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Challenges for business change in district heating
Halmstad University, School of Business, Engineering and Science, The Rydberg Laboratory for Applied Sciences (RLAS).
2018 (English)In: Energy, Sustainability and Society, ISSN 2192-0567, Vol. 8, no 1, article id 20Article in journal (Refereed) Published
Abstract [en]

Background: The Swedish district heating sector is successfully transitioning to a low-carbon energy system. The industry has expanded since the 1950s and currently meets more than half the Swedish heat demand. The heat market was deregulated in 1996, and thereafter, companies have been exposed to an increasing number of challenges related to technology, institutional factors and market. Since municipal ownership dominates, municipal companies must manage these challenges to ensure future competitiveness. However, theory suggests that business change is difficult when the current model is still working. To date, Swedish district heating companies have revisited their price models and customer perceptions. There is limited knowledge on how the business challenges are managed and on the management strategy’s impact on the business. In this paper, new knowledge is generated regarding how the customer and resource-oriented sides of the municipally owned district heating business in Sweden are changing. Methods: A case study approach was adopted. Data were collected by interviews and by review of the national research programme on district heating (Fjärrsyn). The programme served as a proxy for frontline research on Swedish district heating. The data were analyzed through the business model canvas framework. Results: Changes to meet external pressures are identified on the customer side of the business model, but changes are also spreading to other parts of it. However, the key resource component (distribution networks and production unit) and its logic of economics of scale are unchanged and dominate. The logic is not compatible with shrinking heat demand; nevertheless, it is preferred. Conclusions: It is concluded that external challenges have resulted in changes in the customer side of the business model. However, the largest challenge is the transformation of key resources. Accounting for external challenges extends the life of the current business model, but it is not increasing competitiveness. The prolonged life creates a window of opportunity for the companies to begin the needed transformation of their key resources. If the transformation is successful, district heating will have a role in the future energy system. If the transformation is not undertaken, the future is less certain. © 2018, The Author(s).

Place, publisher, year, edition, pages
Springer Verlag , 2018. Vol. 8, no 1, article id 20
Keywords [en]
Commerc, Computer circuits, Deregulation, District heating, Industry, Sales, Challenge, Customer perceptions, District-heating companies, Energy transitions, Institutional factors, Low-carbon energy systems, Management strategies, Sweden, Competition, business, business development, competitiveness, demand analysis, economics, energy efficiency, heat balance, heating, institutional development, management practice, ownership, perception, research program, Sweden
National Category
Business Administration Energy Systems Economic History
Identifiers
URN: urn:nbn:se:hh:diva-38697DOI: 10.1186/s13705-018-0161-4Scopus ID: 2-s2.0-85048885937OAI: oai:DiVA.org:hh-38697DiVA, id: diva2:1276048
Available from: 2019-01-07 Created: 2019-01-07 Last updated: 2019-01-07Bibliographically approved

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Lygnerud, Kristina

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CiteExportLink to record
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Citation style
  • apa
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