Insights

New innovative business models in a transforming energy market

Insights
March 10 2022

Energy is at the very core of our day-to-day lives. The energy sector is changing rapidly, more than ever. Various elements are putting pressure on the current way of doing business, for instance the rising energy prices, sustainability targets driven by science-based targets (SBT), geo-political pressure and soaring customer churn levels. As a result, today’s energy market struggles with some major disruptions: waves of consolidation, new entrants, and new business models. On top of that, the complete energy ecosystem is transforming. All driven by the energy transition towards greener energy, global trends in decarbonization, decentralization in supply & demand and digitalization.  

The energy market is experiencing so many different disruptions, that it is hard to keep track of all the possible innovative opportunities. We at Stretch Innovation deep dived into the new innovative business models in the industry, to give you some interesting insights on how you can jump on the innovation track in the energy market to stay relevant in the future.

A new electrical energy value chain because of innovation

One of the transitions in the energy market, is the change of the energy value chain. The traditional energy value chain was long considered to be linear. In the last few years, due to innovations on various levels, the energy ecosystem moved towards a meshed value chain.

Traditionally, energy was generated in one place and consumed in another. Hence, the structure was simplistic and linear. First, the producers were responsible for energy generation. Next, DSO (Distribution system operators) and TSO (transmission system operators) were responsible for the energy distribution. Lastly, energy consumers consumed the energy. Energy originating from large power plants flowed indirectly towards energy consumers.  

Due to numerous innovations, the electrical energy value chain of the future will look quite different. New flexibilities and constraints driven by digitalization, decentralization and decarbonization are emerging. In the evolved value chain of energy flows, bi-directional energy flows prove to be a challenge but do also create opportunities for innovation. Innovation opportunities such as Vehicle-to-Everything (V2X), Internet-of-Things (IoT) applications, smart meter, storage, distributed energy resources (DER), renewables and prosumers are a result of those disruptive bi-directional energy flows.  

Vehicle-to-Grid (V2G) is even more disruptive, as this also involves other markets, such as the automotive market. Hydrogen is an extremely attractive topic as well, as various players are still considering how they can respond to this opportunity to get the most out of it in a strategic way.

New innovations pave the way for consumer-centric business models to arise

Due to new innovations, new business models with a focus on the consumer are also arising. We at Stretch Innovation analyzed these new business models in the energy market and summarized the main take-aways focusing on energy storage, XaaS and data.

1. Energy storage

Energy storage can have a multitude of functions. Stabilizing energy fluctuation during high renewable energy production is one of them. Batteries will play a significant role in storing excess energy. Annual installations of large Battery Energy Storage (BES) are suspected to grow from 1.5GWh in 2016 to over 10GWh per year by 2025, according to Hitachi.

A few new energy storage focused business models are:

  • ReVolta offers companies and individuals hardware and software to give discarded batteries from electric cars a new future.
  • Skoon created a battery-sharing platform on its online marketplace called ‘Skoon Sharing’. They also launched ‘Skoon Suite’, a rental management software tool, especially designed to manage a fleet of mobile energy assets.
  • Clean Energy Global enables Business-to-Business (B2B) customers to offer Battery-as-a-Service, a white label -integrating smart energy storage in a secure cloud.  

2. XaaS

XaaS or Anything as a Service, refers to the delivery of a service without the need to buy or monitor the assets. In the energy market, various XaaS models exist.

Energy as a service (EaaS) is a business model in which customers pay for an energy service without having to make any upfront capital investment into solar panels, heating, or lights for example. This business model could prove to be valuable in better aligning customer incentives with operational constraints of the energy grid. The EaaS model could assist the integration of renewables, help activate demand-side management and encourage electrification.  

For example, if we look at a service company that owns and operates grid-connected water heaters (residential or commercial). This company could schedule the water heaters to heat the tank during times of high renewable production and accompanied low energy cost instead of ad hoc heating during peak energy hours.

There are various XaaS models that exist in the energy market: Energy Savings as a Service (ESaaS), Lighting as a Service (Laas) and Heating as a Service (HaaS) for example.

Here are some interesting examples of new XaaS business models:

  • Signify (Philips) offers LaaS to B2B retail customers which can save up to 70% of the initial energy cost.  
  • Engie has been expanding its EaaS service offering thanks to a series of acquisitions:
    Commercial storage with Green Charge Networks;  
    PPA facilitator OpTerra Energy Services;  
    Electric vehicle charging network EVBox;  
    Solar developer SoCore Energy;  
    Energy services company Ecova.
  • Fluvius launched the initiative ‘Fluvius Sustainable Buildings’: a full package of energy services (prefinancing, study phase, implementation, and energy monitoring) to promote energy efficiency in municipal housing.
  • Sustainable Led Light provides cost-effective sustainable solutions for the light industry based on the LaaS principle.
  • Viessman is testing HaaS, where it takes over control and maintenance of the heating systems of consumers.
  • Enel X offers integrated EaaS solutions like Power Purchase Agreements (PPAs), on-and off-site energy supply technologies and demand response services.

3. Data

Big data play a vital role in the energy sector as the sector requires high maintenance of machinery and equipment monitoring, solar & wind production estimations etc. Consequently, the big data analytics market specifically in the energy sector, is expected to grow at a CAGR of 11.28% according to Mordor Intelligence. Additionally, innovative technologies, processes and capabilities allow closer customer interactions and using the available grid data or customer data drives insights to act in real-time.

Some examples of new data business models and technologies are:

  • ORES uses Siemens' open Internet of Things (IoT) platform MindSphere for its E-Cloud project. ORES will be able to collect and process data from local electricity needs, so the renewable energy production flows in real-time.
  • ENGIE tested Vertuoz Pilot which is a system for optimizing energy consumption that lets you balance the comfort of a building’s occupants with greater energy savings.
  • Elia launches various consumer-centric test projects. For example, Flexity enables the end-consumer to contribute to the energy transition by enabling asset and valorizing flexibility.  
  • June energy looks for the best market prices & switches consumers automatically between energy suppliers, based on their personal energy consumption.
  • IO.Energy is a communication platform created by Elia, Lumminus, Enervalis, Fluvius and Scholt energy. This platform aims to demonstrate that prosumers (producer and consumer) can gain from their flexibility by optimizing it against a real-time price.  

Energy Innovation Grid

Each of these given innovation examples offers a perspective on both new opportunities and challenges on a given business level. Now, how can you act upon various innovation barriers in a specific business case? We have listed that for you below in our innovation checklist.

Innovation as the solution to the rapidly changing energy market

To stay relevant in the energy sector, now and in the future, it is crucial to keep innovating as you go. However, is it difficult to know which innovation you should implement first. Stretch Innovation is always happy to spar with you about which innovation decisions your company should make first to accelerate your business.

Ready to discover how you can translate your ambition to grow your business into concrete actions? Get in touch with our energy innovation entrepreneurs to get started!

Insights

New innovative business models in a transforming energy market

Insights
March 10 2022
New innovative business models in a transforming energy market

Energy is at the very core of our day-to-day lives. The energy sector is changing rapidly, more than ever. Various elements are putting pressure on the current way of doing business, for instance the rising energy prices, sustainability targets driven by science-based targets (SBT), geo-political pressure and soaring customer churn levels. As a result, today’s energy market struggles with some major disruptions: waves of consolidation, new entrants, and new business models. On top of that, the complete energy ecosystem is transforming. All driven by the energy transition towards greener energy, global trends in decarbonization, decentralization in supply & demand and digitalization.  

The energy market is experiencing so many different disruptions, that it is hard to keep track of all the possible innovative opportunities. We at Stretch Innovation deep dived into the new innovative business models in the industry, to give you some interesting insights on how you can jump on the innovation track in the energy market to stay relevant in the future.

A new electrical energy value chain because of innovation

One of the transitions in the energy market, is the change of the energy value chain. The traditional energy value chain was long considered to be linear. In the last few years, due to innovations on various levels, the energy ecosystem moved towards a meshed value chain.

New innovations pave the way for consumer-centric business models to arise

Traditionally, energy was generated in one place and consumed in another. Hence, the structure was simplistic and linear. First, the producers were responsible for energy generation. Next, DSO (Distribution system operators) and TSO (transmission system operators) were responsible for the energy distribution. Lastly, energy consumers consumed the energy. Energy originating from large power plants flowed indirectly towards energy consumers.  

Due to numerous innovations, the electrical energy value chain of the future will look quite different. New flexibilities and constraints driven by digitalization, decentralization and decarbonization are emerging. In the evolved value chain of energy flows, bi-directional energy flows prove to be a challenge but do also create opportunities for innovation. Innovation opportunities such as Vehicle-to-Everything (V2X), Internet-of-Things (IoT) applications, smart meter, storage, distributed energy resources (DER), renewables and prosumers are a result of those disruptive bi-directional energy flows.  

Vehicle-to-Grid (V2G) is even more disruptive, as this also involves other markets, such as the automotive market. Hydrogen is an extremely attractive topic as well, as various players are still considering how they can respond to this opportunity to get the most out of it in a strategic way.

New innovative business models in a transforming energy market

Due to new innovations, new business models with a focus on the consumer are also arising. We at Stretch Innovation analyzed these new business models in the energy market and summarized the main take-aways focusing on energy storage, XaaS and data.

Energy Innovation Grid

Energy storage can have a multitude of functions. Stabilizing energy fluctuation during high renewable energy production is one of them. Batteries will play a significant role in storing excess energy. Annual installations of large Battery Energy Storage (BES) are suspected to grow from 1.5GWh in 2016 to over 10GWh per year by 2025, according to Hitachi.

A few new energy storage focused business models are:

  • ReVolta offers companies and individuals hardware and software to give discarded batteries from electric cars a new future.
  • Skoon created a battery-sharing platform on its online marketplace called ‘Skoon Sharing’. They also launched ‘Skoon Suite’, a rental management software tool, especially designed to manage a fleet of mobile energy assets.
  • Clean Energy Global enables Business-to-Business (B2B) customers to offer Battery-as-a-Service, a white label -integrating smart energy storage in a secure cloud.  
New innovative business models in a transforming energy market

1. Energy storage

XaaS or Anything as a Service, refers to the delivery of a service without the need to buy or monitor the assets. In the energy market, various XaaS models exist.

Energy as a service (EaaS) is a business model in which customers pay for an energy service without having to make any upfront capital investment into solar panels, heating, or lights for example. This business model could prove to be valuable in better aligning customer incentives with operational constraints of the energy grid. The EaaS model could assist the integration of renewables, help activate demand-side management and encourage electrification.  

For example, if we look at a service company that owns and operates grid-connected water heaters (residential or commercial). This company could schedule the water heaters to heat the tank during times of high renewable production and accompanied low energy cost instead of ad hoc heating during peak energy hours.

There are various XaaS models that exist in the energy market: Energy Savings as a Service (ESaaS), Lighting as a Service (Laas) and Heating as a Service (HaaS) for example.

Here are some interesting examples of new XaaS business models:

  • Signify (Philips) offers LaaS to B2B retail customers which can save up to 70% of the initial energy cost.  
  • Engie has been expanding its EaaS service offering thanks to a series of acquisitions:
    Commercial storage with Green Charge Networks;  
    PPA facilitator OpTerra Energy Services;  
    Electric vehicle charging network EVBox;  
    Solar developer SoCore Energy;  
    Energy services company Ecova.
  • Fluvius launched the initiative ‘Fluvius Sustainable Buildings’: a full package of energy services (prefinancing, study phase, implementation, and energy monitoring) to promote energy efficiency in municipal housing.
  • Sustainable Led Light provides cost-effective sustainable solutions for the light industry based on the LaaS principle.
  • Viessman is testing HaaS, where it takes over control and maintenance of the heating systems of consumers.
  • Enel X offers integrated EaaS solutions like Power Purchase Agreements (PPAs), on-and off-site energy supply technologies and demand response services.

2. XaaS

Big data play a vital role in the energy sector as the sector requires high maintenance of machinery and equipment monitoring, solar & wind production estimations etc. Consequently, the big data analytics market specifically in the energy sector, is expected to grow at a CAGR of 11.28% according to Mordor Intelligence. Additionally, innovative technologies, processes and capabilities allow closer customer interactions and using the available grid data or customer data drives insights to act in real-time.

Some examples of new data business models and technologies are:

  • ORES uses Siemens' open Internet of Things (IoT) platform MindSphere for its E-Cloud project. ORES will be able to collect and process data from local electricity needs, so the renewable energy production flows in real-time.
  • ENGIE tested Vertuoz Pilot which is a system for optimizing energy consumption that lets you balance the comfort of a building’s occupants with greater energy savings.
  • Elia launches various consumer-centric test projects. For example, Flexity enables the end-consumer to contribute to the energy transition by enabling asset and valorizing flexibility.  
  • June energy looks for the best market prices & switches consumers automatically between energy suppliers, based on their personal energy consumption.
  • IO.Energy is a communication platform created by Elia, Lumminus, Enervalis, Fluvius and Scholt energy. This platform aims to demonstrate that prosumers (producer and consumer) can gain from their flexibility by optimizing it against a real-time price.  

3. Data

Each of these given innovation examples offers a perspective on both new opportunities and challenges on a given business level. Now, how can you act upon various innovation barriers in a specific business case? We have listed that for you below in our innovation checklist.

To stay relevant in the energy sector, now and in the future, it is crucial to keep innovating as you go. However, is it difficult to know which innovation you should implement first. Stretch Innovation is always happy to spar with you about which innovation decisions your company should make first to accelerate your business.

Ready to discover how you can translate your ambition to grow your business into concrete actions? Get in touch with our energy innovation entrepreneurs to get started!

Innovation as the solution to the rapidly changing energy market

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Insights

New innovative business models in a transforming energy market

Insights
March 10 2022

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