Investigation of Community Energy Business Models from an Institutional Perspective: Intermediaries and Policy Instruments in Selected Cases of Developing and Developed Countries

Abstract

Community energy development and the empowerment of customers as producers are the main contributors to decentralized market solutions in energy transition policy. Despite the growing literature on community energy projects from the perspectives of various business models, drivers, and barriers, few studies display the impact of institutional factors on the community energy business model configuration. Using insights from Ostrom’s institutional framework, this study develops a conceptual framework comprising policy instruments and the intermediaries that configure the various community energy business models, and it examines this framework in the developed world of northwestern European countries (Germany, Denmark, Belgium, and the UK) and in selected cases in developing countries (Rural Central America, South Africa, Iran, and Indonesia). The findings indicate that ambitious renewable energy consumption targets and national policies in northern EU countries have resulted in political and financial incentives, as well as greater financial security than other investment markets, which encourage citizens to contribute to the proliferation of community energy. On the other hand, in the studied developing countries, top-down energy policies and a centralized energy system are insufficient for participatory energy planning. Due to unsupportive policies, a lack of appropriate regulatory frameworks, and a lack of institutional support in these countries, the initiation of community energy projects requires the presence of intermediaries such as developers who work ‘in-between’ other actors, such as energy providers, users, or regulators.

Policy Chain of Energy Transition from Economic and Innovative Perspectives: Conceptual Framework and Consistency Analysis

“…Market-pull policies such as energy taxes are politically controversial due to the expenses imposed on vulnerable consumers, and energy efficiency regulations should be adequately strong and stringent to the extent that they can impede the "rebound effects" of more direct and indirect consumption of energy sources. In addition, the concept of "technology spillovers" means that the benefits of patents and innovation are not restricted to only innovator firms or institutions, and hence investors are not normally interested in private RD&D foundations [108]. Taking into account the above-mentioned obstacles to energy transition, it is suggested that future studies could examine the challenges of energy transition considering the hindrance of technology development, supportive policies, and renewable energy deployment.…”