2016 13th International Scientific-Technical Conference APEIE – 39281
Analysis of Promising Business Models in
Solar Energy Market
Eugeniya S. Gorevaya1, Dmitry V. Gorevoy2
1
NGTU, Novosibirsk, Russia
2
SibRIPE, Novosibirsk, Russia
Abstract – Solar power is one of the most controversial trends of
future power generation. On the one hand, its cost is high, and
investments pay off only in countries with high solar insolation. On
the other hand, the emergence of new technological, organizational
and administrative decisions on the energy market leads to a change
in market structure, participants and business rules. Companies
have new opportunities, which they can use, provided that they can
choose a promising business model, adequate to the situation.
Index Terms – Business model, solar energy market, core
competencies, technological, organizational and managerial
innovations in solar power generation, prospects of companies in
solar energy market.
I. INTRODUCTION
Solar energy market attracts special attention, but discussions
on its development are highly controversial. On the one hand,
existing technologies of generation, transmission, and
accumulation of solar energy do not let us talk about a quick
payback period on investments in these technologies. On the
other hand, developing technologies allow for significant
reduction of the costs of production and operation of solar
panels. In some technologies there is an increase in efficiency
sufficient to shift the geographical boundaries of the effective
use of solar energy technologies.
Competition in production of equipment and components in
solar power generation is very dynamic. While 7-10 years ago
European manufacturers of silicon-based solar technology
predominantly were in the lead, the year 2013 became a turning
point and Chinese companies with silicon-based, modified
silicon and other materials products, which main difference is
their low cost, occupied the frontline. Today, the rate of
innovation upgrade of the solar power market of power
generation equipment increases, that creates new opportunities
for equipment manufacturers and consumers.
II. PROBLEM STATEMENT
The search for new forms and models of business and
economic activities of companies seeking to succeed on the solar
energy market is essential, taking into account high dynamics of
solar energy technologies, new opportunities arising due to
globalization, as well as high interest, especially that one of
developed countries, in launching a mechanism of sustainable
development and new opening commercial prospects,
Modern companies, developing at the market, are still using
traditional business models in the B2C segment, such as the
model of the "Counter". As long as the current supply is
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saturated by solar technologies with low efficiency of 10-15%
(e.g., solar cells from monocrystalline and polycrystalline
silicon), traditional models of the company's presence on the
market are not competitive compared to technologies of
conventional energy industry.
Distribution and use of centralized and distributed solar power
generation systems are based on B2G segment, which provides
support at the level of state regulatory solutions aimed at
reducing environmental damage and increasing the attractiveness
of alternative energy technologies for private investors and
households. However, in recent years, a number of industries
have undergone significant changes under the influence of
geopolitical transformations, new technological solutions in
companies business operation and virtual space. On the one
hand, there are technologies that change the rules of doing
business, such as the system automating the work of taxi
company the Uber, electronic payment solutions CFT, collection
and analysis of large data sets Mercu and so on. Institutional
framework, technology and organizational approaches to
business are changing and the rules games are changing too. On
the other hand, a large number of universities, laboratories,
companies are working in the field to solve the basic problems of
solar energy, namely, increasing the efficiency of solar
generation and the development of new quality storage of
electricity. All that creates new opportunities for the
development of business in this market.
The companies working in the field of solar energy, now have
the other possibilities, the adequate use of which can create
industry pioneers and form a distributed network of actors with
different technological solutions giving the opportunity to
implement technical, organizational and managerial innovations
in the field of generation, distribution and storage of solar
energy. In conditions of high volatility and ever growing
competition the companies, that want to gain a foothold in the
market of solar power generation, should learn to work with new
segments G2B (government to business), M2B (machine to
business), C2B (consumer to business), C2B2C (consumer to
business to consumer), C2C (consumer to consumer), and use a
combination of emerging technologies and management
solutions that will lead to the emergence of new core
competencies and creating successful business models in the
market.
The authors formulated the hypothesis that solar power
generation, which is now at the level of pinpoint localization,
will move to the level of one of the sources of power generation,
if the possibilities of solar power generation technologies are
 XIII Международная научно-техническая конференция АПЭП – 2016
used together with other modern solutions of alternative energy
and technologies of the adaptive system, That will generate new
opportunities for companies in searching new business models
and development of key competencies, allowing for forming a
sustainable competitive advantages in this market. In its turn,
introduction of modern, efficient technological solutions, such as
the development of sources of generation, transmission and
distribution of energy, the use of hybrid systems, alternative
energy sources, and the use of innovative marketing solutions
and new patterns of interaction of the electricity market
participants will provide a cumulative effect, comparable to the
use of traditional energy generation.
III. THEORY
Consider technologies of solar energy conversion used in
systems of alternative generation and possible options of their
commercialization. Solar power generation is based on two solar
technologies, which development is expected in the future:
1. Solar thermal technology is the use and conversion of
solar thermal energy for heating and electricity production.
This technology is based on heating the coolant from the
concentrated solar beam (solar thermal technology).
2. Technology of photovoltaic effect is based on the
extraction of current by photoelectric effect (photovoltaic,
PV).
Solar thermal technology.
CSP-power plants convert concentrated solar radiation into
heat energy, which is later used for heating purposes and to
generate electricity. Most of the equipment used at power plants
of CSP-type is part of the ordinary thermal power plant. The
general concept of this technology is to heat the heat carrier -
water, oil, or salt solution - by concentrated sunlight received by
focused mirrors (heliostats). Water vapour, which runs a steam
turbine, generating electric current, is obtained, when a heat-
carrying agent is heated to the phase transition temperature,
There are several types of solar power plants (SPP) of this type:
• tower type SPP;
• plate type SPP;
• SPP using parabolic concentrators;
• combined SPP;
• balloon SPP.
Solar thermal tower-type power plant is based on the principle
of generating steam using solar radiation. The centre of the plant
there is a tower 18 to 24 m high (depending on power and other
parameters the height can be greater or smaller), on top of it
there is a water tank. This tank is covered with black to absorb
heat radiation. In this tower there is also a pumping unit that
delivers steam to a turbine generator, which is located outside the
tower. Heliostats are placed at some distance circling the tower.
Heliostat is a mirror with an area of a few square meters, fixed
to a support and connected to a common positioning system, i.e.,
depending on the position of the sun mirror will change its
orientation in space. The main and the most time-consuming task
is positioning of all the mirrors of the plant in such a way that at
any time all the rays reflected from the mirrors got on the tank.
Plate-type solar power plants (plate-type SPPs) use the
principle of electricity generation, similar to the tower-type SPP,
but there are differences in the design of the station. The plant
consists of individual modules, while each module consists of a
support to which a truss structure of a receiver and a reflector is
attached The receiver is located at some distance from the
reflector, reflected rays of the sun concentrate on it. The reflector
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is assembled from plate-shaped mirrors (hence the name),
radially disposed on a farm. Such plants may be composed of
both one module (autonomous), and several tens (work in
parallel with a network).
SPPs, using parabolic concentrators, employ the principle of
heating the coolant to the parameters that are suitable for using
the coolant in the turbine generator. SPP construction is as
follows: a parabolic mirror of great length is mounted, in the
focus of the parabola there is a tube, through which heat transfer
fluid (usually oil) flows. Coming all the way, the heat transfer
fluid is heated and in heat exchangers it gives heat to water,
which converts into steam and then is fed to the turbine
generator.
Parabolic installations to date are the most developed solar
energy technology, and they are likely to be applied in the near
future in large scale projects.
SPPs, using the Stirling engine, are SPPs with parabolic
concentrators, in which the focus is set at the Stirling engine.
There are designs of Stirling engines, which directly convert
piston vibrations into electrical energy without using a crank
mechanism. This makes it possible to achieve high energy
conversion efficiency. The efficiency of such power stations
reaches 31.25%. The working fluid used is hydrogen or helium.
Combined solar power plants can combine several types of
solar power plants. For example, in one area plate-type or
parabolic constructions and photovoltaic cells will be connected
in parallel. Another example is that an additional heat exchanger
for producing hot water, which can be used for hot water supply,
heating, or technical needs is installed at a solar power plant.
Heat exchangers are often additionally installed at most solar
power plants (SPP) of various types to produce hot water, which
is used for technical needs as well as for hot water supply and
heating. This is the essence of combined SPP. In the same area
there can be a parallel installation of augmentors and
photovoltaic panels/cells. It is also considered to be a
combination of SPP.
Balloon solar power plants are the most energy-efficient power
plants. They are able to collect more than 95% of solar energy.
At the same time, this type of construction takes up minimum
surface area, as located on the surface of the ground equipment
occupies very little space, and the bulky balloon with a
photoelectric layer is in the air and is able to absorb the sun's
rays almost completely, at any time of the day, regardless of
weather conditions.
It is worth noting that solar thermal technology is more cost
effective than photovoltaic solar power plants. Thus, the
achieved efficiency of the former is not less than 50% taking into
account that this type of solar power plant is set only in the
equatorial zone, which is characterized by large amount of solar
energy. The amount of energy, produced by solar thermal power
plants installed in deserts, is much higher than the capacity of
photovoltaic solar power plants.
However, a drawback of solar thermal technology is biological
danger to people who are in the area of high-power concentrated
solar beam; expensive equipment for one or a small group of
consumers, as well as significant space requirements. The use of
these technologies is only possible for B2C segments (large
generating stations) and B2G2C (generating companies with
state participation or under strong state regulation of the
industry).
The technology of photovoltaic effect.
2016 13th International Scientific-Technical Conference APEIE – 39281
Solar power plants of this type are now very common, since
generally SPP consists of a large number of separate modules
(photovoltaic cells) of different power and output parameters.
These SPP are widely used for energy supply of both small and
large objects (private houses, boarding houses, health resorts,
industrial buildings, and so on.). Photovoltaic cells can be
installed practically everywhere, from the roof and facade of the
building and to specially designated areas. Installed capacities
also vary widely, ranging from supplying individual pumps to
providing electricity for a small village.
Technical complexity of photovoltaic effect application is
related to the complexity of the transformation of solar spectrum,
that is, using multifrequency techniques, as a certain
semiconductor captures only certain frequency photons. Modern
photovoltaics are designed for a small part of visible solar
spectrum, the efficiency of industrial solar cells does not exceed
7-15%. This is very little to satisfy current demand for
electricity.
To produce solar panels semiconductor silicon of high purity is
used. Photovoltaic power plant (PVPP) based on photovoltaic
cells are assembled on a modular principle and can be expanded
according to the needs. The high cost of the panels is offset by
the ease of installation and maintenance; as a rule, powerful solar
power plants require minimum of maintenance personnel.
Operating period of photovoltaic cells exceeds 25 years.
Photovoltaic technology can be used to construct both large
power plants and to provide electricity for private property but
now it is possible only in the areas with high and medium levels
of solar insolation. Using these technologies enables a more
flexible approach to business organization in the solar power
generation and in combined energy generation and to work with
segments G2B (government involvement in power generation
facilities), M2B (intelligent system automating networks
operation), C2B (use of solar energy by private households),
C2B2C (power transmission from households to other private
customers), C2C (supply and electricity exchange between
households).
IV. RESULTS
Consider the latest technological advances, possible areas of
commercialization and a business model at the solar power
market. Investigation of possibilities of applying new types of
business models is based on A.Ostervalder [1] classification.
The authors have studied relevant research areas in the field of
solar energy, and it was concluded that most of the research
works are directed:
- at finding ways to increase the efficiency of photovoltaic
technology. Solar power plant is an array of hundreds,
sometimes thousands of photovoltaic cells, each of which
converts radiant energy from the sun into electricity.
Unfortunately, the average efficiency of existing solar cell ranges
from 15 to 20%, i.e., about 80% of the sunlight energy is lost and
is not transformed into electric energy. Although developments
in the US, UK, Australia, Russia, in which the solar cell
efficiency is of over 40% [2, 3, 4, 5] have been already
announced.
-at searching storage capacity and conservation of solar energy
in electric storage batteries [6, 7];
-at finding new ways to use photovoltaic elements and at
creation of new mechanical and consumer devices powered by
alternative energy sources, such as flexible coatings for
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mounting constructions of different types; transport systems,
powered by solar energy; clothing with solar panels for
recharging gadgets.
These studies give reason to believe that increase in the
efficiency of solar cells represents opportunities for
commercialization of the technology wider. It is becoming more
profitable for households partially or fully replace power
consumption of traditional centralized energy sources with
alternative autonomous sources of energy. For generating
companies, it is becoming possible to use the "Separation of the
business model", separating generation based on photovoltaic
effect apart. Such approach will make it possible to develop and
evaluate the efficiency of the use of new technological solutions
in the field of solar energy and assessing feasibility of further
investments in this direction. The key competence in this case is
to optimize the generating processes.
Collaboration with distribution companies that use the multi-
platform model, i.e. companies that provide network resources in
order to use surplus electricity generated by households, is
interesting for the many households with solar power generation,
The key competence for this type of the business model is using
additional possibilities of attracting consumers, marketing of
surplus capacity and distribution of consumed power to smooth
consumption peaks.
For large SPPs equipped with solar thermal systems the
perspective is the use of a modified business model FREE, the
essence of which is to provide part of the product for partial or
free use under certain conditions. During the periods of peak
generation it is possible to reduce the cost of electricity
generation companies, SPP or individual solar modules or enable
charging batteries for electric vehicles and other electric
equipment at lowest prices. The key competence for this business
model will be extension of the target segment and acquisition of
additional distribution channels.
The business model of open innovation allows for distribution,
exchange and mutually beneficial development of generation
technologies, transmission control, accumulation and storage of
solar energy. The use of this approach to organization of
business activities does not only enable electric generating
companies to acquire leading competitive advantages, but also to
ensure their contribution to creation of sustainable development
of their own region.
There are conditions for the development of Smart Grid
technologies. The possibilities of creating, testing and
implementation of innovative solutions in the field of solar
energy according to the model Customer Development model are
building up.
According to B.B.Kobets and I.O.Volkovoy, Smart Grid
concept is a set of principles, core values and characteristics of
the energy system of the future and the main elements of the
basis for their implementation [8]. In the framework of Smart
Grid concept a variety of requirements of all interested parties
(the State, consumers, regulators, energy companies, marketing
and public organizations, owners, equipment manufacturers, etc.)
is reduced to so-called key requirements (values) of the new
electric power industry, formulated as follows:
- Efficiency - optimizing electricity tariffs for consumers and
reducing system-wide costs;
- Efficiency - maximizing the efficient use of all resources,
technologies and equipment in the processes of production,
transmission, distribution and consumption of electricity;
 XIII Международная научно-техническая конференция АПЭП – 2016
- Organic interaction with the environment - the greatest
possible reduction of negative environmental impacts;
- Security - preventing situations in the power industry, which
are hazardous for people and the environment.
It is fundamentally new here that all the nominated key
requirements (values) are expected to be regarded as equal, and
their degree of priority levels and ratios are not common and
statutory fixed for all of them, and can be defined and
implemented for each subject of power relations under
consideration (power company, region, city, household, etc.)
ultimately individually.
Defined like this, the task of power industry development is
transformed from mainly the task of balancing into the problem
of creation, development and delivery of a kind of energy
options menu to consumers and society as a whole. The
integration of solar power generation and Smart Grid
technologies will provide new opportunities for the development
of private generation and small generating devices. Key
competencies for companies using this business model will be
variability of the relationship with customers and flexibility of
value proposition, depending on preferences of consumer micro
groups.
V. DISCUSSION
In the world there appear new trends, indicating the approach
of system transformation of the energy market with the reduction
of energy production costs on the basis of renewable energy due
to the dynamic development of technologies, and because of the
increasing orientation toward the creation of distributed
generation and new business solutions for the organization of
commercial interaction between market players. A new branch
which includes a wide range of technologies from the private and
combined generation to smart grid is being built, .
The following factors determined the irreversibility of the
future system changes:
- Uncertainty about the future, which is increasing against the
background of the launch of a new large investment cycle in the
energy sector of the advanced industrial countries, has sharply
increased for participants in global energy markets. Usual
duration of the cycle is 40-60 years and is determined by the
period of operation of major generating facilities and energy
infrastructures
- The model of "new paradigm" [9] in a logic of continuation
of the energy market reforms is now taking shape. Structural and
instrumental changes affect the fields of generation and effective
integration of renewable energy in the field of generation which
in fact does not have any alternative. New technologies do not
leave the possibility for companies to survive with the old
business models.
Consider system elements and operating processes of the new
organizational and technological solutions of the energy market.
The essence of the "new paradigm" model lies in the fact that the
consumer is able to manage not only consumption, but also
energy production. At the same time the used technology
"consumption and production" should be changed so that all (or a
significant portion of) produced energy is conserved, available
for storage, and can be used by actors of the market. Examples of
such technologies, primarily, are:
1. electric cars connected to the so-called "active network»
(V2Grid), capable of not only supplying, but also taking
electrical energy stored in the "distributed battery" of electric
cars park, for example, to cover peak energy demand;
230
2. "active houses", which do not only save, but also produce
(generate) resources and are able to deliver them in a
network;
3. smart grid in the version of "active networks", integrating a
variety of subjects, acting as a "customer-supplier" of energy
and other resources;
4. scalable technologies for energy production from locally
available resources and a variety of energy storage
technologies.
Expansion of the range of technologies used and the
development of organizational, managerial and financial
mechanisms of the energy market will enable the change in the
usage of alternative energy sources, including solar generation, at
system-level,. That will lead to creating new segments of the
energy market. Traditional segments B2B and B2C (large
generators supplying electricity to businesses and domestic
usage) are complemented by B2C2C (private distribution
networks), C2C (private generation capacity), M2B2C
(intelligent systems for large generating companies that supply
electricity to households). Accordingly, the operation of
companies in the new segments will require new business rules
and other processes of the companies operation that will lead to
appearance of new business models for the energy market actors.
VI. CONCLUSION
During the last decade in solar power generation there is a
decrease in the cost of production of 1 kilowatt of electricity, the
emergence of new technological solutions that increase the
efficiency of solar cells, and creation of new carriers for
photovoltaic coatings. Hybrid systems of alternative energy
sources (carbon-free energy), where small hydropower plants are
added solar and wind energy generation, electricity generation
from biomass and other technologies are developed. Adaptive
networks with intelligent control are developed on the basis of
alternative generation technologies. That triggers the appearance
of the companies working in the area of in supply and
maintenance of equipment for the Smart Grid and renewable
energy. There will also be new business opportunities for
households to supply surplus electricity to the national grid.
In the long term, emergence and expansion of using eco-
houses, "Smart" and "Micro" networks, widespread electric cars
and other vehicles and equipment, using alternative sources, will
lead to the transformation of the energy market, the emergence
of new actors, aimed at the service of intellectual processes of
new networks and the provision of adequate services for the
main participants of the energy market. The very notions of
consumer and producer will be blurred because the Green
Buildings are not only able to consume electricity, but also
produce and transmit surplus power to the network. These
changes are leading to the emergence of sharing business models
or shared platforms [10], where power generation equipment and
manufactured product can act as a shared object. That implies
further reduction in the cost of electricity generated from
renewable and alternative sources, and leads to practical
dissemination of the concept of sustainable development.
REFERENCES
[1] A.Osterval'der, I.Pen'e Postroenie biznes-modeli. – M.: Izd-vo Al'pina
Pablisher, - 2013g. – 288s.
[2] I. Kaminkova Solnechnaia energetika: otrasl' na poroge burnogo razvitiia.
Electronic source. Access mode:
(http://hvylya.net/analytics/tech/solnechnaya-energetika-otrasl-na-poroge-
burnogo-razvitiya.html) Accessed date 16.04.2016