Transformation of the Electric Utility Business Model: From Edison to Musk(1 The Global Energy Markets Series)

This book examines business model transformation through the study of electrical utilities, an industry at the center of today’s efforts to combat climate change. When change comes to the business model of such a mature industry, the pattern is often recognizable. The foundational elements of the industry shift, allowing the innovation of business models by new competitors, while established firms face the threat of disruption. The utility sector, after decades of relative stability, is in the midst of such a transformation today. After providing a historical summary of the dominant business models of the utility sector, Transformation of the Electric Utility Business Model looks at the factors currently impacting the industry. Utilities and policy makers today are facing two long-term issues that will dominate their agendas in the coming decades: rebuilding utility infrastructure to enable the decarbonization of the economy, and managing the risk of catastrophic events that can leave large areas without power for extended periods. Fortunately, with proper planning, many utility investments in decarbonization will also support risk management. However, these investments are often not compatible with current utility business models, requiring creativity and new regulatory frameworks to successfully implement. This book considers the impact of these factors, and then discusses the future. This well-researched, extremely insightful book is essential reading for all those with an interest in business strategy, energy studies and sustainability.

Table of Contents:
Introduction Part 1 - The Business Model 1. Age Leads to Rigidity The Problems with Mature Organizations Changing a Dominant Business Model 2. The Business Model – What is it? Development and Popularization of the Concept The Elements of a Business Model Part 2 – A History of Business Model Transformation 3. Before the Grid “The Private Power Plant” – Pre-1882 A Fragmented Marketplace An Example in JP Morgan’s Basement 4. First Business Model – Central Station Grid – 1882 to 1890s Edison’s Vision on Pearl Street Downfall: A Business Model Constrained by Distance. 5. Second Business Model – Centralized Production, Competition - 1890s to 1920s The Dominance of AC and Scale Downfall: Competition in a Natural Monopoly 6. Third (and still current) Business Model – Regulated Monopoly – 1920s to 2020s Regulation and Monopoly Stressing the Business Model: The Four D’s and Competition from Distributed Renewables Part 3 – Emergence of a New Business Model 7. Four D’s of Change: Financial Decline, Decarbonization, Decentralization, Digitization Financial Decline Decentralization Decarbonization Digitization 8. A Business Model Under Strain The Value Chain: New Competition from Decentralized Renewables The Customer: A Dream Customer No Longer The Value Offering: Expanded Customer Expectations Value Capture: An System in Need of Maintenance 9. The Future Business Model What We Know Shape of the Future Business Model Part 4 – Pathways to Business Model Transformation 10. A Path Well Traveled - Recurring Patterns of Dislocation 11. Roadblocks to Change The Roadblock of Technology The Roadblock of Embedded Values and Thinking The Roadblock of Financial Returns Breaking Through Roadblocks 12. Pathways to Transformation Approach 1 - Maintain Traditional Boundaries (“Stay in your lane”) Approach 2 - Extend the Existing Model (“Get a bigger umbrella”) Approach 3 - Develop Ambidexterity (“Use a different skill set”) Approach 4 - Experiment (“The path seldom taken”) References

About the Author :
John Manshreck - a CPA and management consultant with over two decades of consulting experience to public utilities, particularly in areas of smart grid deployment and large capital projects. John holds a Bachelor of Commerce (Honours) from the University of Manitoba (Canada), an MBA from London Business School (United Kingdom), and a Doctorate of Business Administration from the Grenoble Ecole de Management (France).