Business models and the energy transition

Business models and the energy transition Report at a glance

Citation Mouritz, M., Silva, A., Economou, D., Hargroves, C., Inchauspe, J., Akimov, A., Stegen, S., Nutkani, I., Vahidnia, A., and McGrath, B. (2022). Business Models and the Energy Transition. Fast Track for RACE for 2030.

Project team Curtin University Dr Mike Mouritz Dr Angie Silva Dr Dean Economou Dr Charlie Hargroves Dr Julian Inchauspe

Griffith University Dr Alexandr Akimov Dr Sascha Stegen

RMIT Dr Inam Nutkani Dr Arash Vahidnia Prof. Brendan McGrath

What is RACE for 2030? RACE for 2030 CRC is a 10-year co-operative research program with AUD350 million of resources to fund research towards a reliable, affordable, and clean energy future. https://www.racefor2030.com.au

Project Partners

Acknowledgements We would like to thank the Industry Reference Group Energy WA, Development WA, Western Power, Starling, PlanetArk Power and Redgrid for their contributions. Acknowledgement of Country The authors of this report would like to respectfully acknowledge the Traditional Owners of the ancestral lands throughout Australia and their connection to land, sea and community. We recognise their continuing connection to the land, waters and culture and pay our respects to them, their cultures and to their Elders past, present, and emerging. Disclaimer The authors have used all due care and skill to ensure the material is accurate as at the date of this report. The authors do not accept any responsibility for any loss that may arise by anyone relying upon its contents.

Report at a glance What is the report about This report documents an exploration of business models in the electricity system as a way to identify opportunities to accelerate this transition. Simply put, a business model is about how the money is made and the stories and processes that explain how an enterprise works. The core question posed by the industry partners involved in this project was "What business models are emerging for all system participants in high distributed energy resources (DER) world?" Why is it important? The Australian and global electricity system is undergoing a massive transition towards a clean and more decentralised model. For technological, economic and policy reasons, this shift is happening fast. The national policy agenda on greenhouse gas reductions of 45% by 2030 and ‘net zero’ carbon by 2050 is going to drive this transaction even more quickly. In this context, there is a need to guide the transition processes so that investments in the public and private spheres can be optimised. What did we do? Research involved obtaining industry insights from three industry reference group (IRG) workshops and interviewing selected stakeholders to draw out their professional and organisational insights on the state of the energy transitions. A review of relevant literature and the policy environment was undertaken, and an analysis of recently published energy market and financial data was completed to identify the shift in value pools as increased electrification and increased DER penetration occurs. What difference will it make? Analysis of current and potential ‘value pools’ in the Western Australian integrated systems highlighted potential for lower energy costs and a need for increased investment in distribution over transmission to support a low emission energy system. This assessment strengthens the argument for increased attention to the creation and definition of distribution service operators (DSOs) and distribution market operators (DMOs) as important role changes for existing incumbents. What’s next? The clean energy transition will require leaders experienced in dynamic systems change that can test new ways of doing business in a ‘safe–fail’ rather than ‘fail–safe’ mind set through processes of co-design and co-creation. Certain high value business models for a DER transition require further support and testing, including: • • • • •

Energy as a service System stability, reliability, and security (ancillary services) Matching supply and demand Aggregator services (includes VPPs) Microgrid managers/providers

Ancillary services were also seen as important to maintain system stability during the transition to DER and need to be appropriately valued. Further, a marketplace of aggregators needs to be created to help enhance the overall performance of high levels of DER, a model closely linked to VPPs and microgrid management and provision. 3

www.racefor2030.com.au

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