Renewable and Sustainable Energy Reviews 49 (2015) 857–870

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Renewable and Sustainable Energy Reviews

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Renewable micro-generation of heat and electricity—Review on common and missing socio-technical configurations

Jouni K. Juntunen a,n, Sampsa Hyysalo b a Aalto University School of Business, PO Box 21230, 00076 Aalto, Finland b Aalto University School of Arts, Design and Architecture, PO Box 31000, 00076 Aalto, Finland article info abstract

Article history: A widespread adoption of distributed generation (DG) technologies in energy systems can play a key role Received 24 November 2013 in creating clean, reliable energy and support the targets of emission reduction. A transition from current Received in revised form modes of production to a significant deployment of renewable energy technologies can fundamentally 11 December 2014 affect the structure of the industry and change the way energy is produced, transmitted and sold. The Accepted 3 April 2015 current paper provides an extended review of the socio-technical configurations of micro-generation based on journal publications and reports during the 21st century. The paper analyses currently existing Keywords: and missing configurations and discusses technology and policy implications to support proliferation of Renewable energy micro-generation technology and local energy production from renewable sources. The potential for new Micro-generation configurations can be found particularly in heat producing micro-generation with solar heat, heat Decentralized energy production pumps, and biomass. Developing further the operations and maintenance of distributed generation Socio-technical configuration Business model technologies and business models appears an area that calls for further innovation, and corresponding Community energy innovation policy measures. Third party service and community-driven deployment models can aide the proliferation of distributed generation and further innovation therein, justifying the introduction of feed-in-tariffs to attract such models during their early diffusion. & 2015 Elsevier Ltd. All rights reserved.

Contents

1. Introduction...... 2 1.1. Concept of micro-generation...... 2 2. Analytical framework ...... 3 2.1. Organizing around micro-generation ...... 3 2.2. Methodology and procedure ...... 3 3. Existing configurations—Technical and non-technical aspects ...... 4 3.1. Technologies of micro-generation...... 4 3.2. Ownership and financing...... 4 3.3. Operation and management ...... 5 3.4. Distribution of energy ...... 7 3.5. Summary on existing socio-technical configurations...... 9 4. Missing socio-technical configurations...... 10 4.1. Technological limitations...... 10 4.2. Service-based models and limited market demand ...... 11 4.3. Opportunities with community energy ...... 11 5. Policy implications of missing configurations ...... 11

n Corresponding author. Tel.: þ358 405062114. E-mail address: Jouni.juntunen@aalto.fi (J.K. Juntunen). http://dx.doi.org/10.1016/j.rser.2015.04.040 1364-0321/& 2015 Elsevier Ltd. All rights reserved. 858 J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870

6. Conclusions ...... 12 Acknowledgements ...... 13 References...... 13

1. Introduction consumer, are increasingly becoming blurred. New configurations consist of different sizes of networks that underpin the energy Decentralized energy production based on renewable sources is consumption of consumers and communities [2]. a commonly presented vision and solution for future energy needs This paper is interested in the deployment of micro-generation [1]. The exponential growth in distributed photovoltaic installa- technologies. The article departs from the framework introduced by tions has been accompanied with a widening range of their Walker and Cass [11] in 2007, and adapts it to discuss renewable deployment models. Other decentralized renewables appear to micro-generation, the covering technologies, ownership, financing, feature fewer alternatives to the deployment models. As a fuller production, and the distribution of energy. Our contribution is range of available models could also help the proliferation of these twofold. First, we review current academic literature complemen- technologies, it is worth examining whether these technologies ted with up to date documents to reveal existing socio-technical have hitherto been deployed in a more limited array of models, configurations of renewable micro-generation technologies. Second, and if so, are these limitations inherent or could they be subjected we analyze technological and organizational combinations that to targeted measures for innovation and for energy policy. After an create configurations which remain unrealized or marginalized cf. analytic review it appears that only some of the limitations are [28].Ourfindings offer insight for policy makers in the field of inherent and there is room for development. energy, and help companies and user groups to understand various According to recent research, distributed generation (DG) opportunities and current restrictions when enhancing the diffu- fi fi technologies may yield signi cant bene ts in terms of energy sion of micro-generation technologies and scaling up local renew- fi ef ciency and reduced carbon emission. This is due to the fact that able energy production. Such insight and opportunities have been DG combines geographically dispersed decentralized generation hitherto discussed mostly with regard to the solar photovoltaics from preferably renewable sources [1,2]. DG can reduce losses in (PV) domain only, and we expand on this. energy distribution [3], improve energy security by producing The article begins with opening up the concept of decentralized energy close to the point of consumption [4], facilitate an increase generation, micro-generation, and the methodological approach that of energy services in remote rural areas in developing countries will be used in this study. We then describe different types of socio- – [5 9] and consequently it may foster social equity by providing technical configurations taking place in the micro-generation of heat energy services and capacity for households and villages to reduce and electricity. In Section 4 we analyze marginal and missing extreme poverty and advance standards of living [10]. In addition, configurations and the reasons that hinder the emergence of certain DG from local renewable sources, also called micro-generation, configurations. Finally, we discuss innovation and energy policy can reduce dependencies on foreign energy sources. implications and how these could speed up the proliferation of Energy technologies are not just material objects, they also can micro-generation technologies. be seen as embedded components of socio-technical systems—in which energy final users, producers, infrastructures, regulators, and other intermediaries are all embroiled [11–14]. A transition 1.1. Concept of micro-generation from current modes of production to significant deployment of renewable energy technologies will fundamentally affect the Decentralized or distributed energy supply refers to the gen- structure of the energy industry and change the way that energy eration of energy close to the place where energy is used. It can is produced, transmitted, and sold [15–19]. mean a range of generator sizes; from residential households to Technologies emerge through active development, linkages, community or district-level [3]. Micro-generation is the term given and the alignment of various heterogeneous, social, and technical to small-scale local energy generation, and it has various defini- elements into working configurations [20]. Science and technology tions, which vary from country to country. The key characteristics studies (STS) have revealed a wide variety of different “configura- of these definitions are that micro-generation occurs at a local tions” of renewable energy technologies and the elements of social scale, it can include both the generation of heat or electricity or organization involved in their deployment. Socio-technical con- both, and it generates small amounts of energy compared to figurations comprise assemblies of technological components, and centralized plants. Furthermore, there is often a requirement of non-technological components such as human factors. A config- environmental friendliness in the production. For example in the uration can be seen as an unique assembly of components built up UK, the Energy Act section 82 defines micro-generation as gen- to meet the particular requirements of organization [21,22]. These erating plant with a capacity of less than 50 kW. Most residential organizational interacting mechanisms around energy technology installations are in the range of 2.5–3 kWpcs [3,27]. In the case of include dimensions such as ownership, management, operation, electricity, it can be for the sole use of the building’s occupants or and infrastructure [11]. it can feed the National Grid. Another stream of literature and research has been interested Various renewable energy sources are used for micro-generation. in value chain(s) in the renewable energy business and deploy- These include solar, wind, biomass power (e.g. wood, wood pellet, ment models [4]. Especially the issue of utilities’ business models bio waste), and the utilization of outdoor and ground source heat. for renewable energy has been addressed by a number of recent Hydropower can also be built on a small-scale, the capacity defined reports [18,23–26] and academic studies [27]. as small, mini or micro-hydropower [29].Itisnoteworthythatmicro- Both streams of literature show how organizing a micro- hydropower definitions of size and capacity differ from other sources, generation is in constant change and new configurations are and a hydropower plant with the capacity of between 50 kW and emerging. Production of renewable energy is becoming multi- 10 MW is still considered as a micro-hydropower [30,31].Definitions faceted and clear demarcation lines between centralized and of small-scale Waste to Energy (WTE) systems have some variations. decentralized, grid-connected and off-grid, and producer and There are studies [32,33] that define small-scale WTE is as capacity J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870 859 below 100,000 t of waste per year, which equal to 33–67 MW Ownership Management Distribution thermal capacity. In some other studies [34,35], a small-scale WTE and finance and operation of energy fi fi de nition is more inline with typical micro-generation de nitions i.e. Distant Utility and 3rd party driven models universal distribution below 50 kW output. Proximity grid connected In this article we focus on the above common technologies that are available as established commercial systems in many markets, Medium micro-grids even if not necessarily globally. Proximity Community driven models district heating networks

off-grid 2. Analytical framework Close locally produced and User driven models Proximity consumed 2.1. Organizing around micro-generation Fig. 1. The socio-technical framework for micro-generation: Non-technical dimen- Different types of deployment models of micro-generation sions and proximity between point of generation and energy use (adapted from have received attention in studies of energy policy. These models [11]). include business model like considerations, but also take into account different ways of organizing the production, such as analysis framework. Dimensions of ownership and financing, community energy [4]. As micro-generation is gaining momen- operation and maintenance, and distribution of energy can be tum, new types of actors and ways of organizing around micro- viewed from the point of locality; i.e. what is the physical and generation are emerging. institutional distance between the local site of production and the In earlier studies, by Walker and Cass [11] and Sauter [36],the site of service consumption [11]. The degree of locality depicts authors make a division between technology and social and infra- energy autonomy or self-sufficiency, which is the ability of an structural actors in their conceptualizations of socio-technical con- energy system to function based on own local energy generation, fi gurations of the renewable generation. Technologies generate storage, and distribution systems without the need of external usable energy in the form of heat or electricity. The social and support [39]. The proximity levels (user/household, community, infrastructural actors utilize the technologies. These actors take care business) follow widely used approach in the literature. An of functions such as generation, distribution network, ownership, abstraction level of analysis has been put to a position that can – operation, management, service, consumer supplier relationship be answered and filled by a rigorous literature review. and supply chain. How the energy technology is used also includes considerations of learning, skills and the function for which the The socio-technical configurations framework for micro-generation energy is used. Walker and Cass examine all sizes of renewable is presented in Fig. 1. The vertical axis presents increasing locality in energy production and list five implementation ‘modes’:public three steps, and horizontally the figure is divided in to three separate utility, private supplier, household, community and business [11]. dimensions; ownership and finance, management and operation, and These modes especially reflect the ownership dimension of produc- distribution as described above. tion. Walker and Cass [11] framework is the most comprehensive attempt to analyze socio-technical configurations of renewable energy productions. Thus it has been taken as starting point in this 2.2. Methodology and procedure study to create a practical tool for analyzing micro-generation technologies. For the purposes of the present study, the Walker In this paper, our analysis follows the socio-technical config- and Cass framework has been adapted for what can be analyzed urations framework for micro-generation. The analysis of socio- fi regarding the variety of socio-technical con gurations in micro- technical configurations can make visible both the options of generation reported in reliable published sources as of 2014. This organizing around renewable micro-generation and the value has required altering, further focusing and developing the earlier network around local small-scale energy production. 1 model in the following aspects; In the study of configurations, the micro-generation of energy ’ is scrutinized without particular actors viewpoints (corporate, Nuanced examinations on function and service have been left community, or user/consumer/citizen). How actors take different out of this model. Function and service is electricity or heat is positions in a socio-technical network within which they operate always produced primarily for local consumption and some- then becomes interesting. The actors include individual users, fi times also fed to grid. Questions of nal energy consumption communities, and corporates2. The configuration depictions show purposes such as comfort, warmth, visibility, or mobility would how different dimension can be configured in multiple ways. require further research that goes beyond literature review of The concept of shared value creation has received limited atten- presently available information. tion in traditional energy business model analysis, which is based on Micro-generation implementation model variations are more a top-down hierarchy from generation to distribution and the final limited. In practice three implementation modes takes place, use of energy. A value chain perspective is presented in Fig. 2.Inthe namely household, community, and business (aka company- value chain, actors follow each other in the marketplace. However, driven, utility or third party business) [38]. decentralized energy systems can be characterized as value networks Locality can be seen as a key dimension in conceptualizing micro- cf. [40]. To understand the roles and engagements of actors within generation and has been added as second dimension to our the energy system requires a multidimensional conceptualization [11].Aconfigurationcanbeseenastheconceptualizationofa

1 Bracken et al. propose “environmental dimension” to be added to Walker and network wherein actors take a position, connect to each other, add Cass original model to take into account ecological impacts such as biodiversity value, create and share knowledge, and make transactions. [37]. For the purposes of this study inclusion of environmental dimension would complicate the analysis beyond what can be achieved through literature review of materials available to date. Taking into account various aspects of ecological 2 In the network of actors policy makers also play a role, especially in the impacts both locally and globally (in supply chain) of technologies would arguably formulation of (dominant) configurations. However, if production-based support- require separate study focusing to this dimension with each micro-generation ing mechanisms such as FIT are not used, the role of regulation may be rather technology examined. limited in a socio-technical configuration that is running a daily operation. 860 J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870

Fig. 2. Value chain perspective of micro-generation. The example case of solar (PV) technology. Adapted from [41,18].3 Distribution of electricity is not included in the figure. Other electricity generating technologies follow the main features of the solar PV value chain. In heat production, the supply chain of energy source material creates an additional dimension to the value chain.

Ouranalysisisbasedontwoseparateinformationsourcesorsets. removed, which reduced the number of journals to 154 with 925 There has been increasing interest in research to address different unique articles. Finally, based on an examination of abstracts4,101 aspects of micro-generation technology and business and develop- academic publications were found that were relevant for this ment models. Thus, a logical point of departure in this study was to study, of which 23 articles had a significant contribution in the review recent (from 2000 to 2014) academic articles on micro- area of business or deployment models (discussed in Section 3.2). generation in the areas of business and deployment models. These models explain the key characteristics of organizing around the technology, define points of control, and help to construct depictions 3. Existing configurations—Technical and non-technical of socio-technical configurations that have already been recognized aspects in research and academic literature. The literature review includes an extensive set of empirical studies both from the developing countries 3.1. Technologies of micro-generation and from developed industrial countries. However, renewable micro-generation is an emerging area: Micro-generation technologies are small-scale systems that gen- academic literature is scant and most of it is too constricted to erate energy in usable form from heat or electricity or both. In the thoroughly address the issue. Moreover, many of the models are historical perspective, the oldest form of micro-generation is wood emerging as we speak, and academic publications appear to lag burning fireplaces, but available technology alternatives, product behind the new configurations and value networks that are models and solutions are steadily increasing. To give an overview 5 emerging. Thus, other sources available on the Internet were of commonly used technologies, Table 1 presents energy sources consulted in order to gather further information relevant to the and technological alternatives of micro-generation. Micro-generation analysis and to fill the gaps in academic publications. The addi- is a technology that converts a source energy to a form that can be tional material includes reports, documents, company pages, and utilized for certain functions, which, for example, can be warmth or material from cleantech news sites. comfort [11]. This study has two main research questions: 3.2. Ownership and financing 1. What kind of socio-technical configurations have been estab- lished around renewable micro-generation technologies? Various legal and financial models of ownership have been 2. What are the missing configurations and the underlying adopted for micro-generation. One hundred % public ownership is limitations and barriers affecting the absence of certain not common, but public involvement in supporting schemes is configurations? widely present. A whole range of combinations between public and private ownership exists: projects can be community owned, The literature review began by searching with 12 relevant or may be developed under co-ownership arrangements (e.g. keywords3 from two main academic search services. First, a full public–private sector partnerships [43]). Projects can involve the text search was carried out in Ebsco for Financial Times 45 list ownership of energy generation that is grid-connected or off-grid, business journals. Second, both Ebsco and Sciverse ScienceDirect or can combine the locally owned production and consumption of full text searches were carried out for a wider range of business, energy (e.g. where heat is generated for local use for one or several economics, technology, and energy specific journals. The initial buildings) [44]. round resulted in 1246 articles from 171 journals. The duplicates of Ownership issues are inseparable from organizing the finan- articles, conference proceedings, non English journals and outside cing for energy production. There is an extensive literature on of scope tech journals (e.g. hydrogen or fuel cells technology) were financial subsidies for energy projects. Through the use of

3 Community energy, decentralized energy (decentralised energy), decentra- 4 The abstract addressed topics of business and deployment models, financing, lized power (decentralised power), dispersed generation, distributed energy, operations, management, distribution of heat or electricity, or storage of energy. micro-generation (microgeneration), rooftop solar, solar home system, solar AND 5 Emerging technologies (e.g. micro-CHP and fuel cells) without significant fee-for-service, solar AND lease, third party solar, waste to energy. market adaptation have not been listed. J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870 861

Table 1 Common micro-generation technologies by source and function. Adapted from [1,31,42].

Energy source Energy technology Output power type

Hydro power Small hydro-turbines Electricity Wind Micro-wind power Electricity Solar Solar PV Electricity Solar Solar thermal collector Heat (water) Solar Solar air collector Heat (air) Biomass: wood Fireplaces Heat (air or water) Biomass: wood Wood burning boiler Heat (water) Biomass: wood pellet Wood pellet boiler Heat (water) Biomass: bio waste, e.g. straw Small-scale combustion Heat (water), electricity, CHP Biomass: bio waste Gasification Heat (air/water), electricity, CHP Solid waste Thermolysis Heat (water) Outdoor air heat (þelectricity) Air source heat pump Heat (air) Outdoor air heat (þelectricity) Air to water heat pump Heat (water) Ground heat (þelectricity) Ground source heat pump Heat (water) Indoor air heat (þelectricity) Exhaust air heat pump Heat (air)

subsidies, government aims to lower the cost of energy provision With a lease consumer pays monthly fee, which is not tied to level either through incentives for energy generation or price reduc- of production, and with a fee-for-service the payment can be fixed tions to consumers. In recent research, the main interest has been or based on variable production. The details of third party finan- to study energy generation incentives, namely feed in tariffs (FIT), cing can vary, e.g. a lease contract can allow the consumer to to enhance the diffusion of the technology [45,46]6. Table 2 purchase the system over a certain period defined by the initial presents an overview of recent literature on business, financing equipment owner. The homeowner can feed an oversupply of and deployment models. electricity back to the grid and sell electricity to an electricity Ownership models can be divided in to different categories by service provider. Third party financing has become the dominant looking at the distances from operational technology and energy form of financing for domestic solar PV in the U.S. [52]. production site to an actor or an institution that holds the own- In the developing countries, the fee-for-service model is ership of the production equipment. From this viewpoint owner- receiving increased attention. Next to all of the studies of fee- ship can be divided in to a local ownership at site of the for-service focus on these markets. Using micro-credit for building production or to ownership outside the site of production. Both new energy capacity, or implementing a fee-for-service utility ends include various kinds of models. Friebe et al. [51] examine model, is now considered as two desirable options to create a solar PV technology and divide options along the lines of cash, dynamic self-sustained market for solar home systems [55]. credit, leasing, and fee-for-service. Based on the literature review, Donation models [10,58] in which the technology is transferred business and ownership models of solar PV has been most widely to the community as a gift is hardly in practice in the most studied among micro-generation technologies. The existing mod- developing countries these days [9]. The donation logic is dis- els are also most diverse in solar PV technology. continuous, by nature, which makes it hard to succeed in a However, similar models may also be applied, in principle, to long run. other micro-generation technologies, but certain technology char- On the other hand, in developed countries with FIT programs, acteristics do set limits and hindrances to this, which we will PPA (rent-a-roof) are gaining momentum. Third party companies discuss later. The traditional ownership model is where house can lease the equipment, and large utilities have entered the owners, or similar, own the production unit and use upfront cash market and provide DG technology to commercial users and or credit (e.g. home-equity loan) to purchase equipment7. Both of private consumers [63]. these options are popular in the developed countries. In regards In summary, while DG is growing, and new types of business credit based model in the developing country context, micro- models are entering the field, the field includes a range of different finance has been used (especially with biogas based generation models of financing and ownership [52]. [57,66]). When the ownership of production is outside of the production 3.3. Operation and management site, third party financing is used. Third party financing models i.e. service-based models include both Power Purchase Agreement In the operation and management configuration, interest is on (PPA) and lease [52]. There are no clear-cut definitions and who manages, controls and maintains the hardware, and how is implementations have some variation, and models can also be this organized [11]. Ownership of micro-generation equipment mixed and have various local marketing terms. For example, solar and control of operation and management are typically tightly PV lease can be called “rent-a-roof” and PPA as fee-for-service, coupled, thus ownership has a high influence on socio-technical which can be marketed as “free solar on your roof” [67]. Fee-for- configurations. To keep technology operating and energy output service and lease customers have different payment structures. high is primarily the owner’s responsibility. However, ownership and operations can be also separated via outsourcing [49], whereby ownership is purely a control and financing issue, with- 6 Due to the complexity and the set of issues involved, it is not possible to out material responsibilities. include public policy support mechanisms, such as subsidies and regulations, in the Feasible operation and management configurations are highly analysis of this paper. defined by the operation needs of the technology. The operation 7 This basic model has been called also as “dealer model. Cf. Sustainability— needs vary significantly from one micro-generation technology to Business Models for Rural Electrification (Source.: The ACP-EU Energy Facility http://capacity4dev.ec.europa.eu/system/files/file/23/04/2012_-_1736/sustainabil another. While electricity generation from solar requires relatively ity_ruralelectrification.pdf, accessed Nov 27 2014.) low maintenance depending on environmental conditions such as 862 J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870

Table 2 Literature review of academic articles on micro-generation business, finance and deployment model and socio-technical configurations.

Author(s)/ Publication name Journal Business or deployment models covered Type/empirical Technologies year of study area or included to publication country if empirical work applicable

Boon and Local civil society based renewable energy Energy Policy Community business models: collective Empirical/ Wind, solar, Dieperink organisations in the Netherlands: procurement of energy and technology, Netherlands biomass, geo- [47] Exploring the factors that stimulate their education and facilitation, delivery of thermal emergence and development energy, collective generation Derrick [48] Financing Mechanisms for renewable Renewable Energy Revolving funds, credit co-operatives, Conceptual Solar PV energy renting schemes, utility schemes/leasing, hire purchase Dornan [49] Solar-based rural electrification policy Renewable Energy Fee-for-service (RESCO) Empirical study/Fiji Solar PV design: The Renewable Energy Service Company (RESCO) model in Fiji Drury et al. The transformation of southern Energy Policy Customer owned, Third party owned Empirical study/ Solar PV [50] California’s residential photovoltaics California, United market through third-party ownership States Friebe et al. Exploring the link between products and Energy Policy Sales model (cash and credit), service Empirical study/ Solar PV [51] services in low-income markets—Evidence model (leasing and fee-for service) several emerging from solar home systems and developing countries. Hess [52] Industrial fields and countervailing power: Global Publicly owned Utilities, PACE (DeVries Empirical Solar PV The transformation of distributed solar Environmental model), Share based models (Mt. Pleasant (Comparative case energy in the United States Change Solar Co-op and 1BOG) study)/United States. Hujiben and Breakthrough without subsidies? PV Energy Policy Customer-owned, Community shares, Review and Solar PV Verbong business model experiments in the Third party empirical data/ [53] Netherlands Netherlands Lemaire [54] Fee-for-service companies for rural Energy for Fee-for-service (by ESCOs) Empirical study/ Solar PV electrification with photovoltaic systems: Sustainable Zambia The case of Zambia Development Lemaire [55] Off-grid electrification with solar home Energy for Fee-for-service, credit (micro-credit) Empirical study/ Solar PV systems: The experience of a fee-for- Sustainable South Africa service concession in South Africa Development Liu et al. [56] Purchasing vs. leasing: A benefit-cost Renewable Energy Leasing, Cash, Credit (home equity loan) Empirical study/US Solar PV analysis of residential solar PV panel use in California

Mainali and Financing off-grid rural electrification: Energy Fee-for-service, leasing of energy- Empirical study/ Micro-hydro and Silvera [57] Country case Nepal generating products, credit (credit from Nepal solar PV local cooperatives, revolving funds, credit from commercial banks) Mainali and Renewable energy markets in rural Energy for Cash, credit, private ownership, Empirical study/ Micro-hydro and Silvera [9] electrification: Country case Nepal Sustainable community ownership) Nepal solar PV Development Nieuwenhout Experience with Solar Home Systems in Progress in Donations, cash sales, consumer credit, Empirical/ Solar PV et at. [58] Developing Countries: A Review Photovoltaics: fee-for-service, Developing Research and countries Applications Obeng and Impacts of public solar PV electrification Energy for Fee-for-service Empirical study/ Solar PV Evers [59] on rural micro-enterprises: The case of Sustainable Ghana Ghana Development Okkonen and Business models of heat entrepreneurship Energy Policy Co-operative, ESCO (larger scale utility Empirical study/ Wood pellets, wood Suhonen in Finland. models presented also) Finland and peat [60] Provance et al. Institutional influences on business model Energy Policy Plug and play, company-driven, Conceptual Generic [61] choice by new ventures in the community micro-grid microgenerated energy industry Rai and Sigrin Diffusion of environmentally-friendly Environmental Lease (utility), cash Empirical/United Solar PV [62] energy technologies: buy versus lease Research Letters States differences in residential PV markets Richter [63] German utilities and distributed PV: How Renewable Energy Utility DG, energy efficiency, distributed Empirical study/ Solar PV to overcome barriers to business model storage Germany innovation Sauter [36] Socio-technical implications of domestic International Plug and play, community micro-grid, Empirical study/ Generic. Discusses microgeneration technologies in the UK Journal of company-driven (utility and new energy United Kingdom micro-CHP, micro- electricity system Environmental service companies) wind, solar PV. Technology and Management Sauter and Strategies for the Deployment of Micro- Energy Policy Plug and play, community micro-grid, Reviewþempirical Generic Watson [38] Generation: Implications for Social company control data/United Acceptance Kingdom Sovacool [10] Design principles for renewable energy Energy & Cash, credit, mixed finance, donation Empirical/ Generic programs in developing countries Environmental model, fee-for-service, leasing, ESCO developing Science countries J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870 863

Table 2 (continued )

Author(s)/ Publication name Journal Business or deployment models covered Type/empirical Technologies year of study area or included to publication country if empirical work applicable

Walker [64] Financing Distributed Generation Energy Engineering Appropriations, commercial bank loan, Empirical Internal combustion home mortgage or equity loan, lease, examples/United engine, small gas utility financing, chauffage (conceptual: States turbine, fuel cell, vendor financing, bonds) solar PV, micro-wind Watson [65] Co-provision in sustainable energy Energy Policy Plug and play, company ownership, Simulation/United Solar PV and micro systems: the case of micro-generation leasing Kingdom CHP

Fig. 3. Micro-generation technology operation needs. soiling rate, heat production technologies using biomass can contracts for locally produced electricity and heat services is require weekly (e.g. wood pellet heating) or even daily (e.g. wood reduced [68]. heating) intervention. Fig. 3 shows how operation and mainte- Mini-grids and Micro-grids are smaller scale infrastructures nance frequency separates electricity from heat producing tech- between the universal (or national) network and off-grid solu- nologies. Management and operation can be organized privately, tions. Developing mini-grids for decentralized needs is a very collectively, or publicly, but viability of these options is tied to an important concept for promoting rural electrification in the actor’s (maintenance worker) proximity to the technology and to developing countries, since the spread of the national grid is very the frequency of a required site visit. low or almost absent in remote rural areas. Thus, renewable DG provides an opportunity not only for GHG emission reductions but 3.4. Distribution of energy also for improving the quality of life in rural communities [71]. Micro-grids are increasingly important where production is based Although the basic principle of micro-generation is to produce on distributed resources, multiple electrical loads, and meters. and consume energy at the same location, a distribution network These connected generation units can form an autonomous grid. enables the transfer of energy and proximity between production The micro-grid can be either a parallel island from the wider and consumption. This solid infrastructural connection is an essential national grid or connected to it. In the most common configura- dimension in the analysis of the socio-technical configuration. tion, micro-generation inside a micro-grid is tied together with its In Fig. 4, electricity distribution is used as an example to own distribution feeder and that micro-grid is linked to the demonstrate the multitude of distribution configurations. Electri- national grid at a single point of common coupling. In “islanded city distribution occurs through different types of organizations, mode” there is no connection to the grid. Micro-grids can enhance with country variations and ownership combinations. Tradition- energy security and reliability in various ways. They can reduce ally the ownership of the distribution network has been tradition- distribution losses, support local voltages, provide increased effi- ally concentrated to large organizations such as those of the state, ciency or provide stable power supply functions [72]. Micro-grids municipality, or energy utilities. For example, in the U.S., electricity are gaining momentum, with hundreds of individual projects distribution occurs through three main types of organizations— already implemented or under construction worldwide [73]. public utilities, investor owned utilities, or distribution coopera- Production and consumption of all produced energy at the tives [52]. These very same distribution networks are used when same site without connection to external networks is a special micro-generation is connected to the grid. case. In the case of electricity, an off-grid system works standalone. Social public–private partnerships or customer trusts are All of the produced energy is used at the site of production and the examples of new forms of ownership used with distribution system is self-reliant. Recently, off-grid electrification has been networks. In New Zealand there is a local electricity distribution promoted for rural electrification as an answer to the growing company having the form of a customer trust, it is owned and energy needs in developing countries [74]. In many developed governed by consumers [68]. In Germany, within the last five years countries with an extensive national grid, off-grid and micro- over 450 new energy cooperatives have emerged that are not only generation has been used widely in special cases, such as on setting up energy generation but also have taken an important role summer houses and holiday homes. For example, in Nordic in running local grids [69]. When local distribution wires are countries in the case of remote houses there is a trade off between owned locally, the need to regulate wholly privately owned net- new grid extension and solar PV, which favors solar PV because work monopolies and mitigate the need to regulate long term constantly falling panel and installations costs [75]. In terms of the 864 J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870

Off-Grid (Rural) Micro (Rural) Investor- Grid Electric Owned Cooperatives Utilities Generation

Municipal State owned owned Generators Generators

Transmission System Bulk Power Transmission

Distribution Municipal System Distribution Utilities

Energy Storage

Energy End User

Common Ownership or the Rough Equivalent Electrically Connected

Fig. 4. A simple electric system (Figure adapted from [19,70]).

Micro-hydropower economically [76]. Peer-to-Peer networking concepts have brought models from ICT systems to community energy systems [77]. Ownership Management Distribution and finance and operation of energy These concepts have the potential to change how micro- generation in the context of the community can be organized. Distant User driven Current micro-generation community energy is based on close Proximity grid connected proximity users co-operating in energy production. In the future a community could be seen in a new way in the smart-grid 9 Medium Community energy environment, where the peer-to-peer approach spreads out from Proximity a close proximity community to a group of remote households generating and using, and selling and buying their own energy to each other and using the national grid for their electricity Close Credit9 Proximity distribution. Cash9 Energy generation from renewable sources is seldom constant over time; moreover, electricity demand is never constant. There- Fig. 5. Summary of socio-technical configuration in micro-hydropower. 9 In a community level micro-hydropower has been used for rural electrification pur- fore, connecting and utilizing an energy storage within a system poses [9,57]. Mini-grids, in small-sale, even for one building, have been used for becomes important [78]. In addition to the stochastic nature example to provide electrification to hospitals [71]. of local production, the volatility of the market price in a grid-connected DG environment may also create a need to shift micro-generation of heat, production without external distribution the consumption of produced energy. and connection is even more popular. Most small-scale installa- The heat storage of hot water in boileri is a traditional and tions are not equipped with thermal network connection to the widely used method with micro-generation of heat. Batteries have other consumption units. Because of the losses in distribution been used to store DG electricity and there are various technolo- distance between production and consumption becomes limited. gies at different stages of maturity and with a wide range of Thus current heat distribution networks connect buildings in technical characteristics that can provide heat or electrical storage urban area or within-community. District heating networks can [79–84]. It is likely that several solutions will continue to compete be considered as equivalent to electricity micro-grids. Both pro- in the future due to the wide variations in possible applications vide medium proximity distribution. [84,85]. The electricity infrastructure types presented in Fig. 4 provide Local energy storage is an additional new dimension in energy high-level depictions of distribution configurations. In terms of systems, which will also have an impact on energy usage. Users economic considerations, how electricity is measured becomes can change their energy behavior not only based on local produc- interesting with regard to how monetary transactions are carried tion or market price, but also according the local storage situation. out and how an established market price is formed. The develop- While research of micro-generation and storage has mostly ment and promise of a smart-grid is seeking to develop a more addressed the technical or economical aspects of local electricity transparent, two-way, distribution network, which enables small- storage, less attention has been paid to heat storage [84] and the scale production connection to the grid and participation in the behavioral or socio-technical aspect of storage and how it impacts electricity market. The promise of smart-grids is that it can electricity production and usage in daily life. develop the grid towards more sustainable system that is more Local storage is not typically present in current micro- reliable and more efficient in both technologically and generation networking configurations because of the high price J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870 865

Fig. 7. Summary of socio-technical configuration in solar thermal collectors. 21 Get Solar Lousiana is an example of the commercial vendors providing solar thermal collector leasing (Source: http://www.getsolarlouisiana.com, Accessed on Sept 30, 2013.). 22 Conceptual model of utility driven solar thermal deployment model has been presented by Pöyry Consulting Oy. (Source: http://www.tem.fi/files/37133/ TEMrap_28_2013_05072013.pdf, Accessed on Sept 30, 2013). Similarly a fee-for- service conceptual model for third party providers is present in Vitae Civilis institution’s report from Brazil. (Source: http://www.green-markets.org/Down loads/SWH_FFS_Brazil.pdf, Accessed Sept 30, 2013.). Etelä Savon Energia in Finland provides fee-for-service concept for its’s customers that are outside of district heating zone (source: http://www.ese.fi/fi/lampo/muut-lamporatkaisut/, Accessed Nov 26. 2014.). 23 The systems provided for example by SIG Energy Management. (Source: http://www.sigenergy.co.uk/, Accessed on Sept 30. 2013.). 24 Solar district heating is emerging topic in European Union. Most of the deployments rely on large scale solar thermal unit. For medium-scale net metering solar heat has been used in Fig. 6. Summary of socio-technical configuration in solar PV and micro-wind. 10 Sweden, Allbohus Fastighets AB. (Source: http://solarthermalworld.org/content/swe Different type of leasing models discussed in literature, which range from grid den-growing-number-feed-contracts-district-heating-providers, Accessed Nov 5, connected to off-grid systems: Leasing model by third party companies 2014) and in Finland in so called House A (Source: http://www.jyvaskylanenergia. [51,56,57,64,65], leasing by publicly owned utilities [52] and more generally utility fi/asuntomessut/alykkaat-energiaratkaisut, Accessed Nov 13, 2014). Conceptual financing based on leasing [36,62–64]. 11 Fee-for-service models are used widely model of district heating connected solar thermal collectors have been presented [49,51,54,55,57–59]. RESCO [49], ESCO [54] and Chauffage [64] models build on by Pöyry Consulting Oy in Finland. (Source: http://www.tem.fi/files/37133/TEMrap_ similar basic principle where third party company owns and operates the systems 28_2013_05072013.pdf, Accessed on Sept 30, 2013). 25 Conceptual model of service and energy output is charged based on level of production. 12 Community owned concept (without 3rd party ownership) for solar thermal has been proposed by Pöyry models includes both credit co-operatives and community share based models Consulting Oy. (Source: http://www.tem.fi/files/37133/TEMrap_28_2013_05072013. [52,53]. Community micro-grids are used to share the electricity for members [61]. pdf, Accessed on Sept 30, 2013). 13 Derrick [48] lists grid connected utility scheme and off-grid renting schemes used for solar PV charging stations in South Africa and Thailand. These stations are footnotes which explain the sources. In heat distribution there are owned by a community or entrepreneur and villagers rent batteries for recharging at the PV charging station. 14 Variations of credit based models [51,57] include hitherto unfeasible areas, which have been marked on the pictures. revolving funds [48,57], hire purchase [48], micro-credit [55], commercial banks Let us use micro-hydropower as an example case to explain [57,64] and home mortgage [64]. 15 [9,51,56,58,62]. 16 Basic ownership model is to how the analysis framework visualizes existing and missing socio- use own savings for solar PV investment [9,51,62].PACE[52] model is based on technical configurations. In Fig. 5 diagrams of currently existing local household ownership and but the model utilizes local government bonds and fi community tax collection in the model. 17 Fee-for-service for micro-wind is not con gurations for the technology are summarized. For micro- implemented widely. The idea is presented for example in Sauter [36] and in Nfah hydropower we have not been able to identify third party own- and Ngundam [86] articles. 18 [36]. 19 Community owned micro-wind projects are ership or third party management and operation models, which common. For example Totempower provides micro-wind technologies for residen- leaves these section empty. Community energy deployment has tial and community use (http://www.totempower.com, Accessed 4th Nov 2014). been used, for example, in Nepal [9,57], and it covers all three Rankin Inle, Hudson Bay: (http://www.aadnc-aandc.gc.ca/eng/1100100034302/ 1100100034418#chp12, Accessed 4th of Oct 2014) is a community energy project dimensions, hence the green community energy line connecting with 50 Kw micro-wind turbine. 20 Credit from commercial banks or home these areas at the community level. Cash and credit financing mortgage [64] can be used. models, where the owner takes care of management and opera- tion, can be found and all possible electricity distribution forms take place in these areas (i.e. off-grid, community micro-grid, and of battery technology. Feasible options for local storage increase in user owned and operated grid-connected), hence the red connect- conjunction with the proliferation of electric or hybrid vehicles ing lines that move from close proximity ownership and manage- that can be connected to the grid [2]. ment to three extents of distribution. The diagrams in Fig. 6 make evident that solar PV holds the least technical and maintenance restrictions, and that it has been 3.5. Summary on existing socio-technical configurations subject to most business model development both as third party and as private ownership arrangements. With regard to micro- We have gone through renewable micro-generation technologies wind, the off-grid renting schemes and leasing models remain andreviewedliteratureonthefinancing, ownership, operation, absent. In micro-wind the boundaries between small-scale and maintenance, and networking aspects of energy production. In medium-scale becomes easily fussy in the context of community Figs. 5–9 we use the socio-technical configurations framework to energy. Community energy operations may start from small-scale depict currently existing and currently missing socio-technical con- generating units with a capacity of less than 50 kW and expand figurations for each technology as a means to summarize our later to medium or even large-scale, which, by definition, is no findings on existing configurations. Each technology has been longer micro-generation. In the community energy literature, and analyzed separately and the existing configurations have been especially in community energy news, the scale is rarely clearly marked with a solid line. The index numbers in the figures refer to explicated, which makes socio-technical configuration mapping 866 J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870

difficult. In all likelihood, community-driven micro-generation of electricity in hydro, solar PV, and micro-wind is also often connected to the national grid, but nowhere in the reviewed literature is this explicitly documented. In all of the heat systems, national networking has been cut off because of heat losses that would occur through distribution. Third party ownership models exist for solar thermal deploy- ments, but as yet, only solar thermal has had modest trials with regard to leasing. Heat pump, wood and pellets biomass feature a similar relative lack of development in their possible socio-technical configurations. Company-driven models, including fee-for-service and ESCO service for ground source heat pumps have been trialed. For biomass based production community energy models, are also in place, but fee-for- service has been in modest wider use. Finally, we have analyzed Waste to Energy (WTE) for micro- generation use. Managing solid waste is a big challenge both in developing and developed countries. WTE technologies can reduce both use of virgin raw materials and carbon emissions. WTE has been widely deployed in large and medium scale plants [88]. However, WTE based on small-scale units is less used as the smaller-scale facilities are less efficient than the larger-scale systems. WTE based on small-scale technologies are particularly feasible for communities in rural or semi-urban areas or regional centres. In less densely populated areas the volume of waste, transportation costs or public disapproval may rule out large-scale solutions [32]. Small-scale thermal energy production has been Fig. 8. Summary of socio-technical configuration in heat pump technologies and biomass. 26 Micro ESCO concept piloted is piloted by Enespa in Finland. (Source: traditionally based on combustion concept, which has been almost http://mechanisms.energychange.info/sites/default/files/projectstories/micro-es abandoned, because of its problems: very low energy efficiency cos_cb-project-story.pdf, Accessed Nov 5, 2014). 27 Etelä Savon Energia, muncipality and high dust and polluting emissions [34]. Currently small-scale owned utility, in Finland offers ground-source-heat-pump fee-for-service for units have been piloted and used for special purposes in commu- households. (Source: http://www.ese.fi/fi/lampo/muut-lamporatkaisut/, Accessed nity level providing waste treatment in developing countries for Nov 26. 2014.) 28 Ground source heat pumps have been used in community energy project in Vaasa, Finland. Similar concept can be scaled to micro-generation size. refugee camps, rural villages, and institutions like hospitals utiliz- (Source: http://www.varmex-energieffektivisering.se/wp-content/uploads/2011/ ing for example crop residues in farming [91] or hospital waste 11/Projektbeskrivning-Geoenergy-Research-Project.pdf, Accessed Nov 5, 2014). 29 [92]. The smallest units of WTE technology can be found deployed 30 – ESCO model in wood energy has been used in Finland [60] . Public private in the developing countries. These units are used at homes to partnerships are offering small-scale wood pellets systems that have been installed to schools and day-care centres in Finland [12] table, Commercial vendors available. provide heat for space heating and cooking. (Source: Energ-Group http://www.energ-group.com/, Accessed on Sept 30, 2013). In our analysis, technologies have been analyzed separately. An example of systems and service provider is HWEnergy in UK (Source: http:// However, in real life setting many technologies are used in hybrid 31 www.hwenergy.co.uk/heat-supply-and-ESCO.asp, Accessed Nov 5, 2014). [60]. setups as combination of technologies, which reduces problems associated with intermittence, randomness, and uncertainty of renewable energy sources. In their current deployments, hybridi- zation has not forced different micro-generation technologies to take similar non-technical positions. This type of isomorphism of socio-technical configurations could come about with the matura- Biomass: Solid waste tion of the micro-generation business field. Ownership Management Distribution and finance and operation of energy

Distant 4. Missing socio-technical configurations Proximity Viable business and deployment models on energy generation

32 Medium Community scale units are often applied (copied) to new areas, environments and Proximity technologies. This development has been visible among micro- generation technologies. At the same time, there are various limitations and barriers that hinder proliferation of certain models, Close at least “as is” to certain other micro-generation technologies. Proximity 33 Home units Based on our review, however, we can recognize several missing socio-technical configurations, which may open doors for alter- Fig. 9. Summary of socio-technical configuration in waste to energy biomass. 32 native new business models with micro-generation, despite the fi Small-scale gasi ers can be used to recover energy from waste in smaller limitations. These issues are discussed in the following. communities [87]. Smallest basic incinerators are so called mobile incirenators that can handle between 5 to 120 t of solid waste per day (Source: http://www. sswm.info/content/incineration-small-scale, Accessed Nov 20, 2014). These units 4.1. Technological limitations are used for community purposes, farms, mines, construction sites, hospitals etc. [88]. 33 Biogas from animal, agricultural, and domestic wastes can be used in biogas Operation and maintenance needs vary significantly between plants at homes and are suitable for providing gas and heat for cooking three meals a day for an average sized family [10]. Domestic-size waste based plants have been technologies, and in general heat production requires more studied for example in Kenya [89], Rwanda [66] and Cambodia [90]. frequent operation than electricity production. Service based J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870 867 business models have gained popularity with technologies that 4.3. Opportunities with community energy require infrequent operation. Solar PV provides the richest set of configurations and includes several third party, community and Community energy as a concept consists of a diverse set of end-user driven models. The technology requires relatively little activities and includes more than energy production [96]. maintenance after installation, but in some extreme conditions an Community-energy initiatives can improve energy systems via active user can influence output. In cold climate during the winter, renewable energy; energy efficiency, and behavior change [97].In the removal of snow from panels becomes important. Similarly, this paper our interest in community activities is solely on energy high soiling rate can be an issue is dusty dry areas. In service- production from renewable sources, and we grouped under com- based models with technologies requiring frequent operation munity energy initiatives those that have community ownership requirements, operation maintenance challenges can be addressed and production benefitting multiple households. Micro-generation by shared responsibilities where incentives for energy users are refers to small-scale energy technologies and often community created. energy production exceeds the micro-generation scale. Micro-generation typically provides a competitive energy price When energy output from micro-generation is distributed to in comparison with external energy sources, i.e. market price. multiple households, the technical capabilities of distribution When a (residential) energy user receives locally produced energy become essential. In electricity distribution micro-grids can be (at discount rate), the user also benefits from the high output level. used, but in heat distribution heat losses can be significant thereby A local ownership option, cash and credit, gives full authority to creating limitations8 in community production. Solar thermal the user to control the production unit and full reward to collectors and biomass, are used in community-scale deployments. maximize the production of the unit. Strengers [93] proposes The visions for using the district heating network for transmitting enabling co-management relationships with consumers for peak solar heat imply models of distributed privately owned collectors electricity demand. Similarly co-management can be expanded to and third party owned distributed solar heat generation. To make production equipment in order to enable the mutual benefits that these models viable may require regulatory forced unbundling of maximize local energy production. However, co-management heat production and distribution ownership in a company level in applicability is highly dependent on general skills and knowledge a similar manner that has been done in electricity generation and of the population to operate domestic technologies, which may be distribution earlier. insufficient for example in bottom of the pyramid (BOP) markets. To date community-scale experiments with ground source heat pumps have remained mostly trials, and present a missing con- 4.2. Service-based models and limited market demand figuration. Shared collector fields, potentially heated with solar collectors in the summer, as well as trials with seabed heat for Although micro-wind and micro-hydropower can be seen as district wide heat pump installations, point to the technical forms self-sustaining technologies, they have not attracted third party this can take [28]. Similarly, multiple heat pump combinations in business models. Khennas and Barnet [94] who researched hydro- shopping malls provide excellent examples for how the technol- power deployment in developing countries explained this as a ogy could be managed at a community-scale. In terms of business market size issue. A third party model is not used because the models, only cash/credit has been available to date, but due to extent of project developers is largely a function of whether there their easy maintenance and the capacity of being monitored is sufficient work for them; i.e. are there sufficient number of new remotely, other business models could suit community ground micro-hydro constructions taking place each year. Natural condi- source heat as well. tions, such as unharnessed rivers, define where it can be deployed Finally, we may note that sources to date have not addressed at all. In the case of micro-wind and solar thermal, an under- community energy possibilities from the point of view of separating developed market and limited current market size can limit ownership, operations and maintenance, and networking, with distant viability of the business, whereas the solar PV market has grown proximity and close proximity combinations (distant proximity net- large enough to provide companies with economies of scale in working being ruled out due to technical limitations, naturally). An operation and possibility to create profitable business around the example would be third party lease of biomass generation equipment third party ownership model. It should be noted that especially in to a community, which could mitigate the third party barriers in the case of a solar thermal collector, a market lease could be an operation and maintenance of e.g. pellet systems. applicable model if the gained heat production vs. cost of equip- ment ratio is sufficiently high. Because subvention mechanisms have been generally directed towards electricity production, solar fi PV has been the starting point and entry technology to provide 5. Policy implications of missing con gurations service-based models such as lease and fee-for-service. In the fi countries without government subvention, these models are Analysis of missing con gurations revealed three key limiting practically nonexistent as yet. Nonetheless, service-based models factors: technological limitations, limited market demand, and chal- of solar thermal collectors appears to be a missing configuration lenges in distribution in the community energy context. Innovation which is hard to rationally account for. The concepts of the model and energy policy mechanisms can used to facilitate all these items. fi can be dated back to 2006 [95] and some commercial deployments The cost ef ciency of energy technologies is highly dependent have been planned but commercial providers are still very rare. on the cost involved during the operation phase. New innovations Similarly, a missing configuration without clear explanation, apart especially addressing the issues of the maintenance and operation perhaps from a poor fit with extant business models, is that of equipment could open new service models for micro-generation utilities do not appear to provide fee-for-service solar PV. technologies that have not attracted service business models so Energy Service Company (ESCO) models have been applied to far. We suggest that local innovation trials may [97,98] support fi some heat generating technologies, but the operations are often manufacturers efforts to nd new solutions to drive heat based difficult to apply successfully on a small-scale [60]. For heat micro-generation technologies, in particular, towards a more self- pumps, micro-ESCO models have been tested but commercial sustaining or remotely controlled operation. success has been limited to date. However, for biomass systems, third party ownership is an established model and service provi- 8 Centralized community production unit feeds heat to households in ders can be found, for example, in the UK. surrounding area. 868 J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870

A diverse socio-technical configuration choice set also includes shows. In this Sustainable Energy Financing District, the municipality service-based models. Fee-for-service or leasing can boost market takes part in financing by issuing bonds whose proceeds could development in multiple ways, as has been evident with solar PV. finance the upfront costs of photovoltaic systems. The participating They remove the need for upfront capital investments from con- homeowners could use the money they save on their utility bills to sumers, and thus have the potential to increase the popularity of pay a tax assessment, thereby achieving payback. Unlike in third- small-scale renewable technology in general. In addition, service party financing, the ownership of the energy production unit rests companies can gain economies of scale in sourcing of equipment, with the building owner under this model [52,101].InCalifornia installation and operation, and maintenance. Moreover, end of life- PACE model has been expanded from initial solar PV technology to cycle and recycling services can be organized in a professional cover also HVAC systems, and energy efficiency renovations such as manner. Service-based models can address component quality con- more efficient windows10.Inprinciplethesamemodelcanbe cerns, because this model allows companies to purchase equipment utilized for all renewable micro-generation technologies. in volume and use low-cost finance to spread customer costs over the lifetime of the equipment. It also appears to promote innovation, as in the case of solar utility companies, which can have enough 6. Conclusions resources for R&D investments and are large enough to use negotiat- ing power with suppliers [99]. Especially in the developing countries There is a range of options to deploy micro-generation. In this third party ownership and credit models are having special impor- study we developed the socio-technical framework for renewable tancetoincreaseaffordabilityamongthepoorersegmentsofthe micro-generation and used it to make visible the currently existing market, where lack of capital and loan guarantees are an issue. In and missing configurations in small-scale decentralized energy thesemarketsleasingandfeeforservicesareparticularlyimportant production. Micro-generation takes three main ownership models; [9,54,55].Household’s knowledge and capability for taking care of consumer (household), community, and company ownership. We operation and maintenance of micro-generation technology might showed how the versatility of socio-technical configurations within become an issue, which support idea of service-based models. In fact, these ownership models has, to date, varied significantly between in the countries where adult illiteracy rate is high the lack of skilled technologies. Some configurations appear to be impossible due to and motivated local human resources to build, operate and manage physical limitations, such as distribution limitations in heat produc- may represents a major barrier even for the corporate driven models tion because of heat losses, but most configurations are a result of a [100]. combination of social, technological and economical factors. In the early market phase where the limiting market size does Earlier literature has recognized the impact of various factors on not attract sufficient commercial vendors, subvention is an impor- how socio-technical configurations emerge and diffuse in the tant driver to support market takeoff. Especially FIT tariffs have been local marketplace. Within the micro-generation sector, the choice used widely to support electricity generation from solar. FIT for heat between alternatives is a reflection of consumer involvement in the production, such as solar thermal collectors, is less used with a few acquisition process, and that variation or a combination of these exceptions (e.g. Spain). Also in developing countries main renewable models is possible [36]. In addition, both politico-institutional and focus has been in solar PV deployments. Our review echoes earlier socio-institutional forces have an impact on the choice between these research by Karezeki [6] and calls for expanding policy support models as explanations of the variation in level of the activity and horizons for various renewable technological options. Efficient business model choice between countries, ventures, and technologies micro-generation technologies for the use of biomass, for example [61]. Our contribution is to extend this thinking and show that crop residues, would, ensure that scarce biomass resources are differences in technological characteristics, which have a direct effectively utilised. In addition to eco-efficiency increases more impact on operation and management needs, play a key role in advanced micro-generation would alleviate the negative impacts socio-technical configurations and enable or hinder proliferation of that burning biomass can affect on women and children’shealth. company-driven models and servicetization of micro-generation. We Increased productivity level in basic energy generation could also suggest that particular attention should be paid to innovations that improve women’s participation possibilities in different economic improve reliability, increase maintenance-free operation times and activities other than household work. Furthermore, in regards provide remote monitoring and maintenance. This applies to heat energy policy and supporting mechanisms of renewable micro- producing technologies in particular. Alternative possibilities might generation, attention in developing countries should be paid not also emerge from improved ease of use (usability) and the organiza- only to solar PV but also to solar thermal, windpumps, micro- tion of the operation and maintenance at the site of use or at hydropower. We emphasize the importance within technology and community level so that operations and maintenance could be left innovation policy, both in developing and advanced industrial to consumers whilst the ownership and distribution of heat might countries, to drive development towards carbon emissions reduction reside with a third party operator. We can also recognize technolo- and remain technology agnostic so as to allow winning innovations gies, such as solar thermal collectors, that could well meet operational to come about on multiple fronts. requirements of service-based models, but which have not yet Finally, let us address financing issues that can support the attracted business interest. At the policy level, there is space to proliferation of micro-generation technologies. Cash, credit, or com- develop new mechanisms for small-scale heat production in manner munity ownership options give high autonomy and control to similar to that which has been used to support the scale up of production for individual users or groups. These options are applic- electricity micro-generation in many markets. In developing countries able especially among wealthier segments in the developing coun- special focus should be put on expanding energy policy measures tries and developed countries. For financial institutions there is space from solar PV to other renewable micro-generation technologies. to develop new financing instruments (credit schemes) in order to The present study concentrates on current ways of organizing remove the upfront payment9. There are also possibilities to develop around micro-generation technologies. Its temporal context is con- other types of mechanisms as an example of Francisco DeVries, also fined to the operation of micro-generation when a certain organiza- known as Property assessed clean energy (PACE), from California tional set up around a technology has been already established. Our

10 Movers in the Spread of California’s PACE programs (Source: Cleantechnica, 9 Financial institutions may not consider micro-generation products to be valid https://cleantechnica.com/2014/11/26/movers-in-the-spread-of-californias-pace- for collateral security, which increases interest rate in the credit pricing. programs/, accessed 27 Nov. 2014). J.K. Juntunen, S. Hyysalo / Renewable and Sustainable Energy Reviews 49 (2015) 857–870 869 contribution opens several avenues for further research on socio- CHP systems. Energy 2008;33:1518–36. http://dx.doi.org/10.1016/j. technical configurations. It points out that academic research on energy.2008.07.003. [20] Smith A, Stirling A. The politics of social–ecological resilience and sustain- micro-generation technologies and related business models requires able socio-technical transitions. Ecol Soc 2010;15:11. frequent updates to avoid falling behind the rapidly developing field. [21] Fleck J. Configurations: crystallizing contingency. 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Renewable energy and the utility—the next 20 years. Renewable ing mechanism were excluded in order to be able extensively cover Energy World 2010. [26] Richter M. Utilities’ business models for renewable energy: a review. selected dimensions. Servicetization may also hinder the develop- Renewable Sustainable Energy Rev 2012;16:2483–93. http://dx.doi.org/ ment of local energy autonomy from a user perspective, even if it 10.1016/j.rser.2012.01.072. may also provide a boost for market development and lead to [27] Schoettl J-M, Lehmann-Ortega L. Photovoltaic business models: threat or increasing popularity, lower prices and reliability of equipment for opportunity for utilities? In: Wüstenhagen R, Wuebker R, editors. Handbook of research on energy entrepreneurship. Cheltenham, UK: Edward Elgar; autonomous consumers in the long run. 2011. p. 145–71. [28] Walker G, Cass N. Public roles and socio-technical configurations: diversity in renewable energy deployment in the UK and Its Implications. In: Devine- Acknowledgements Wright P, editor. Renewable energy and the public from NIMBY to participa- tion. London: Earthscan; 2010. p. 43–56. [29] Dudhani S, Sinha AK, Inamdar SS. Assessment of small hydropower potential The researchers have received funding for the present work using remote sensing data for sustainable development in India. Energy – from Fortum Foundation (Grant number: 201200215) and Marcus Policy 2006;34:3195 205. http://dx.doi.org/10.1016/j.enpol.2005.06.011. [30] Kosa P, Kulworawanichpong T, Srivoramas R, Chinkulkijniwat A, Horpibulsuk Wallenberg Foundation (Grant: “Climate change and the social S, Teaumroong N. The potential micro-hydropower projects in Nakhon construction of a market for new energy solutions in Finland”). Ratchasima province, Thailand. Renewable Energy 2011;36:1133–7. http: //dx.doi.org/10.1016/j.renene.2010.09.006. 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