Demand response business model canvas: A tool for flexibility creation in the electricity markets

Abstract Wind and solar power generation have been rapidly increasing on a global scale; this increase is limited by the capacities of the existing grids at maintaining balance between supply and demand to accommodate the fluctuations of these renewable energy resources. Therefore, grid flexibility has become a key factor in power systems. This study focuses on demand response business models (DRBMs), which have great potential for fostering energy flexibility in a cost-efficient and sustainable manner. Based on the literature review and empirical data from a case study, a business model analytical framework is proposed to explore the demand response potential based on value proposition, value creation and delivery, and value capture. This DRBM framework is characterised by nine elements: flexibility product, flexibility market segment, service attributes, demand response resources, resource availability, demand response mechanism, communication channels, cost structures, and revenue model. Based on this framework, a visualisation tool is proposed to help researchers and practitioners understand, integrate, and develop flexible electricity products. The application of this tool is then presented for electric vehicles as an example. The tool is valuable for evaluating the initial and untapped potentials of commercial demand response in electricity markets. This study thus contributes to the body of demand response literature via development of a holistic approach to assist recognition and creation of business models in emerging electricity markets.