Business Models for Demand Response: Exploring the Economic Limits for Small- and Medium-Sized Prosumers

Guntram Pressmair, Christof Amann and Klemens Leutgöb
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Guntram Pressmair: E7 Energy Innovation & Engineering, 1020 Vienna, Austria
Christof Amann: E7 Energy Innovation & Engineering, 1020 Vienna, Austria
Klemens Leutgöb: E7 Energy Innovation & Engineering, 1020 Vienna, Austria

Energies, 2021, vol. 14, issue 21, 1-28

Abstract: The European energy transition increasingly requires flexibility to ensure reliable operation of the electricity system, making use of demand response, a promising concept. With technological advances in the fields of big data analysis and the internet of things, small- and medium-sized prosumers could also provide flexibility services through aggregators. A lot of conceptual work has been conducted recently to formulate business models in this context, but their viability still remains unclear. In this paper, a quantitative validation is conducted of two business models that are frequently proposed in the scientific discussion. The aim of this work is to explore the economic limits of these business models and show under which conditions they can be profitable for small- and medium-sized prosumers. For this purpose, a multi-level contribution margin calculation for several scenarios, customer segments and target markets is conducted. The results show that the profitability for the participation of small loads is still very low under current market conditions. Especially for household consumers, transaction costs are too high to be covered by the revenues. Considering the quantitative results, in the future profitable business cases can only be expected for medium-sized tertiary consumers.

Keywords: business model; demand response; flexibility; prosumers; economic assessment (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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