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Images of particles made from a promising battery cathode material called NMC

Co-creation of digital business models in the electricity sector

2018
Bits & Watts Initiative

PI: Steve Comello, Lead, Energy Business Innovations Focus Area, Graduate School of Business, Stanford University

An energy transition is changing the value proposition of the traditional utility business model. This project seeks to understand how and why utilities and start-ups co-create business models based on digital technology, and understand how technology characteristics influence the co-creation process and ultimate adoption. The project will develop rich case studies with international industry collaborators and, further academic and practitioner knowledge of digital business model co-creation in energy.

Comello identifies “four Ds” behind the energy transition currently taking place: decentralization, decarbonization, digitalization, and deregulation. In the face of these changes, utilities must update existing products and services and potentially offer new ones. As part of a long-term case study on models of such “capability development”, Comello is tracking their evolution by observing the efforts of 10 utilities from around the world that have created the Free Electrons program. Free Electrons is a platform where utilities annually select a cohort of start-ups in order to leverage each other’s complementarities to identify and deploy new technologies and business models. Beyond the specific solutions being pursued, he is interested in the extent to which the process itself is enabling the capability to innovate within utility companies.

In terms of specific capabilities, Comello notes the high interest that utilities have in data capture and analytics solutions, applied to operational excellence. Such solutions enhance the ability for utilities to, for example, find and repair faults, inspect system components and perform preventative maintenance. This may be a useful way for utilities to learn new tools,  “The data sciences are a suite of general-purpose technologies that utilities are learning to use effectively in the applications they know best, namely asset management. This will give them the experience to more effectively explore these technologies in a revenue generating context, which is ultimately where they will have to go.”

To learn more about Stephen Comello’s work, see https://www.gsb.stanford.edu/contact/stephen-d-comello.