“Business model strategies: Flexibility trade in low voltage distribution networks”
Patrick Lynch,RIKON-WIT, IrelandP
atrick is the director of RIKON-WIT, a business innovation research centrelocated in Wa-terford Institute of Technology. He has published extensively onbusiness models and net-worked innovation in top-tier journals andpeer-reviewed conferences. He has amassed considerable industry, consultancyand applied innovation research experience in process optimisiation, businessmodelling & strategy and market models.
Richard Hickey, RIKON-WIT, IrelandR
ichard is a Business Development Strategist in RIKON-WIT and works closelywith organi-sations to find solutions to their business model challenges bydeveloping and applying var-ious research methodologies and helping themachieve their research goals.
Thomas Messervey, R2M Solution, Italy
om Messervey has over 20 years of engineering experience spanning militaryservice in the US Army Corps of Engineers, Industrial Experience with the Italian Engineering Company D’Appolonia, teaching excellence at the United States Military Academy at West Point, and Coaching services as the EU Facilitator for the Intelligent Manufacturing Systems program. He is currentlyan organizer of the annual International Electronic Conference on Sensors andApplications.
This paper provides a morenuanced picture of the potential of multi-sided business model for local flexibility management in the low voltage grid to disrupt the long-standingbusi-ness models within the sector because value network analysis focuses noton the actor or the industry but the value-creating system itself, within whichdifferent economic actors perform roles and who work together to co-createvalue of local flexibility. Analysing the value flows along the multi-commodityflow chain perspective, including interactions and potential conflictingobjectives provide us with a contextual understanding of how a net-workedeconomy/multi-sided business model could potentially materialise.
“In traditional industries, users can be homoge-nous and/or bilateralexchanges follow a linear path as vendors purchase inputs, transform them, andsell output. The electric power net-work has historically operated in thisfashion. However, the energy model landscape is changing with flexibility atthe core of a new en-ergy market design. Empowered by information andcommunication technologies (ICT) analyt-ics and smart technologies, consumers,prosumers and local energy communities are emerging as active participants inthe energy value chain. If homes can individually and col-lectively level theirdemand load profile, then the generation, distribution and storage ofelec-tricity at the Low Voltage (LV) level (and indi-rectly at higher voltages)can be optimized. However, the integration of ICT into the energyinfrastructures will profoundly change the busi-ness model structures of theelectricity value chain. As business value will be increasingly attached to thebi-directional flows of electricity, data and revenue where flows are driven bya coupling of stakeholder optimization objectives and free market principles,new participatory business platforms will emerge to unlock the potentialadvantages of distributed energy re-sources and flexibility possible by theindividual and collective actors at the LV level. In general, participatorynetwork platforms provide a mech-anism for providers and buyers of products andservices to interact and co-create value that could not be createdindividually. In particular, multi-sided platforms (MSPs) has gained prom-inentattention as a business model that cre-ates value by enabling directinteractions be-tween several distinct groups of actors who need each other inorder to deliver goods or services to their customers. However, as MSPs areless familiar and complex within the energy market, there has been littleinvestigation in modelling this dynamic ecosystem beyond viewing business modelvalue creation from the perspective of an individual actor which is not veryeffective when trying to ignite network based business models.
Utilising thebusiness modelling methodology of value network analy-sis and the key informanttechnique, value flows were modelled within the context of a multi-sidedbusiness platform to understand the value creation, value delivery and valuecap-ture in a network of interdependent relation-ship, its networked positionand the stakeholder interactions required for delivery of local flexibil-ity.Supported by this analysis, this paper fo-cuses on the LV area of the smartgrid, and presents a MSP, its strengths and weaknesses, its actors, theirobjectives and roles, along with value propositions and collaborationopportuni-ties.
The MSP presented involves local energy communities and where alocal flexibility aggre-gator facilitates flexibility management betweenretailers, distribution system operators, and consumers/prosumers. Incomparison to the traditional utility model, the complexity of this recharacterizationof the industry ecosystem is significant. While it presents new opportunitiesfor incumbent energy providers to collaborate and develop new products, it willalso dramatically reshape the value model of the industry as a whole and thenet-worked economy value propositions required by the mar-ket.