What type of business model would suit you best?
The objective of this section of the Renovation Hub is to present the variety of Business Models that already exist to finance energy renovation, guide you in this large collection to find those that are the most adapted to your needs, provide recommendations for replication, and illustrate the application of most promising ones through Business Cases.
Today’s measured rate of refurbishment is much lower than what should be observed to remain in line with Europe 2050 ambitions. There is a need to accelerate the market uptake and large-scale implementation of energy efficient refurbishment solutions to bring the renovation level to 3% per year until 2030. The poor market acceptance of innovative and adaptable refurbishment solutions is in most cases due to the fact that these solutions are not associated to an adequate business model. Innovating on the technological side is not enough: there is also a need to innovate on the business side. Innovative business models have already been demonstrated and validated, but their replication is very slow: how can this replication be supported?
The following business models will be presented:
Business models based on One Stop Shop (OSS) concept
- OSS based on Step-by-Step approach [Example: Enerphit]
- OSS provided as a complementary business (e.g. by utilities) [Example:Energieheld Switzerland]
- OSS provided by Private-Public-Partnership [Example: Remourban]
- OSS provided by multi-disciplinary team cooperation [Example: Energiesprong]
- OSS provided by joint venture of retailers with industry and contractors [Example K-Rauta and Rautia]
- OSS provided by contractors’ cluster cooperation [Example: ENRENOV]
- OSS supported by digital tools [Example: BetterHome ]
Business models based on Product Service Systems (PSS) – Energy Service Companies (ESCO)
- Energy Supply Contracting (ESC)
- Energy Performance Contracting (EPC) [Example: EPC+]
- Integrated Energy Contracting (IEC)
Business models based on new and innovative revenue models
- Feed-in remuneration scheme
- Developing properties certified with a green building label
- Building owner profiting from rent increases after the implementation of energy efficiency measures
Business models based on new financing schemes
- Property Assessed Clean Energy (PACE) financing [Example: EuroPACE]
- On-bill financing
- Leasing of renewable energy equipment
- Energy savings obligations
Each Business Model presentation is structured in four blocks: What? Who? How? Why?
"What” (value proposition)
The „What“ section describes what is offered to the target customer, or, put differently, what the customer values. This notion is commonly referred to as the customer value proposition, or, more simply, the value proposition. It can be defined as a holistic view of a company’s bundle of products and services that are of value to the customer and represents the added value that a certain Business Model provides to the target customers.
"Who” (target customer)
Every business model serves a certain customer group, thus the definition of the target customer is one central dimension in designing a new business model. In the context of the Renovation Hub, the customers are the owners of the buildings to be renovated, and their nature (e.g. public, single owner, multi-owners, social housing association, etc.) is often correlated to the type of building that it is considered for renovation. When possible, the way of reaching and attracting the target customers is also presented in this section (customer channels).
"How” (value chain, activities, resources)
The third section describes how to build and distribute the value proposition, in terms of processes and activities, along with the involved resources and capabilities. The key partners for delivering the added value to the target customers as well as the technologies and processes involved in terms of refurbishment solutions are detailed in this section. The involvement of the different stakeholders within the renovation value chain, depending on each specific business model, is illustrated by highlighting the key actors on the “Stakeholder map”
"Why” (revenue model and cost structure)
The fourth section explains why the business model is financially viable. In essence, it unifies aspects such as the cost structure and the applied revenue mechanisms, generally from the point of view of the market actor using this business model to sell a service or a product.