In the context of the SEBM, the Dubai current energy BM (Chapter 5) is updated as follows:
Table 33 showing only the transition from the Dubai Current Energy Business Model to the Dubai SEBM Business
Model 9 Blocks
Current Energy Business Model Sustainable Energy Business Model
Customer Segment
– Residential, commercial, industrial and public sectors
– Environmentally friendly
customers
Same as current energy BM in addition to: – Solar customers (5/4-star hotels)
Channels – On-line, TVs, Social media, related government websites, payment channels, etc.
– Energy supplied via a national transmission & distribution network
– Support via customer service call centre, metering & billing etc.
Same as Current energy BM in addition to: – Customer service channel to manage
hotels
Customer Relationships
– Impersonal & standardized – Open ended supply agreements
Same as current energy BM in addition to: – Medium term contracts with hotels for
payment of solar premium Value
Proposition
– Fulfil energy needs efficiently – Energy supply in a reliable and
affordable way including solar
energy
Same as current energy BM
Key Activities – Owning and operating
conventional generation supply (EPC model) as well as distribution, and transmission of power
– Partnering with IPPs through SPVs
to own and operate solar plants
Same as current energy BM in addition to: – Managing the Dubai hotel solar
programme
Key Resources
– Financial, technical and legal resources to develop large-scale, centralized generation and distribution infrastructure – Customer facing services i.e.
nationwide metering, billing and customer service network – Access to fossil fuels
– Centralized generation & network technologies
– Financial, commercial, technical
and legal resources to negotiate IPP deals and manage them over time
Same as current energy BM in addition to: – Managing the Dubai hotel solar
programme
Key
Partnerships
– Financial Institutions & Investors – Fuel supply networks
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Business Model 9 Blocks
Current Energy Business Model Sustainable Energy Business Model
– Equipment manufacturers – EPC Contractors (for the build of
gas fired powered plants) – Consultants
– Dubai Supreme Energy Council – Dubai Regulatory and Supervisory
Bureau
– Dubai Carbon Centre for
Excellence
– Private developers (IPPs)
– DTCM – Hotels
Revenue Streams
– Sale of metered units of delivered energy
– Trading of surplus electricity to other emirates in UAE
– Low-carbon financial incentives
(e.g. carbon credits)
– Profits from participation in IPP
Same as current energy BM in addition to: – Solar premium (value to DEWA)
Cost Structure
– Staff and contractors
– Marketing and communication – Operation & maintenance of
infrastructure
– Finance or investment repayments – Technical, financial and legal
consultancy – Metering & billing
– Generation technology and/or wholesale purchase of energy – Fuel (conventional)
– Premises & land generation – Cost of IPP power generation as
stipulated in PPA
Same as current energy BM in addition to: – Cost of managing the Dubai hotel solar
programme
In terms of DEWA’s Value Proposition, this continues to be the same in the SEBM because the value that DEWA brings to its customers continues to be solar energy. DEWA’s current business model already introduces solar energy into Dubai’s energy mix, however the aim of the introduction of the SEBM is to allow DEWA, and by that the Dubai government, to alleviate some of the burden of the solar premium. Hence, although DEWA’s value proposition to its customers (electricity buyers) continues to be the same, there are potential benefits to the new stakeholders involved and to Dubai’s economy.
These potential benefits could include the Dubai government not having to secure subsidies to support the deployment of solar. These funds may then be allocated to various other projects as an example to support the achievement of the overall solar target for Dubai. Additionally, the SEBM could offer a value proposition to DTCM and its customers. DTCM’s goal is to help promote Dubai and increase the influx of tourists as well
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support Dubai towards a green economy. This model could support DTCM to market Dubai as a green destination economy and possibly tap into the green travellers’ customer segment. As for the hotels, their main benefits will come through the commercial benefit associated with each incentive. The SEBM may also nurture communication between both entities and could foster the business relationship. As for DCCE, it would benefit from the increase of solar within Dubai because it makes part of its income through the management and sale of carbon credits.
The Customer Segment of the SEBM are the same residential, commercial, industrial and public sectors and environmentally friendly customers as the Dubai current energy BM, with the addition of 5 and 4-star hotels. These hotels are considered a separate category to DEWA’s customers because they would be served differently. The participating hotels would require certain contractual agreements committing their participation in the model as well as electricity bills that highlight the consumption of solar energy and the premium required.
As mentioned earlier, the value proposition of SEBM goes beyond the typical electricity end users of DEWA, for example this may include green guests who may be encouraged to stay at these hotels in Dubai due to their encouragement of solar energy.
DEWA’s Customer Channels continue to be the same in the SEBM. All the methods used in the current energy BM are still valid in addition to DEWA possibly providing a dedicated customer service channel to manage the
participating hotels. In the overall context of the SEBM, additional customer channels are utilized, such as the marketing channels
that will be used by DTCM to promote the hotels as part of the incentives. DEWA may also leverage its traditional local advertisement channels to promote the Hotels and act as a catalyst to attract local green guests to these hotels.
Customer relationships continue to be the same in the SEBM with the addition of contractual agreements between participating hotels, DTCM and DEWA to ensure flow of payment pertaining to the solar premium and DTCM’s commitment to the incentives. Initially medium-term contracts could be signed with the participating hotels for payment of the solar premium to allow for adjusting the solar tariffs and the percentage of solar up take of each hotel in case of increase of solar capacity or the number of participating hotels. The proposed mechanism here is to have one government entity, in this case DEWA, leading and managing the SEBM. This would facilitate the ease of discussions between the stakeholders.
The main addition to the Key Activities and Key Resources of the SEBM is in the management of the model. From a legal standpoint this includes personnel to negotiate, write and administer the contractual agreements,
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as well as manage renewal of contracts, notices and dealing with potential payment defaults or deferments. It would also require resources to market the programme locally, design the billing format and mode of payment, and liaise with DTCM and other related government entities, such as the Dubai Municipality if it will also offer incentives. Other activities include personnel to support the call centre and manage the digital platform. From a financial stand point, Key Activities and Resources will include managing the overall ins and outs of the cash, fixed and variable costs, account payables and receivables and the overall profitability of the programme.
In the broader context of the SEBM, DTCM and the hotels may require additional activities and resources to assess the success of the incentives and to modify the incentives where possible or suggest new ones. Like any value proposition, there needs to be continuous assessment of the merits of the programme and assurance that it continues to bring in value. DTCM and DEWA will need to make sure that the hotels are satisfied with the value they are receiving in return for the solar premium they are paying (as was learned from the BM literature review 2.9).
The Key Partnerships for DEWA in the SEBM include all of the same partners present in the current energy BM with the addition of DTCM and the participating hotels.
As for the Cost Structure for DEWA the model will impose additional costs such as marketing, communication, technical, financial and legal consultancy. In terms of the hotels, their cost will primarily be the solar premium, whereas DTCM’s cost will be related to the cost of running the incentives.
In the case of the Revenue Streams DEWA is the main beneficiary of the proposed business model due to the revenue stream coming from the solar premium payments from the hotels. As for the hotels, in the broader context of the model, they will acquire both direct and indirect revenue. For example DTCM incentives that include booking of hotel facilities for DTCM or DEWA events, or savings from reduction of licensing fees may be regarded as direct revenues, whereas DTCM advertisement, DEWA’s promotion of the programme, green business recognition, may act as indirect revenues. With respect to carbon credits, the 100 MW plant can obtain carbon credits and bring in additional revenue. More on this topic is covered in the next section.