Business Model Innovation Approach for Commercializing Smart Grid Systems

The depletion of fossil fuels, increased environmental concerns, rising cost and the demand for clean energy are causing the transformation of energy generation and distribution system, to shift towards the consumption side. Electricity generation sources and distribution systems are drifting from non-renewable to renewable, centralized to decentralized and localized, and traditional grid systems to smart grid systems. New technologies nurture the concept of transformation of energy firms, all the way from energy production to electricity consumption. Smart grid systems are one of the disruptive and emerging technologies that might influence the entire electricity system. This disruptive technology demands a new business model which can be used to commercialize the new power distribution system and thus create value for all stakeholders, from production to consumption. The Smart grid has the potential to revolutionize the electricity industry if it is commercialized successfully. It allows information and communication technology firms to contribute with their modern technology to empower their consumers to regulate the usage of electricity. To investigate the reasons for shifting from the old to the new energy system, the impact of this disruptive technology on energy providing firms, the demand for the new business model and the approach of the new business model in terms of creating and capturing values published peer-reviewed articles, and international energy agency reports have been reviewed. This paper encourages energy providing firms to redesign business models for commercializing new energy distribution system and to offer new services to the energy consumers for their future survival in the new trends of the energy market. These services include integrating with renewable energy sources, electric vehicle services, and demand response services to create more value for the consumers and in return gains more profit for each actor. The services provided through integration of renewable energy with smart grid and the electric vehicle will empower consumers involvement in the electricity system which will give them more control over electricity. CO2 production will be reduced, helping to create a clean environment and will enable operators to improve grid security and network stability. Finally, demand response services will provide multiple electricity package options to the consumers in which they can select an appropriate package according to their need which will give them more control over their electricity bill. System operators can optimize their grid operations to provide better power quality, and service providers can increase their income by offering additional services. © 2018 by authors and Scientific Research Publishing Inc