Sustainable business models for wind and solar energy in

Romania

Maria Alexandra NICHIFOR

Bucharest University of Economic Studies, Bucharest, Romania

Abstract. Renewable energy has become a crucial element for the business environment as
the need for new energy resources and the degree of climate change are increasing. As
developed economies strive towards greater progress, sustainable business models are of the
essence in order to maintain a balance between the triple bottom line: people, planet and
profit. In recent years, European Union countries have installed important capacities of
renewable energy, especially wind and solar energy to achieve this purpose. The objective of
this article is to make a comparative study between the current sustainable business models
implemented in companies that are active in the wind and solar energy sector in Romania.
Both sectors underwent tremendous changes in the last two years due to changing support
schemes which have had a significant influence on the mechanism of the renewable energy
market, as well as on its development. Using the classical Delphi method, based on
questionnaires and interviews with experts in the fields of wind and solar energy, this paper
offers an overview of the sustainable business models of wind and solar energy companies,
both sectors opting for the alternative of selling electricity to trading companies as a main
source of revenue until 2013 and as the main future trend until 2020. Furthermore, the
participating wind energy companies noted a pessimistic outlook of future investments due
to legal instability that made them to reduce their projects in comparison to PV investments,
which are expected to continue. The subject of the article is of interest to scientific literature
because sustainable business models in wind and photovoltaic energy have been scarcely
researched in previous articles and are essential in understanding the activity of the
companies in these two fields of renewable energy.

Keywords: business model, sustainability, wind energy, solar energy, wind farm turbine.

Please cite the article as follows: Nichifor, M.A. (2015), “Sustainable business models for
wind and solar energy in Romania”, Management & Marketing. Challenges for the
Knowledge Society, Vol. 10, No. 1, pp. 52‐60, DOI: 10.1515/mmcks‐2015‐0004.

Introduction
There is a growing focus on business models in the renewable energy literature
and practice, and on how to use this concept practically in both business and
scientific fields. While the development of renewable energy has become one of the
main goals of the Member States of the European Union, the ability to create and
adapt one’s business model in an ever dynamic and competitive environment is a
key point in the survival of companies in today’s service markets. Business models
play an important role in the development of successful companies, including
those in the green energy field.
Renewable energy production accounted for 14.1% of the gross final
energy consumption in 2012. Further progress is expected until the 2020 objective
of the European Union will be achieved according to Eurostat. The 2020 objective
imposes a 20% share of renewable energy in the gross final energy consumption Correspondence:
for all members of the European Union and 10% of transport final energy Maria Nichifor
maria_nichifor@
consumption. The two sectors of renewable energy, wind and solar, that are hotmail.com

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investigated in the present article are two of the fastest growing sectors of MMCKS
renewable energy in the European Union. Although these two fields have grown
exponentially in the last five years in Romania and in other European states, the 52
main characteristics of their specific business models have been scarcely
investigated in the scientific literature. The activities of wind and solar energy
companies have been often debated in political and economic discussions without
revealing the strategic choices that lie behind the financial achievements and
business models of these firms.
The main objective of this article is to investigate the current business
models in wind and solar energy companies from Romania. These models contain
specific components and revenue strategies depending on the companies’ goals,
organizational culture and external environment. The second argument of this
study is to define a path for future scientific research towards the knowledge
regarding specific wind and solar energy business models until 2020.
The present study was based on three assumptions that take into
consideration the current legal and renewable energy context:
H1: The most preferred business model strategy in the case of wind and
solar energy experts is selling energy to a trading company. This assumption was
made based on the fact that trading companies are more willing to negotiate the
selling conditions than the traditional regional grid operators.
H2: The future trends of wind energy projects in Romania until 2020 will be
on‐grid, on‐shore projects. This assumption was made under consideration of the
geographical and climate conditions of Romania, which do not favour the
development of offshore wind parks. The on‐grid option was chosen due to the fact
that on‐grid wind parks receive green certificates for the produced electricity.
H3: The future trends of preferred business strategies in the fields of wind
and solar energy in Romania will be selling energy to trading companies and to
regional grid operators. The same reason as in the first hypothesis was taken into
consideration for the option of selling electricity to trading companies, while
regional grid operators will remain an important partner of renewable energy
companies.

Business models in the renewable energy field
Business models are the foundation for successful companies. The importance of
business models for the companies’ activities is also shown by the fact that they
can be the subject of patent as Hedman and Kalling (2003) emphasize. In the last
decade different approaches regarding the components of a company’s business
model were presented in numerous studies (Baden‐Fullen, 2010; Johnson et al.,
2008; Osterwalder and Pigneur, 2010; Vives and Svejenova, 2011), while the same
authors affirmed the importance of value creation as the main element of a
business model.

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MMCKS Baden‐Fullen and Morgan (2010) state that a business model “provides a
set of generic level descriptors of how a firm organises itself to create and
53 distribute value in a profitable manner” (p. 157). Furthermore, Nair et al. (2013)
mention core logic, belief systems, cognitive environment and competencies as
structural components of business models which must interact effectively and
create value from resources. Other authors have illustrated schemes of the
fundamental business model elements. Johnson et al. (2008) summarize similar
elements of a business model, as shown in Figure 1.

Figure 1: Elements of a successful business model

Source: Johnson et al. (2008).

Further studies looking to conceptualize the elements of a sustainable
model have been performed by other authors, such as Stubbs and Cocklin (2008),
who emphasize the importance of treating nature like a stakeholder and the
necessity of leaving the environment in a better state than the one in which it was
found through the minimized use of resources or the recycling of resources. Todd
(2009) underlines the struggle of corporations today between maintaining a
balance between shareholder value and ensuring environmental quality.
In the renewable energy field, specific business models have emerged
besides the traditional energy model. Nasti and Rask (2012) have used the nine
building blocks scheme of Osterwalder and Pigneur (2010) and have \adapted it
for the renewable energy field, as shown in Figure 2.

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Key partners Key activities Value proposition Customer MMCKS
relationship
‐ Project developers ‐ Production of
‐ Providers of 54
‐ Research  traditional and traditional and ‐ Automated services
institutions renewable energy renewable energy
- Government



Customer segments Key resources Channels Cost structure

‐ Households ‐ Physical, financial ‐ Sales force ‐ Buy and produce
‐ Businesses assets energy
‐ Industry ‐ Technology ‐ Infrastructure
building and
maintenance

Revenue streams

‐ Sales of traditional
and renewable
energy




Figure 2: Business model scheme applied to the renewable energy field
Source: Nasti and Rask (2012).

Richter (2011) classifies the specific business models in the renewable
energy fields according to three types of cooperation: cooperation with suppliers,
cooperation with development companies and cooperation with other utilities. The
first two types of cooperation allow the utility to concentrate on its core activities,
while suppliers and development companies manage a part of their business. The
cooperation among utilities allows them to develop large projects through the
resources invested during the partnership period. In a different study (Richter,
2012), the same author specifies another typology of renewable energy business
models that are frequently encountered in the European Union in the current
context: the customer‐side business model and the utility‐side business model. The
customer‐side business model is practically a direct business between the
renewable energy utility and the client. Renewable energy systems are installed on
the customer’s property by the utility. The utility gains revenues from services
offered to the customer and from the return on assets (Frantzis et al., 2008). The
customer benefits from the renewable energy assets, which they could hardly
afford otherwise. The utility‐side business model is used in the case of large
projects and is similar to the common energy model. The produced electricity is
fed into the grid and there is no direct relationship to the end‐customer. Certain
studies have researched other elements of sustainable business models in the
renewable energy, such as in the case of solar energy, the ownership either by the
solar energy company or the local energy supplier and the type of photovoltaic

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MMCKS parks, with implications for the decision making rights, as well as for the revenue
sources (Tanţău et al., 2013; Tanţău, 2014).
55
Research methodology
The purpose of the present article is to offer an overview of the most frequently
implemented business models in wind and photovoltaic Romanian energy in 2013,
as well as of the estimated future trends until 2020 in the two sectors of research.
For this study, the classical form of the Delphi method was used in order to ensure
a structured planning of the questioning phases. According to Hiltunen’s (2013)
Delphi model, the practical part of the present research was divided into ten
phases as follows: the selection of the research topic, the questionnaire
preparation based on the consultancy of university and renewable energy experts,
selection of the participating experts, the first phase of interviews with the experts,
the analysis of the results, informing the experts on the obtained results, the
second phase of interviews with the experts, the analysis of the results, the
interpretation and summary of results, feedback on the experts regarding the final
results of the interviews. The research period was extended from the 1st of May
2013 until the 30th of March 2014.
The study was conducted based on a sample of 51 experts from the two
fields (26 experts in the wind energy field and 25 experts in the solar energy field).
There were a total of 22 questions included in the research questionnaires that
were offered in the two phases of interviews with the experts. The first phase of
interviews inquired in regards to the current wind and solar energy business
models. The second phase of interviews referred to the expected future trends of
business models in Romania until 2020.
In the first phase of the interviews issues such as the current elements of
business models in wind and solar energy were addressed. These elements
included the type of wind parks and PV utilities used by the participating
companies and strategies to gain revenues and ownership. The second round of
interviews focused on the trends expected in business models in the two analyzed
sectors such as selling strategies and the perception of the legal environment in
Romania as a factor of influence for the investment context of wind and solar
companies.
Regarding the size of the experts’ companies, the majority of the companies
had a maximum of 50 employees; respectively, 46% of the wind energy companies
and 60% of the solar energy firms. In the case of wind energy companies, a
significant rate of large scale firms with more than 1000 employees (19%) have
contributed to the study and 15% had between 150 and 1000 employees. The rest
of the companies had a size of 50‐150 employees. In the photovoltaic field, 32% of
the interviewed firms had 50‐150 employees and only 2 companies had more than
500 employees.

Findings and analysis
The most important finding of the study refers to the preferred business model
strategies that were similar in the case of wind and solar energy fields. The

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strategy of “selling electricity to a trading company (different than the regional MMCKS
grid operator)” was mentioned by the almost half of the wind energy specialists
(42%) and photovoltaic energy experts (48%). The experts chose the alternative of 56
having a trading company as a business partner instead of the regional grid
operator due to the flexibility of trading firms to negotiate the electricity price and
thus gain a better contract. A second option was the strategy of “selling electricity
to the regional grid operator” which was mentioned by 30% of the wind energy
experts and 17% of the solar energy experts. Furthermore, the wind energy
experts affirmed that the wind plant operators also sell green certificates to
trading companies (27%) and to regional grid operators (23%), while the strategy
of “selling electricity to a third party consumer” received 19% of the experts’
confirmations. The majority of the interviewed specialists were involved in more
than one renewable energy projects and declared that they have used multiple
strategies simultaneously.
Another important finding of the study revealed that there are only on‐
shore wind energy plants in Romania and no off‐shore wind energy plants due to
the lack of convenient climate conditions and cost efficiency. A vast majority of the
wind energy experts also stated they owned on grid wind farm turbines (93%), as
shown in Figure 3.
The second part of the interviews revealed that the most popular business
model strategy currently implemented in wind and solar energy is also the main
estimated future trend until 2020. All experts in the wind energy field described at
least two types of business models as future trends. As shown in Figure 4 and
Table 1, 65% of wind energy operators and 52% of photovoltaic energy companies
mentioned the trend of selling energy to trading companies as the main strategy
until 2020.

Figure 3: Types of wind farm (turbines) in Romania 2013 as described by the wind energy
experts
Source: Author’s own research results.

The option of selling energy to the regional grid operator was the second
preferred alternative in the current context by wind energy companies (53%),
while the third preference was to sell GCs to the trading companies.

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MMCKS
57

Figure 4: Future trends in business models of photovoltaic energy companies in Romania
until 2020
Source: Author’s own research results.

An equal share (30%) of the wind energy experts choices was selling either
green certificates to regional grid operators or energy to third party consumers. In
the case of solar energy, the second choice of the photovoltaic energy experts was
to sell electricity to the local grid operator (16%), while 12% stated the PV plant
was owned and operated by their company with energy sales to a third party. 8%
of the photovoltaic plants were owned and operated by local energy suppliers. The
rest of the respondents mentioned other similar alternatives of photovoltaic
plants.
Most of the experts described the future trends in wind energy projects
until 2020 as on‐shore and on‐grid projects. Small‐scale projects with a maximum
of 10 MW were considered as the most efficient by 48% of the interviewed
specialists. The small‐scale projects were described as safer against financial and
regulatory risk.

Table 1. Future trends in business models in the wind energy field until 2020
Wind energy operators will rather use the following strategies until 2020:
‐sell electricity to trading companies 65%
‐sell electricity to the regional grid operator 53%
‐sell green certificates (GCs) to trading companies 38%
‐sell electricity to third party consumers 30%
‐sell electricity GCs to regional grid operators 30%
Source: Author’s own research results.

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 The last part of the research described the influence of the legal MMCKS
environment in Romania on the two renewable energy fields. A lack of reliability of
the Romanian renewable energy environment could be observed and was 58
explained by the experts through the cuts in the support scheme that occured on
the 1st of July 2013. There are further concerns regarding the lack of regulatory
predictability. 62% of the wind energy respondents stated that the legal changes in
July 2013 reduced the number of projects they were involved in. Additionally, 87%
of the same respondents also described another consequence: stopping their
company’s ongoing projects. Another 27% of the companies focused on other
countries for future projects. In the photovoltaic field, the majority of the
respondents still perceived investment opportunities (65%) while only 35%
described the field as uncertain and lacking opportunities.

Conclusions
All three hypothesis of the paper were confirmed by the empirical inquiry. Thus,
wind and solar energy companies prefer to sell electricity to a trading company
due to the extended price negotiation possibilities which are not provided by the
regional grid suppliers. The second assumption that the future trends in wind
energy projects until 2020 are expected to be on‐shore and on‐grid wind farm
turbines was also supported by the respondents. The third hypothesis revealed
that both wind and solar energy respondents agree on the fact that the strategies
of selling electricity to trading companies and to the regional/local grid operators
will be the main future trends in the two sectors.
The results of the comparative study of business models in wind and solar
energy indicate clear directions for the two fields until 2020. These directions can
be justified not only by the internal objectives of the company, but also by the
influence of the legal context in Romania. Limitations of the current study include
the participating sample of experts; as well as the permanently changing
regulatory standards which in turn cause changes in the renewable energy
industry. The study can be further expanded through the involvement of more
participants from the two sectors of renewable energy, potentially also from
different countries in the next years.
Though the last year brought a significant growth of the installed capacities
in wind and solar energy in Romania, the changing of the renewable energy
supporting scheme on the 1st of July 2013 represented the first barrier towards
the expansion of further investments in the field. As a consequence, 2014 is
expected to be a year of standstill for the solar energy field and a year of
diminished investments in the wind energy field. The future research agenda
regarding the business models in wind and solar energy includes the observation
of their future development as a result of the internal and external influence
factors of the companies, an applicable subject to both scientific and business
theory. Romania is currently at a critical point in the field of renewable energy, but
it will remain an important actor of the European energy market due to its
potential of expanding renewable energy capacities.

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MMCKS Acknowledgements
This work was cofinanced from the European Social Fund through Sectoral
59 Operational Programme Human Resources Development 2007‐2013, project
number POSDRU/159/1.5/S/142115 „Performance and excellence in doctoral and
postdoctoral research in Romanian economics science domain”.

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