Platform business models have disrupted many industries in recent years. At Airbnb’s IPO in December 2020, the company was considered more valuable than three major players in the hotel industry combined (Marriott, Hilton, Hyatt) – without even owning a single hotel room. This example shows the transformative nature and disruptive power platform business models bring to the table. In a nutshell, platform business models center around a multi-sided market with a corresponding value-adding ecosystem that fundamentally breaks with the idea of the conventional linear value chain.
Until recently, the power sector has resisted the platform revolution to a large degree – its rigid value chain still mainly builds on centralized generation in nuclear and coal power plants, transmission through monopolized grids, and consumption by customers unenthusiastic about switching providers. However, the tide is turning as liberalization, digitization (e.g. smart homes), electrification (e.g. e-mobility), and decentralization (e.g. rise of the prosumer) are changing the rules of the game in the energy industry.
Ultimately, this development could not only turn the industry upside down but also substantially accelerate the sector’s green transformation: Platform business models will promote adoption of green technology by providing additional income streams and lowering entrance barriers for new, renewable assets (e.g. rooftop PV, home storage batteries, electric vehicles) and managing increased complexity caused by flexible power generation and demand.
In their recent publication, BCCP Fellow Timm Teubner and co-author Tobias Menzel provide a first review of literature on this matter. They describe the upcoming transformation in the sector, present a taxonomy of platform business models in the energy sector, and describe worthwhile paths for future work. Further, the authors lay out how platform business models transform the conventional power value chain.
The full article “Green energy platform economics – understanding platformization and sustainabilization in the energy sector” is published in the International Journal of Energy Sector Management.