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The energy sector's future business models

“Innovation is both exciting and disruptive. The disruptive part of it is not necessarily bad but it can be devastating to the incumbents.” With these words, professor Derek Bunn of the London Business School, started his talk on his research on price formation in electricity with an emphasis on the impact of renewables. “We're familiar with a number of manifestations of this: negative prices emerging, requirements for greater flexibility of existing plants, asset write downs and so forth.”

Risk is a necessary element to drive innovation. Bunn: “In many respects that was part of the idea of liberalizing the electricity market. Essentially by creating a market that had risks there'd be greater efficiency and greater innovation. Well, we're certainly getting more risks now.”

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