating flexible distributed assets and policy issues raised," Energy Policy, Elsevier, vol. 135(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:5:p:4417-:d:1084918. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.