Dr Stephen Hall of the University of Leeds joins us at the Science: Disrupt London Session on Future Energy, to talk about how business models of energy supply markets shape energy transitions.

1. Valuing Energy Futures
Dr Stephen Hall: University of Leeds
s.hall@leeds.ac.uk

2. “Vetinari was looking intently at the blind, blank map. It
was, he felt, very much like the future; a few things were
outlined, there were some rough guesses, but
everything else was waiting to be created….”
Pratchett,T., (1999)The Fifth Elephant, Doubleday.
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3. Scenarios
NGrid - No
Progression
DECC
2050 -
Higher
RE, more
EE
DECC 2050 -
High
Nuclear,
less EE
DECC 2050 -
Higher CCS,
more
Bioenergy
NGrid -
Gone
Green
RTP -
Market
Rules
RTP - Central
Co-Ordination
RTP -
Thousand
Flower
Electricity Demand TWh 309 490 555 461 361 504 402 301
Power Generation (incl.
Import)
TWh 349 530 610 556 454 573 464 370
Conventional
Generation Capacity
(excl. CCS)
GW 49 0 0 0 18 15 5 0
CCS equipped
Generation Capacity
GW 0 13 2 40 11 46 32 23
Low-Carbon Generation
Capacity
GW 42 121 97 49 119 104 90 84
Number of Electric
Vehicles
mln. 3.9 24.2 31.0 24.4 9.7 25.2 25.2 25.2

4. Method

5. Market size in 2050 compared with new
revenues and avoided costs.
Market size and new values in 2050
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0
NGRID No Progression
DECC 2050 - Higher RE, more EE
DECC 2050 - High Nuclear, less Energy Efficiency
DECC 2050 - Higher CCS, more Bioenergy
Ngrid - Gone Green
RTP - Market Rules
RTP - Central Coordination
RTP - Thousand Flower
bnGBP
New Revenues Avoided Cost Market Size

6. VP#1 Efficiency
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2030 2040 2050
mGBP2015

7. VP # 2 Energy Services
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2030 2040 2050
mGBP2015

8. EV Dominance in VP#2*
0.00
1000.00
2000.00
3000.00
4000.00
5000.00
6000.00
2030 2040 2050
mGBP
VP#2 Energy Services decomposed by service in NGrid Gone Green
Energy efficiency retrofit Home energy management Electric vehicle revenues
Provocation #2: Utilities can capture lots of value from electric vehicles so they
will lead the way on promoting them.

9. VP #3 Local Low Carbon
0
500
1000
1500
2000
2500
3000
2030 2040 2050
mGBP2015
0
500
1000
1500
2000
2500
3000
2030 2040 2050
mGBP2015
Figure 6 - Value Pool #3: Local Low-
Carbon Electricity - Distributed Energy
Lease Service - New Revenue
Figure 7 - Value Pool #3: Local Low-Carbon
Electricity - Solar PV Services - New Revenue

10. VP #4 Large Scale Low Carbon
-5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
bnGBP2015
2030 2040 2050

11. VP # 5 Flexibility Optimisation

12. VP #6 Carbon Capture and Storage
-1500
-1000
-500
0
500
1000
1500
2000
2030 2040 2050
mGBP2015
Provocation #1: Will anyone really invest in CCS when it is such a volatile value pool?

13. Provocation #3:
Flexibility value is so
volatile only small
start-ups will bother
with it and it will
never reach the scale
needed.

14. 14
Provocation #5: Regulation gets in the way of business model innovation.
Provocation #6: Some business models just too risky for the levels of return in the
sector.

15. Same but Smart
• Free to switch companies as and when
you want to
• You will have a ‘smart meter’ with
‘live’ information at home and on your
phone etc
• Your supplier can see how and when
you use electricity
• You can change your behaviour (not
use the washing machine etc) when
you see that electricity is cheaper
Energy Service Company
• You have a 10-year contract
• Your energy bills are guaranteed to be lower than
you are currently paying for the duration of the
contract
• You receive one bill for all your light, heat and any
electric car needs
• You might have some new things installed, like
insulation and a home energy management system
• Your supplier can pause your heating and appliances
(such as your fridge) occasionally for up to 15
minutes at a time, or take control of when to charge
your electric car to help you avoid paying the highest
prices, though you can opt out of this
Peer to Peer
• You have no contract with an energy
supplier
• You use an app on your phone choose who
to buy energy from - you can choose based
on price, type or location of energy. (For
example, you might want local green
energy, even though it might not be the
cheapest)
• You can change who you get your energy
from as often as you like
• If you have a solar panel on your roof you
can make money by selling the energy from
it through the app
New Electrifier
• You have a two-year contract
• You get a discount for switching your home
from gas to electric heat
• It will cost about the same as now
• You might have some new things installed
like electric radiators or a heat pump
• Your supplier can pause your heating
occasionally for up to 15 minutes at a time,
or take control of when to charge your
electric car to help you avoid paying the
highest prices, though you can opt out of
this
3rd Party Controller
• You have a multi-year contract
• You tell the company how you
want to live your life and it takes
decisions on your behalf to deliver
this
• You receive one bill for all your
energy, broadband, TV, mobile
phone, electric vehicle and water
services
• Your company may offer to install
equipment like insulation and a
home energy management system
to make your home more efficient
and smarter
• Your company can pause your
heating and appliances (such as
your fridge) occasionally for up to
15 minutes at a time, or take
control of when to charge your
electric car to help you avoid
paying the highest prices, though
you can opt out of this
Paired Comparison design (=10 binary choices)
Provocation #7: Some business models are technically possible but just too complex to understand.

16. Proportion of times each archetype was chosen
over another archetype (out of 8096 eligible times for each)
Provocation #8: Consumers are more engaged than we think when given meaningful
choices.

17. Attractive
Complicated
Unpredictable
Relaxing
Flexible
Trustworthy
Fair
Interesting
Risky
Bad
Inefficient
Expensive
Liberating
Popular
Same as today
Unattractive
Straightforward
Predictable
Stressful
Inflexible
Untrustworthy
Unfair
Boring
Safe
Good
Efficient
Cheap
Oppressive
Unpopular
Different from today
Each archetype + current
supplier were rated on
various attributes
(sliding scale between different
‘poles’)
Provocation #9: Consumers are not as engaged as they say and any business model
based on deep engagement is bound to fail.

18. • Provocation #1: Will anyone really invest in CCS when it is such a volatile value pool?
• Provocation #2: Utilities can capture lots of value from electric vehicles so they will lead the way on promoting
them.
• Provocation #3: Flexibility value is so volatile only small start-ups will bother with it and it will never reach the
scale needed.
• Provocation #4 is: Distributed energy and electricity utilities will always be in competition because large utilities
won’t pursue this value pool.
• Provocation #5: Regulation gets in the way of business model innovation.
• Provocation #6: Some business models just too risky for the levels of return in the sector.
• Provocation #7: Some business models are technically possible but just too complex to understand.
• Provocation #8: Consumers are more engaged than we think when given meaningful choices.
• Provocation #9: Consumers are not as engaged as they say and any business model based on deep engagement
is bound to fail.
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