Business models for distributed energy resources: A review and empirical analysis

October 2017

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This paper presents a novel, empirical analysis of the most common business models for the deployment of demand response and energy management systems, electricity and thermal storage, and solar PV distributed energy resources. We classify the revenue streams, customer segments, electricity services provided, and resources for 144 business models. We use this assessment to identify a set of business model “archetypes” in each resource category. Our analysis leads us to five observations that have important implications for policymakers and regulators. First, our analysis highlights that business models are deeply embedded in myriad policy and regulatory frameworks. Second, current DER business models are driven more by regulatory and policy factors than by technological factors. Third, the relatively small set of well-defined DER business model archetypes suggests that the determinants of success within a given archetype may include executional capabilities, culture, and other activities that are not captured in our framework. Fourth, continued cost declines, technological innovation, and changing policy and regulatory landscapes mean the business models of tomorrow will likely look very different than the business models of today. Finally, DER business models compete within archetypes for market share in providing a limited set of electricity services.

MITEI Author

Scott Burger PhD

Institute for Data, Systems, and Society

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