The Emerging Industry of Aggregation: Novel business models and empowerment strategies for incentive-based demand response in Finland

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School of Business | Master's thesis
Degree programme
Creative Sustainability
81 + 4
In the course of the energy transition, novel business models for aggregation are emerging in the Finnish energy sector. To anticipate and govern the energy transition and its sustainability, knowledge on the current state and development of this novel industry is essential. Hence, the aim of the study is to describe novel business models for aggregation and discourses attached to them, to provide an overall picture of the emerging industry and its relation to energy transition. The research aim is approached through the theoretical framework of sustainability transition studies and its recent intersection with business models and discursive legitimation, niche empowerment in especial. Methodologically the study adopts the approach of critical discourse analysis and business models as a unit of analysis. The research data bases on a desk study and interviews of 14 companies. The analysis identifies and generalizes novel business models and empowerment strategies for aggregation. Three general business model archetypes for aggregation are suggested: balance-responsible aggregator, independent aggregator and sub-aggregator. The archetypes differ regarding their market position, customer segments, key resources and motivation to engage in aggregation business. The varying key resources of the archetypes result in interrelated partnerships among the companies. The niche-overarching empowerment strategies favour fit-and-conform legitimation. However, the niche-internal, archetype-specific empowerment strategies are more heterogenous. The balance-responsible aggregator archetype seems to engage in the novel industry to renew and grow its position in the energy sector. The independent aggregator archetype strives to establish a novel market position in the Finnish energy regime, while the strategy of the sub-aggregator archetype is to position in the industry as a technical enabler of others’ business models for aggregation. Previous empirical studies on niche empowerment have mostly been longitudinal, largely portraying niches as unanimous. The study positions in certain moment in time, enriching empirical evidence on the heterogeneity of empowerment strategies of niche advocates, which further reflect the heterogeneity of their motivations and capabilities. In the context of the study it seems that the more peripheral the niche advocate companies are to the regime, the more stretch-and-transform legitimation they employ. Overall, though the archetypes engage in aggregation for different strategic reasons, their main motivations seem rather market than sustainability oriented. The role of the aggregation niche can be described as intermediary regarding the energy transition, as the industry seems to support gradual renewal of the energy regime, and the continuity of its current values and principles in the course of the energy transition.
Thesis advisor
Ruggiero, Salvatore
demand response, aggregators, energy transition, sustainability transition studies, business models, niche empowerment, discourse, legitimation
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