Business models at REWARDHeat demonstrators

In this report, business models have been developed for the demonstration sites in the REWARDHeat project with the purpose to uncover lessons learned about the shift in business logic when transitioning from conventional DH business models to low temperature schemes. The business models have been developed in an iterative process with the DH companies participating in the project, during the first three years of its elaboration. A particular focus has been placed on the innovative component of the business models, i.e., the green value creation and its value to different stakeholders. Selling heat as a service (instead of as a commodity) has been the starting point in developing the business models. Contractual considerations and ownership forms have been analyzed for each of the demonstration sites.

The findings enable the project to respond to the main questions of the deliverable: How does the REWARDHeat business model experiences differ from a conventional DH business model and what can we learn from the transition to low temperature DH solutions?The aggregated results show that the demo sites focus on technical innovations but seven out of 10 also develop business innovations by increasing the service offer to customers. The business logic of low temperature DH makes it more efficient to develop the business innovation simultaneously with the technical innovation.The lack of EU legislation on waste heat recovery is causing uncertainties. Investors need to know whether the investment is considered sustainable. The value of green is created at all demo sites and valued by most stakeholders. It is however only exploited in the business model at three demo sites.Offering more advanced service to customers necessitates a shift towards being more customer oriented.

By assuming ownership and maintenance of the substation at the customer site, the boundary condition is shifted to inside the customers’ buildings. It creates a value of carefreeness for the customer as the DH company assumes more risk. The DH company gains from increased control of the network, something increasingly important in low temperature solutions. Three demo sites are offering advanced services resulting in a co-dependent relationship with the customer where the collaboration requires integration of processes.The main change in the business model canvas for low temperature installations, in comparison to conventional DH, is the necessity to manage relationships. Relationship building is required for new partnerships, due to multiple decentralized heat sources, and for the prosumer customer segment, instated from waste heat and renewable energy integration. As decentralized energy sources are introduced to the DH network the distribution network becomes more important and large-scale centralized production plants less important. The business logic of low temperature solutions is more on circulating available resources, utilizing the available flexibility in the distribution network, and implementing more advanced control to manage the system efficiently.

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