Governing sustainability transitions through business model innovation: towards a systems understanding

This paper examines the role of innovative business models in the transformation of socio-technical systems. Focusing on decentralised energy technologies, we explore business model innovation in the context of a transition towards a more sustainable energy system. We conduct an empirical study of two Energy Services Company (ESCo) models for the deployment of combined heat and power with district heating (CHP/DH) infrastructure in the UK. Based on these case studies we illustrate the different ways in which Local Authorities develop business models to create and capture value from more efficient resource use and to deploy sustainable technologies. Drawing from systems theories in the business model and socio-technical literatures, we analyse the interfaces between business models, energy infrastructure and institutions. We propose that a systems based approach to the analysis of business models as embedded in their socio-technical contexts can offer new insights into the dynamics and governance of sustainability transitions.