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Business models of energy prosumers: Energy and the institutional imagination

On June 18, DRIFT organized the Workshop Prosumer Business models for the Energy Transition in the Impact Hub Amsterdam. The workshop addressed one of the key challenges for energy prosumerism: the development of viable, democratic and environmentally sustainable business models. DRIFT-researcher Bonno Pel wrote a recap of the day.
 
The day was kicked off by dr. Donal Brown (Leeds University, UK), partner of DRIFT in the PROSEU project. His talk reminded us that the mainstreaming and institutionaliation of prosumerism is already well on course. As the post-subsidy era is about to begin or beginning already, it becomes all the more important to construct robust business models. Strategically well-considered BM development can increase revenue streams through 1) increased self-consumption; 2) improved export prices; 3) access flexibility, balancing and ancillary service markets and 4) shifts in energy vectors.
 
Together with Moritz Ehrtmann from Leuphana University in Lüneburg (GER), Donal engaged the participants in an exercise of business model development (see picture of model). With 25 participants engaging in the energy transition from various backgrounds, the model easily came to life. Depicting key energy system actors such as grid operators and suppliers, their activities and their interactions (e.g. financial streams, balancing services, electricity and mobility services), the model was used to map out existing prosumership arrangements and explore alternatives.
 
The collective placing of the coloured pins and ribbons put into practice what Burke & Stephens (2018)[1] stated recently: The current rise of prosumership business models is a historical opportunity not only for the technical re-design of our energy provision systems, but also for the institutional design of more democratic governance arrangements. The practical, pressure cooker mode of exercise brought out how this ‘double’ design challenge is well more complex than the business modelling kit suggests at first sight:
 

 
Discussing how the prosumership system works and which actors are needed to keep it working, we easily lose sight of what it should achieve, what the main performance criteria are, and which indirect stakeholders may have to be included in the design process. Inversely, starting from purposes and political choices, it suddenly becomes difficult to start ‘placing the pins’. Questions of ‘how’ easily obscure the ‘why’ and the ‘for whom’.    
 
Institutional imagination.
The business model exercise stimulated the ‘institutional imagination’, as the Brazilian political philosopher Roberto Unger called it. In practice, the technical-institutional design starts from situations in which many pins are already placed: Lasting agreements between public and private actors, vested interests, the given possibilities of built and natural environment, the actual state of technology and market conditions. Instead of free-roaming institutional imagination and design-from-scratch, the exercise comes down to some institutional ‘bricolage’ and creative tinkering with the pieces of the puzzle already in place.
 
Finally, it became clear earlier on through the presentation by Guus Ydema how the prosumership game can very well be taken up as forward-looking, ambitious institutional design. His AGEM initiative in the Dutch Achterhoek region started as a social enterprise funded by 8 municipalities in 2014. Pursuing the goal of self-sufficient, energy-saving and renewable energy for 2030, AGEM is involved in 120 renewable energy projects. The hybrid cooperation model drives towards a stepwise growing inclusion of enterprises and citizens. AGEM deploys the ‘revolving investments’ through which activist regional governments seek to support sustainable development – whilst steering clear from market-disturbing subsidy. The appropriate size and scope of this public financing model is as yet unclear and controversial, as indicated in the NRC newspaper (in Dutch). In any case, this shows how national administrative cultures and regional governance choices make quite a difference. This sense of context is typically developed through EU collaborations like PROSEU.
 
[1] Burke, M. J., & Stephens, J. C. (2018). Political power and renewable energy futures: A critical review. Energy Research & Social Science, 35, 78-93.


Date
July 26, 2019