Governance Drivers and Barriers for Business Model Transformation in the Energy Sector

Abstract

AbstractSmart second-generation policies for energy transition governance have been less studied and reviewed in the literature. They are also difficult to compare or measure in terms of their effectiveness with regard to the energy transition, not only because each country’s objectives and underlying drivers for an energy transition are different. Technological innovation and new technology deployment are only the tip of the iceberg. Understanding how to redesign energy governance to allow for business model reconfiguration among incumbents and how to stimulate business model innovation by start-ups and new entrants is key for an effective and sustainable energy transition in the long term. However, beyond this, countries must address the underlying driving forces such as consumption patterns and the financial system. Therefore, business model transformation is not the only solution, but it is an important one and it requires well-designed policies. It also requires the involvement of all stakeholders at all levels of the economic fabric of each region and country. At the same time, we continue to measure progress on energy transitions in a superficial and extremely limited way. Policies must now be smarter, not just more ambitious in terms of appearances, and the measurement of energy transition progress must evolve as well. We discuss the full story of an energy transition to the extent possible in a single chapter. For example, we will review business models in different sub-sectors, policies that either block or promote such changes in each sub-sector chosen, and the elements that are necessary for energy transitions to become successful and sustainable without long-term government intervention and financial support. Finally, we also provide insights from an expert workshop held in 2019 and we outline our upcoming work on an Energy Transition Preparedness Index.