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Exploring Circular BESS for the Commercial and Industrial Sector: A customer-centric perspective

Schumann, Luca LU (2023) In IIIEE Master Thesis IMEM01 20231
The International Institute for Industrial Environmental Economics
Abstract
In recent years, battery energy storage systems (BESS) have gained prominence as a key technology enabling much needed electricity grid flexibility while simultaneously providing distinct value to its end-users. With the anticipated increase of residual value holding used batteries from mobility applications entering the market, more and more companies are looking to construct BESS offers around these second-life batteries in an attempt to unlock the potential of circular business offers. Aiming to add knowledge that supports the development of more circular BESS offers, this thesis takes a three-step approach exploring what constitutes a feasible circular BESS offer and how digital tools can be used to enable respective customer journeys.... (More)
In recent years, battery energy storage systems (BESS) have gained prominence as a key technology enabling much needed electricity grid flexibility while simultaneously providing distinct value to its end-users. With the anticipated increase of residual value holding used batteries from mobility applications entering the market, more and more companies are looking to construct BESS offers around these second-life batteries in an attempt to unlock the potential of circular business offers. Aiming to add knowledge that supports the development of more circular BESS offers, this thesis takes a three-step approach exploring what constitutes a feasible circular BESS offer and how digital tools can be used to enable respective customer journeys. In an initial step, current circularity practices applied from active BESS suppliers were mapped, reviewing current BESS offers and comparing them to a circularity strategy framework. A second step comprised the mapping of customer preferences towards a hypothetical more
circular BESS offer through interviews, followed by a process of mapping digital technologies that enable respective customer journeys. It was found that BESS suppliers, irrespective of their focus on circularity, provide a high degree of servitisation. Customer interviews highlighted the importance of third-party actors in delivering circular BESS offers. Companies should concentrate on offering product-centric product service systems (PSSs) as customers are largely not ready for business models altering traditional ownership structures. Moreover, governmental funding mechanisms are not adapted to support use-centric PSSs. Establishing local presence through collaborations with third party actors is expected to yield significant advantages for establishing customer relationships and interfaces to these partners along a high performing energy management system, the controlling and optimisation unit of the BESS, are essential enablers of the respective customer journeys. Given the far reaching servitisation degree of linear BESS offers, customer journeys of circular ones were found to not differentiate much from the linear ones. Practitioners should focus on using second-life batteries, providing narrowing and slowing services along clear contractual relationships that enable reverse logistics and therefore closing the resource loop in the end-of-life stage to reap the benefits of circular offers. Further research is needed to investigate hindering factors that foster scepticism towards use-centric PSSs and to develop adequate government support mechanisms to encourage such business models. (Less)
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author
Schumann, Luca LU
supervisor
organization
course
IMEM01 20231
year
type
H2 - Master's Degree (Two Years)
subject
keywords
BESS, Circular Economy, Circularity strategies, Customer journey, Digital enabler
publication/series
IIIEE Master Thesis
report number
2023:16
ISSN
1401-9191
language
English
id
9133821
date added to LUP
2023-08-10 13:01:20
date last changed
2023-08-10 13:01:20
@misc{9133821,
  abstract     = {{In recent years, battery energy storage systems (BESS) have gained prominence as a key technology enabling much needed electricity grid flexibility while simultaneously providing distinct value to its end-users. With the anticipated increase of residual value holding used batteries from mobility applications entering the market, more and more companies are looking to construct BESS offers around these second-life batteries in an attempt to unlock the potential of circular business offers. Aiming to add knowledge that supports the development of more circular BESS offers, this thesis takes a three-step approach exploring what constitutes a feasible circular BESS offer and how digital tools can be used to enable respective customer journeys. In an initial step, current circularity practices applied from active BESS suppliers were mapped, reviewing current BESS offers and comparing them to a circularity strategy framework. A second step comprised the mapping of customer preferences towards a hypothetical more
circular BESS offer through interviews, followed by a process of mapping digital technologies that enable respective customer journeys. It was found that BESS suppliers, irrespective of their focus on circularity, provide a high degree of servitisation. Customer interviews highlighted the importance of third-party actors in delivering circular BESS offers. Companies should concentrate on offering product-centric product service systems (PSSs) as customers are largely not ready for business models altering traditional ownership structures. Moreover, governmental funding mechanisms are not adapted to support use-centric PSSs. Establishing local presence through collaborations with third party actors is expected to yield significant advantages for establishing customer relationships and interfaces to these partners along a high performing energy management system, the controlling and optimisation unit of the BESS, are essential enablers of the respective customer journeys. Given the far reaching servitisation degree of linear BESS offers, customer journeys of circular ones were found to not differentiate much from the linear ones. Practitioners should focus on using second-life batteries, providing narrowing and slowing services along clear contractual relationships that enable reverse logistics and therefore closing the resource loop in the end-of-life stage to reap the benefits of circular offers. Further research is needed to investigate hindering factors that foster scepticism towards use-centric PSSs and to develop adequate government support mechanisms to encourage such business models.}},
  author       = {{Schumann, Luca}},
  issn         = {{1401-9191}},
  language     = {{eng}},
  note         = {{Student Paper}},
  series       = {{IIIEE Master Thesis}},
  title        = {{Exploring Circular BESS for the Commercial and Industrial Sector: A customer-centric perspective}},
  year         = {{2023}},
}