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The Topic: Non-traditional business models NON-TRADITIONAL BUSINESS MODELS THE TOPIC 12 | 22ND - 28TH JULY 2016 | UTILITY WEEK G ermany's energy transition – or Energiewende – is seen by many as the prime example of how non-traditional business models can develop and flourish. It has its origins in the 1970s but came to the fore aer the Fukushima nuclear accident in Japan in 2011 when chancellor Angela Merkel decided that all German nuclear power plants should close by 2022. At that point, nuclear power was providing more than 20 per cent of the nation's electricity capacity, but this has now been whittled down to around 16 per cent, with more closures planned. To make up the gap, Ger- many has commissioned and built new coal plants, but the share of the energy mix for renewables has grown by seven percentage points since 2011. This dramatic political change has been the main driver behind the major structural changes at Eon and RWE (see p15) and has benefited other non-traditional business models that are commonplace in Germany, such as local grid ownership and community energy. In the state of Saxony Anhalt, for example, there are 23,000 photovoltaic (PV) systems and around 2,700 wind turbines installed at 97 sites. They have benefited from a long-standing feed-in tar- iff regime, which offers guaranteed returns for communi- ties investing in them. Last year, 48 per cent of Saxony Anhalt's energy was generated from wind, solar or biomass plants. Central to the Energiewende's principles is the deliv- ery of various long-term targets, with renewables due The winds of change in Germany With its Energiewende programme, Germany is committed to transforming its energy system. Mathew Beech looks at how the industry is organising itslef to cope with the challenge. The growth in community energy schemes in the UK has not been as pronounced in Germany, but it is happening. The now scrapped Department of Energy and Climate Change set out two community energy strategies to help the sector develop, while a number of other schemes, such as Mongoose Energy and other developers, sell shares in renewable energy projects. This "democratisation" of energy, as former shadow energy secretary Lisa Nandy put it, is helping to connect "prosumers" with their energy, and add to the decentrali- sation of power. COMMUNITY ENERGY Albion Water was the first new entrant to compete against the incumbent water suppliers in England when it received its licence from Ofwat in 1999. Its business proposition is to create tailored solutions for hard-to-serve customers and new housing developments, serving a niche by providing ser- vices such as drainage solutions to sites that fall below the bigger players' thresholds for bespoke services. It has so far gained its 2,000 customers via inset appoint- ments, which Ofwat grants to allow one water company to replace another as the supplier of water or sewerage services within a specified geographical area. Wessex Water took a 51 per cent stake in Albion in March this year. Albion chairman Jerry Bryan said the deal would give his company the "financial and technical strength" to meet a growing demand for sustainable and resilient solutions for new housing. gas and other services to Utility Warehouse for the next 20 years. Npower had previous been the owner of the Electricity Plus and Gas Plus arms, both of which are now part of Utility Warehouse following the deal, but these had been managed by Telecom Plus since March 2006 following a management ser- vices agreement between the two companies. PROFILE: Tailor-made by Albion Water PROFILE: Bristol Energy pursues a local solution PROFILE: A bundled play from Utility Warehouse Utility Warehouse is unlike the other domestic retail suppliers because it offers its customer bundled packages including energy, home phone, broad- band, and mobile services. It states that by combining its services, it is able to offer cus- tomers a discount because this helps it to keep its own costs down. Utility Warehouse owner Tel- ecom Plus agreed a £218 million deal with Npower to buy 770,000 customer accounts in November 2013. Telecom Plus paid an initial £196.5 million, with an addi- tional £21.5 million due to be paid aer three years. It also agreed a new wholesale sup- ply deal which will see Npower continue to supply electricity, Bristol Energy is municipality- owned energy retailer, wholly owned by Bristol City Council, and offers electricity and gas tariffs for domestic and business customers across Bristol, the South West and Britain. The company, which only began trading in September 2015, provides an innovative way to support Bristol City Council in its economic, social and environ- mental goals, with any dividends from its operations returned to its parent organisation for invest- ment in the city. At the end of June, Bristol Energy was supplying electric- ity and gas to just under 10,000 customers. Currently around 15 per cent of its customers are from Bristol and the surrounding area, while 42 per cent are from four of its closest DNO regions, including Bristol. And 58 per cent from the rest of the UK. "Bristol Energy gives people power with a social purpose. Because the profits we make will be returned to Bristol City Council, everyone who signs up to Bristol Energy feels part of something bigger. And our research is already telling us that this a powerful message." Bristol Water managing director Peter Haigh