Business Model Innovation for Sustainable Energy: German Utilities and Renewable Energy

The electric power sector stands at the beginning of a fundamental transformation process towards a more sustainable production based on renewable energies. Consequently, electric utilities as incumbent actors face a massive challenge to find new ways of creating, delivering, and capturing value from renewable energy technologies. This study investigates
utilities' business models for renewable energies by analyzing two generic business models based on a series of in-depth interviews with German utility managers. It is found that utilities have developed viable business models for large scale utility-side renewable energy generation and invest huge sums in this field. At the same time, utilities lack adequate business models to commercialize small scale customer-side renewable energy technologies. By combining the business model concept with innovation theory a new perspective on the energy transition is suggested and applied. Furthermore, practical recommendations for utility mangers are provided how to create and capture more value in the energy transition.