HOT|COOL NO. 2/2023 "AI & Digitalization"

relationship-building are vital. Key partners are new heat pro- viders (often prosumers) and, for the “active“ model, the cus- tomers “co-creating“ value. The shift from a characteristic DH business model in 2022 to the “passive“ model and the “active“ model is illustrated above. 1.5 Key takeaways DH companies can play an essential role in the European en- ergy transition. To be successful, changes to the current way of conducting business are needed, and one critical component is digital smartness (of buildings and heating systems). To as- sume that the future will bring engaged energy citizens that support the development of new values is dangerous. Instead, DH companies should proactively engage with customers who want to collaborate and co-create new heat supplies. References Commission 2016 Commission, EU, An EU strategy on heating and cooling. Volume ID: COM (2016)51, EU Commission, Brus- sels, 2016

tomer behavior that dominates today. We do not identify that the future will be characterized by a large number of actively engaged energy customers, which is often supposed today. Indeed, the active customers or “energy citizens,“ as they are often referred to, are assumed to remain a limited share of the customer population. The “passive customer“ value proposition can be delivered because it has become standard to engage in performance improvement activities with the few active cus- tomers that are present. The “active“ customers that want to co-create and co-invest in new and more advanced solutions are at the core of DH company development and, most likely, the way to success. Regarding business model characteristics, both models are characterized by a customer value reflecting security of supply, carefree, and cost-efficient. In the “active“ model, the dimen- sion of “co-creation“ of value is added. The primary customer segment will remain building owners with the addition of pro- sumers. For the “active“ model, the active co-creators are add- ed to the customer segment. The customer relationship will be standardized, and long-term, with prosumers added: for the “passive“ model. For the “active“ model, the relationship will be close with the co-creators, and co-creation will occur. The “pas- sive“ model in the customer channel will reflect automized and digital communication (what corresponds to an app in 2050). For the “active“ model, a close-customer relationship is built. The new configuration of DH activity will necessitate changes to the fixed assets (removal of boilers, the inclusion of waste heat and heat pumps in the heat supply, storage units, installed digital infrastructure resorting to AI): applied for both models. For the “active“ model, co-creation is vital, leading to investments in new and often shared (between DH company and customer) assets. The key activities will shift to reflect the new essential assets. For the “active“ model, co-creation and

Ostewalder 2010 Ostewalder, A, Pigneur, Y, Business model generation, Wiley, New York, USA, 2010

Kristina Lygnerud

Hanne Kortegaard Støchkel

What makes this subject exciting to you? Kristina Lygnerud: The DH industry is facing several challenges, and significant change is ahead. There is much informa- tion on possible technical pathways, but how it is coupled to business model updates is rarely discussed. Flipping the coin and addressing the industry’s challenges from a business perspective is very exciting. Hanne Kortegaard Støchkel: In my mind, the green transition is happening one decision at a time, and I like to find ways to prepare the road for better and quicker decisions. DH is a critical energy infrastructure that provides much more than “just” cheap, sustainable, comfortable, and reliable heating. I find the cross-section between developing DH and the ben- efits that DH can bring to other sectors very exciting. What will your findings do for DH? We hope to support strategy and business developers in DH companies across Europe. The next development steps for DH involve new stakeholders and more focus on co-creation, trust, and deeper collaborations. We hope our research will open some eyes to these new needs and opportunities.

For further information please contact: Kristina Lygnerud, kristina.lygnerud@ivl.se

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