Sustainable Business Model Dynamics of Distributed Solar PV Projects in China

Abstract

Solar photovoltaics (PV), as one of the renewable energy technologies, has gradually penetrated power systems worldwide. Distributed solar photovoltaics (DSPV) systems characterised by reducing transmission line losses, increasing grid resilience and relaxing requirements for investment have experienced exponential growth over the last decade. China’s DSPV power market has witnessed momentous changes since 2012, when a series of policies were introduced. DSPV is becoming the main approach to utilizing solar energy in China.
However, there are barriers impeding distributed energy development regarding financial, technological, regulatory, resources and awareness aspects. To overcome obstacles to DSPV development, several scholars emphasized the importance of promoting business model innovation (BMI) in DSPV projects. Before any further design and implementation, a comprehensive understanding of BMI is essential. The fundamental step is to identify the origins of BMI and investigate how DSPV projects enterprises can capture and subsequently respond to changes within and external to their businesses.
This work aims to investigate business model innovation for distributed solar photovoltaic project companies through dynamic sustainable business model frameworks. The main research question is “How can we develop a dynamic sustainable business model framework to understand business model innovation in distributed solar PV (DSPV) projects in China?” The objective is to develop dynamic sustainable business model framework and then apply it to DSPV project companies in China in order to understand business model innovation.
Through the study, business model innovation at the firm level (DSPV project enterprise) is a dynamic process. Due to environmental and business variables, a company’s business model constantly changes in response to external and internal opportunities and threats. These variables are essential for understanding business model innovation. Changes in external factors (e.g., policy and regulation, industrial technology innovation, customer demand, market competition, etc.) and internal factors (e.g., company technology improvement, project O&M management, personnel capability, etc.) could trigger business model innovation. Starting with recognizing opportunities or threats, DSPV enterprises respond to these variables differently depending on company capability and external business environment. Meanwhile, changes within business model elements tend to be coherent and interlinked over time. For an efficient business model innovation, associated business model elements are supposed to be in line with a changed business model element. On the way, these changes can either create or capture value for stakeholders, including customers, society and the environment. The constantly changing process as to BMI is based on a company’s flexible operation and management for adapting to the complex and varying environment.