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German utilities and distributed PV: How to overcome barriers to business model innovation

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  • Richter, Mario

Abstract

The transformation of the energy industry towards a more sustainable production of electricity increases the importance of distributed generation from renewable sources such as solar photovoltaic (PV). German utilities have largely failed to benefit from this development and lost 97% of the distributed PV generation market to investors from outside the electric power industry. Recent studies indicate that utilities have to react to prevent revenue erosion and loss of profits. This study identifies threats and opportunities of distributed PV generation for utilities based on a series of interviews with German utility managers. The key finding is that utilities do not perceive distributed PV as a threat to their current business models nor do they see it as a potential market for them. Relating these findings to the existing literature on transformation processes in other industries leads to the conclusion that the solution for utilities lies in changing their perspective on distributed PV. Utilities could greatly benefit if they did not treat PV as just another source of electricity generation in competition with traditional sources (as they do today), but as a strategic gateway into the emerging distributed generation and service market. Distributed PV could function as a basis for further business model innovation in new growth markets such as energy efficiency and distributed storage. Specific recommendations are provided and a modular value proposition is suggested to help utilities to turn distributed PV from a threat into an attractive business opportunity.

Suggested Citation

  • Richter, Mario, 2013. "German utilities and distributed PV: How to overcome barriers to business model innovation," Renewable Energy, Elsevier, vol. 55(C), pages 456-466.
    • Handle: RePEc:eee:renene:v:55:y:2013:i:c:p:456-466
    DOI: 10.1016/j.renene.2012.12.052
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    References listed on IDEAS

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