How is value created and captured in smart grids? A review of the literature and an analysis of pilot projects

Eva Niesten, Floortje Alkemade

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Abstract

Profitable business models for value creation and value capture with smart grid services are pivotal to realize the transition to smart and sustainable electricity grids. In addition to knowledge regarding the technical characteristics of smart grids, we need to know what drives companies and consumers to sell and purchase services in a smart grid. This paper reviews 45 scientific articles on business models for smart grid services and analyses information on value in 434 European and US smart grid pilot projects. Our review observes that the articles and pilots most often discuss three types of smart grid services: vehicle-to-grid and grid-to-vehicle services, demand response services, and services to integrate renewable energy (RE). We offer a classification of business models, value creation and capture for each of these services and for the different actors in the electricity value chain. Although business models have been developed for grid-to-vehicle services and for services that connect RE, knowledge regarding demand response services is restricted to different types of value creation and capture. Our results highlight that business models can be profitable when a new actor in the electricity industry, that is, the aggregator, can collect sufficiently large amounts of load. In addition, our analysis indicates that demand response services or vehicle-to-grid and grid-to-vehicle services will be offered in conjunction with the supply of RE.
Original languageEnglish
Pages (from-to)629-638
Number of pages9
JournalRenewable & Sustainable Energy Reviews
Volume53
DOIs
Publication statusPublished - 2016

Research Beacons, Institutes and Platforms

  • Manchester Institute of Innovation Research

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