Co-evolution of innovative business models and sustainability transitions: The case of the Energy Service Company (ESCo) model and the UK energy system

There is a growing consensus that the current energy system we rely on is fundamentally unsustainable and that it will have to be transformed if we are to continue to satisfy our energy needs in the future. At present we have a poor understanding of the role that the development and implementation of innovative business models, designed to satisfy our energy needs in a sustainable manner, could play in facilitating a transition to a sustainable energy system. To improve this understanding, this thesis develops an analytical framework that integrates co-evolutionary and business model theories, and applies this framework to analyse the case of the Energy Service Company (ESCo) business model and the wider UK energy system.

The thesis begins by presenting the core characteristics of the ESCo business model and its key variants; its strengths and weaknesses; and the factors that have constrained and enabled the uptake of this sustainable business model. It then examines the coevolutionary relationship the ESCo model shares with the UK energy system to explain not only why the model has struggled to gain traction, compared to the incumbent Energy Utility company (EUCo) model, but also the role the ESCo model could play in a transition to a sustainable UK energy system.

In light of the empirical investigation, the research finds that the development and adoption of the ESCo business model could play a valuable role in facilitating transitions to sustainable energy systems. However, it is likely to struggle to gain traction due to ESCos’ poor fitness with the prevailing selection environment, which can in part be attributed to the causal influence of the unsustainable, incumbent EUCo model. Conversely, worsening ecosystem crises, the introduction of supportive regulation and positive feedbacks associated with the adoption of this model by new and incumbent system actors could help the ESCo model to proliferate and thus, have an important influence on the transition to a sustainable energy system