business models within the waste-to-energy industry445059/fulltext01.pdf · business models within...

Business Models within the Waste-To-Energy Industry An investigation of the methods used to create, capture, and deliver value; and the influence that

stakeholders have upon a firm’s business model

Authors: Krister Svensson

Joel Jern

Tutors: Veronica Gustafsson

Magdalena Markowska

Jönköping 05-23-2011

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Acknowledgements

We would like to thank our advisor Veronica Gustafsson for her incredible support and inspiration throughout the semester. Her advice and guidance has been an important element to the success of this thesis, and we are greatly appreciative for all that she has done for us. Also, we would like to thank Magdalena Markowska for her motivation and assistance in helping us to write the best thesis possible. We would also like to thank all the employees from Jönköping Energi AB (Ulrika Gotthardsson, Fridolf Eskilsson), Statkraft Varme AS (Arvid Wisløff ), Vestforbrænding (Marcus Müller), Jönköping Rådus AB (Björn Söderlundh), Trondheim Municipality (Hans-Einar Lundli), and Copenhagen Municipality (Søren Nielsen) who volunteered to be a part of this investigation. Their insight and perspective was vital to the success of this thesis, and we are very thankful for their time and help. Finally, we would like to thank our family and friends for their tremendous support, and we are deeply grateful for having them in our lives. ______________________________ ___________________________ Krister Svensson Joel Jern

Jönköping International Business School

2011-05-23

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Master Thesis within Business Administration

Title: Business Models within the Waste-To-Energy Industry Authors: Svensson Krister; Jern, Joel Tutors: Gustavsson, Veronica; Markowska Magdalena Date: Jönköping, May 23rd 2011 Keywords: Business Models, Waste-To-Energy, Stakeholders, Institutional Theory

________________________________________________

Abstract

Background: Waste-to-energy is currently at the forefront of clean technologies. It consists of

the burning of different types of wastes (solid, liquid, gaseous) that provide heat and electricity. With high efficiency levels in energy production (80-90%) and low flue gas emissions, this type of energy production has quickly spread throughout Europe. In addition, laws created by both the EU and national governments have created new agendas regarding landfill and waste disposal.

Problem: We have identified three different problems that currently exist: (1) the lack of

academic literature which explores specifically business models within the renewable energy industry and the potential that business models possess in exploiting the opportunity within the market place; (2) which methods are effective within a business model in achieving the value that a firm wishes to create, capture, and deliver; (3) current academic literature does not provide enough understanding of the influences and pressures that stakeholders place upon shaping a firm’s current/potential business model.

Purpose: The purpose of this investigation is to examine the business models used by

three different waste-to-energy firms in Denmark, Norway, and Sweden and to identify the methods used to create, capture and deliver value. Moreover, we aim to identify and investigate the stakeholders within the waste-to-energy industry of these three companies with the goal of explaining the influence and pressures they place upon the firm’s business model through the use of institutional theory.

Method: Qualitative study done through multiple case studies Conclusion: The three waste-to-energy firms place greater emphasis upon the method of

industry specific business model design. In addition, the firms are greatly influenced by stakeholders through coercive and normative pressures.

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Table of Contents

1. Introduction ........................................................................................................................ 7

1.2 Problem ........................................................................................................................ 7

1.3 Purpose ......................................................................................................................... 8

1.4 Research Questions ....................................................................................................... 8

1.5 Perspective .................................................................................................................... 9

1.6 Definitions .................................................................................................................... 9

2. Frame of Reference............................................................................................................. 9

2.1 Introduction .................................................................................................................. 9

2.2 Value Creation, Capture, and Delivery ........................................................................ 13

2.2.1 Value Creation ..................................................................................................... 13

2.2.2 Value Capture ...................................................................................................... 14

2.2.3 Value Delivery ..................................................................................................... 15

2.3 Business Model Reinvention, Adaptation, and Innovation ........................................... 15

2.4 Strategic Management of Business Models ................................................................. 16

2.5 Industry Specific Business Model Design ................................................................... 17

2.6 Stakeholder theory as a tool for understanding the power balance and relationships within Business Models .................................................................................................... 17

2.7 Institutional Isomorphism and its ability to explain the relationship between stakeholders and a firm’s business model. ......................................................................... 18

3. Methodology .................................................................................................................... 20

3.1 Research approach ...................................................................................................... 20

3.1.1 Qualitative research .............................................................................................. 20

3.1.2 Research approach choice .................................................................................... 21

3.2 Research strategy ........................................................................................................ 21

3.2.1 The Case study approach ...................................................................................... 21

3.3 Data collection method ............................................................................................... 22

3.3.1 Primary vs. secondary data ................................................................................... 22

3.3.2 Preferred data collection method when conducting Case studies ........................... 23

3.4 Data analysis method .................................................................................................. 26

3.5 Thesis trustworthiness ................................................................................................. 26

3.5.1 Validity ................................................................................................................ 26

3.5.2 Reliability ............................................................................................................ 27

4. Results .............................................................................................................................. 27

4.1 Case Study – Jönköping Energi AB ............................................................................ 28

4.1.1 Interview with Jönköping Energi AB.................................................................... 28

4.1.2 Interview with Jönköping Municipality (Jönköping Rådus AB) ............................ 32

4.2 Case Study – Statkraft Varme AS ............................................................................... 34

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4.2.1 Interview with Statkraft Varme AS ...................................................................... 34

4.2.2 Interview with Trondheim Municipality ............................................................... 37

4.3 Case Study – Vestforbrænding .................................................................................... 38

4.3.1 Interview with Vestforbrænding ........................................................................... 39

4.3.2 Interview with Copenhagen Municipality ............................................................. 42

5. Analysis ............................................................................................................................ 43

5.1 – Jonkoping Energi AB ............................................................................................... 43

5.1.1 Value Creation, Capture, and Delivery at Jönköping Energi AB ........................... 43

5.1.2 Jönköping Energi AB’s Business Model Reinvention, Adaptation, and Innovation ..................................................................................................................................... 44

5.1.3 Strategic Management of Business Models at Jönköping Energi AB .................... 45

5.1.4 Jönköping Energi AB’s Industry Specific Business Model Design ....................... 46

5.1.5 Jönköping Energi AB’s Stakeholders ................................................................... 47

5.1.6 Understanding Jönköping Energi AB’s stakeholder relationships through Institutional Isomorphism ............................................................................................. 48

5.2 Statkraft Varme AS ..................................................................................................... 48

5.2.1 Value Creation, Capture, and Delivery at Statkraft Varme AS .............................. 48

5.2.2 Statkraft Varme AS Business Model Reinvention, Adaptation and Innovation ..... 50

5.2.3 Statkraft Varme AS Strategic Management of their Business Model..................... 50

5.2.4 Statkraft Varme AS Industry Specific Business Model Design ............................. 51

5.2.5 Statkraft Varme AS Stakeholders ......................................................................... 51

5.2.6 Understanding Statkraft Varme AS stakeholders though Institutional Theory ....... 52

5.3 – Vestforbrænding ...................................................................................................... 52

5.3.1 Value Creation, Capture, and Delivery ................................................................. 52

5.3.2 Vestforbrænding’s Business Model Reinvention, Adaptation, and Innovation ...... 53

5.3.4 Vestforbrænding’s Strategic Management of Business Model .............................. 54

5.3.5 Vestforbrænding’s Industry Specific Business Model Design ............................... 54

5.3.6 Vestforbrænding’s Stakeholders ........................................................................... 55

5.3.7 Understanding Vestforbrænding’s stakeholders through Institutional Theory ....... 55

6. Discussion ........................................................................................................................ 56

7. Further Research ............................................................................................................... 57

8. References ........................................................................................................................ 58

9. Appendix .......................................................................................................................... 62

Appendix 1. - Interview guide for Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS ......................................................................................................................... 62

Appendix 2 – Interview guide for municipalities of Jönköping, Copenhagen and Trondheim ......................................................................................................................................... 66

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1. Introduction

Clean energy technologies are an important issue for the future. As outlined by Pernick and Wilder (2008, p.2) “Clean tech is bringing unprecedented opportunities for wealth creation, high-growth career development, and innovative solutions to a range of global problems”. Clean technologies have become an important strategy to be able to guarantee economic competitiveness in the future (Pernick and Wilder, 2008). Pernick and Wilder (2008, p.2) define clean technology as “any product, service, or process that delivers value using limited or zero nonrenewable resources and/or creates significantly less waste than conventional offerings.” Waste-To-Energy is one of these clean technologies. The technology behind Waste-To-Energy produces a combination of heat and power. In combined heat and power plants, electricity and heat are generated at simultaneously. This is an easy and energy efficient way to incinerate different kinds of waste (fuels); solid, liquid and gaseous. Most plants built today are using some sort of solid fuel, and waste is one of them. But regardless of what fuel they use, these plants are far more efficient than traditional power plants and they do it with improved environmental performance as well. (Silveira, 2001) In a conventional condensing steam power plant, the steam is condensed after it has expanded through the steam turbine. This process leads to almost a 70% of the primal thermal energy being lost. The electricity efficiency rate therefore only reaches around 30-40%. However, in today’s combined heat and power plants, the efficiency level is around 80-90%. This is because the technology has the capability of recovering much of the heat that comes from the steam (Silveira, 2001). The general principle behind waste-to-energy can be described in a simple form: combined heat and power plant can be seen as an enormous pressure cooker (Svensk fjärrvärme, 2011). The combustion takes place in a steam boiler and the heat produced is transferred to water in tubes inside the boiler. This makes the water boil and generate steam. The steam then drives turbines, which in turn drives generators that create electricity. The remaining steam is used to heat up water that is used as district heating to heat our homes (Jönköping Energi AB, 2011a). Europe is leading the way within the Waste-To-Energy sector, especially in Denmark, Sweden and Germany (Witkin, 2011). Today about 400 waste-to-energy facilities are operating around Europe, with 29 alone operating in Denmark (Lott and Wogan, 2010). One of the major reasons for why Europe is so prominent in this Waste-To-Energy field is because of the EU regulations placed upon its member states regarding landfill issues (one of these laws severely restricts the creation of new landfill sites in countries). These countries also have binding commitments to reduce their carbon dioxide emissions by 2012 and the EU have set up climate targets for year 2020. Overall, many of these reasons have accelerated the development Waste-To-Energy throughout Europe (Rosenthal, 2010).

1.2 Problem

The renewable energy industry offers great potential to a variety of businesses that seek to establish a strong position within the marketplace. With a growing concern surrounding the current global economic and political issues on the use of fossil fuels and nuclear energy, the potential that renewable energy has to offer has been thrust into the spotlight. This potential includes clean and sustainable energy sources, a decrease in the release of harmful emissions

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and global warming, and most importantly great business opportunities for investors, established firms, and start-ups. These business opportunities within renewable energy give rise to the question: how can a firm successfully develop a product and/or service that can bring about this shift from fossil fuels to clean energy? One factor can be the development of a successful business model. Business models are currently being used in a variety of ways throughout numerous industries, e.g. e-business, technology, aviation, etc. However, there are a range of issues when it comes to business models (both from a theoretical and practical perspective) that have yet to be clarified or even investigated. These include (1) the lack of academic literature which explores specifically business models within the renewable energy industry and the potential that business models possess in exploiting the opportunity within the market place, (2) which methods1 are effective within a business model in achieving the value that a firm wishes to create, capture, and deliver, and (3) current academic literature does not provide enough understanding of the influences and pressures that stakeholders place upon shaping a firm’s current/potential business model. Therefore we chose to investigate business models within the waste-to-energy industry in Sweden, Norway, and Denmark because of the industry’s current successes; its potential for helping to identify factors for the development of effective and sustainable business models; and for its ability to give a deeper understanding to how stakeholders may influence a business model because of the industry’s strong ties to their local municipalities, governments, policy makers, customers, etc.

1.3 Purpose

The purpose of this investigation is to examine the business models used by three different waste-to-energy firms in Denmark, Norway, and Sweden and to identify the methods used to create, capture and deliver value. Moreover, we aim to identify and investigate the stakeholders within the waste-to-energy industry of these three companies with the goal of explaining the influence and pressures they place upon the firm’s business model through the use of institutional theory.

1.4 Research Questions

From this purpose we have developed the following questions to help specify our investigation:

• How do firms in the waste-to-energy industry in Sweden, Norway, and Denmark

define value?

• What method(s) in their business model do waste-to-energy firms use in Sweden,

Norway, and Denmark in creating value?

1 Definition of method: “(1) : a systematic procedure, technique, or mode of inquiry employed by or proper to a particular discipline or art (2) : a systematic plan followed in presenting material for instruction” (Merriam-Webster Dictionary, 2011)

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Norway, and Denmark in capturing value?


Norway, and Denmark in delivering value to customers?

• Who are the stakeholders within the waste-to-energy firms in Sweden, Norway, and

Denmark?

• What type of relationship do the stakeholders have to the waste-to energy firms in

Sweden, Norway, and Denmark?

• How do these relationships with stakeholders influence the business models of waste-

to-energy firms in Sweden, Norway, and Denmark?

1.5 Perspective

The problem will be determined from the energy producer perspective by working with specific waste-to-energy firms in Sweden, Norway, and Denmark. Also, the perspective of one stakeholder (the municipalities that the waste-to-energy firms operate within) will be investigated.

1.6 Definitions

Institutional Isomorphism

• Based upon previous work from within the social science field by Hawley (1968),

Powell and DiMaggio (1991, p. 66) define isomorphism as “a constraining process

that forces one unit in a population to resemble other units that face the same set of

environmental conditions”.

• Powell and DiMaggio recognize two types of isomorphism; competitive and

institutional. The authors focus more upon the institutional aspect because of its ability

to portray a better picture of the modern world of organizations (Powell and

DiMaggio, 1991). Where competitive isomorphism may focus more upon the

gathering of customers and resources, institutional isomorphism also takes into

account “political power and institutional legitimacy, for social as well as economic

fitness”, and is considered useful for “understanding the politics and ceremony that

pervade much of the modern organizational life” (Powell and DiMaggio, 1991, p. 66).

2. Frame of Reference

2.1 Introduction

Current business model theory offers an overwhelming amount of variety and perspectives. With previous researchers having tailored their definitions of business models to fit their studies (with only a few overlapping in certain areas) there has yet to be developed an accepted theoretical foundation that would allow for the development of further research (Zott et al. 2010). Moreover, this lack of consensus among research has given rise to multiple interpretations and perspectives (Zott et al. 2010). Examples include the business model being

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described as a statement, description, representation, architecture, a conceptual tool or model, a structural template, a method, a pattern, and a set (Zott et al. 2010). However, throughout this investigation we have embraced this diversity in perceptions and instead see all major works from the past decade contributing a fundamental perspective that is important in the understanding and creation of business models. From our theoretical research, we believe that the primary function of any firm’s business model is centered upon the notion of value creation, value capture, and the delivery of that value. This idea is illustrated in Figure 3.1 (below). It is worth noting that value delivery is deeply intertwined within the way a firm creates and captures value (e.g. a firm can create value in the way it delivers it product). However, for the sake of a clearer empirical investigation, we define it as a separate unit of analysis in the model. The various functions of the business model all interrelate, with any change in one function affecting the other i.e. if a firm changes in the way that they create value, this in turn will affect the way the firm delivers and captures value, and vice versa.

Figure 3.1 - Primary functions (A) of a business model (B.M.)

However, the methods used by a firm when creating, capturing, or delivering value is where current research becomes unclear in which technique is the most appropriate and effective, i.e. does a firm achieve value creation through the use of strategy, innovation, reinvention, etc.? Based on this ambiguity, we chose to adopt part of the definition of a business model created by Morris et al. (2005, p. 727), agreeing that part of a business model consists of “an interrelated set of decision variables” in achieving the desired value. We see these interrelated decision variables as different methods (techniques, approaches, etc.) firms may use (alone or unison) in achieving value creation, capture, and delivery. Based on previous academic research within business models, we believe that these methods within a firm’s business model include (1) business model reinvention, adaptation and innovation; (2) strategic management of business models; and (3) industry specific business model design (in this case, the waste-to-energy industry). A unique combination of these methods could help to achieve a sustainable competitive advantage in a firm’s value creation, capture, and delivery.

VALUE

CREATION

(A)

VALUE

CAPTURE

(A)

VALUE

DELIVERY

(A)

BUSINESS MODEL

(B.M)

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Additionally, these three methods are similar to the core functions of the business model (creation, capture, and delivery of value) in the sense that they all interrelate and share similar qualities. Identifying them as three separate units helps bring clarity to the empirical investigation. Building upon Figure 3.1, Figure 3.2 (below) illustrates the second step in how we interpret the function of a business model:

Figure 2 – Secondary function of a business model; the method(s) a firm may use in achieving

the primary function (noted as “A”) A firm may create different versions of a business model depending on the combinations of methods used. Moreover, these combinatory methods may be created, in part, to the type of value the firm is trying to create, capture and deliver. Based upon our research of business models, we see value being primarily defined in relation to the stakeholder it is being created for. For example, if a start-up firm has received investments from venture capitalists; the start-up’s initial business model will be tailored to creating returns for those investors. From this, the value created from the business model is the returns the start-up generates for the venture firm. While we do recognize that value is relative to the firm, we see that the stakeholder(s) of that firm having the greatest capability in shaping a business model and the overall value that the firm plans to create, capture, and deliver. This notion is built upon Zott et al. (2010, p.17) understanding of stakeholders, who acknowledge that “the total value created is the value created for all business model stakeholders”. Overall, we believe value is defined through the power balance established between the stakeholder(s) and the firm’s business model. It is here that we also chose to investigate this ‘power-balance’ further; the relationship between the stakeholder and the business model.

A A

A

BUSINESS MODEL

REINVENTION, ADAPTATION,

& INNOVATION (B)

STRATEGIC MANAGEMENT OF

BUSINESS MODELS (B)

INDUSTRCY SPECIFIC

BUSINESS MODEL DESIGN

(B)

B.M

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While business models are very operational and idiosyncratic, they are also very much influenced by the stakeholder and their relationship to the firm. A business model will always be influenced (knowingly or unknowingly) by a stakeholder, whether it is a customer, investor, municipality, government, etc. As outlined in section 3.5 of this chapter, this is the case within the renewable energy industry. Based upon the previous models (figures 1 and 2) we attempt to develop it further by illustrating the stakeholder’s potential influence upon the firm’s business model (Figure 3.3). Figure 3.3 illustrates the identification of stakeholders that influence the business model. Moreover, the arrows between the stakeholder and the business model illustrate whether the relationship is one-way (stakeholder influences business model, yet is not influenced by it) or two-way (stakeholder influences business model, and is influence by it).

Figure 3.3 – Identification of stakeholders (C) that influence the business model (B and A)

Based upon our standpoint of how stakeholders can influence (and be influenced by) a firm’s business model, we chose to investigate this phenomena further by examining stakeholder theory. Current literature within business models does acknowledge the existence of stakeholders in relation to a firm’s business model (Voelpel et al. 2004; Johnson, 2010; Teece,

C C

C

BM

A

B

A

A

B

B

C

C

C

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2010) yet there is currently a lack of business model literature that describes the types of influence that they have upon the model. Examining stakeholder theory in relation to business models is important because it helps to bring greater clarity to the variety and types of actors operating within a firm’s external environment. Further, by applying stakeholder theory, it helps firms to understand (1) the business implications that stakeholders have upon their business model; (2) it can help firms to understand the feasibility in business models when catered to different stakeholder groups; and (3) can provide the possibility in gaining a better knowledge in the power balance between business models and stakeholders. To help better explain this relationship between stakeholders and a firm’s business model, we examine institutional theory to help explain these relationships and clarify the types of influence they may have upon the firm.

2.2 Value Creation, Capture, and Delivery

2.2.1 Value Creation

Amit and Zott’s (2001) examination of the sources of value creation within the e-business industry has aided in the fundamental understanding and importance of business models within firms and industries today. Through the analysis of numerous fundamental theoretical perspectives from entrepreneurial and strategic management literature, it is here that the business model is seen as “unifying construct of analysis that captures the value creation arising from multiple sources” (Amit and Zott, 2001, p. 494-495). These sources (or drivers) of value creation are identified as: Efficiency (e.g. reduction in information asymmetries), Complementarities (e.g. bundling of goods and services), Lock-in (e.g. loyalty programs and transaction safety), and Novelty (e.g. innovation) (Amit and Zott, 2001). These sources of value creation are mutually reinforcing through their ability to enhance the effectiveness of each other (Amit and Zott, 2001). Moreover, the business model as a unit of analysis possesses a wider scope than the specific firm “since it encompasses the capabilities of multiple firms in multiple industries” (Amit and Zott, 2001, p. 514). The model as a whole possesses the ability to define how participants enable transaction and how value is created (Amit and Zott, 2001). What is important to note is the distinction between a firm’s business model and revenue model, where the business model is commonly confused as a way for generating revenues (Amit and Zott, 2001). While the business model and revenue model are “complementary yet distinct concepts”, a business model “refers primarily to value creation whereas a revenue model is primarily concerned with value appropriation” (Amit and Zott, 2001, p. 515). Shafer et al. (2005) also recognize the business model as a tool for creating and capturing value. The ability for a firm to create value successfully is connected to the way it differentiates itself to its competitors (Shafer et al., 2005). Differentiation is achieved through the management and application of its core competencies and capabilities, and or, in the way it secures capital to fund these value creating core capabilities and competencies (Shafer et al. 2005). Moreover, value creation within a business model is correlated to the way a firm interacts within its value network, with emphasis upon the unique relationships it has established with suppliers, partners, and customers (Shafer et al. 2005). According to Morris et al. (2005), the sources of value creation lie within the differentiation of decision variables a firm must make when establishing a business model. These decision variables consist of

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components such as a firm’s value proposition, the customer, and the internal processes and competencies (Morris et al., 2005). Johnson’s (2010) interpretation of a business model is defined as an illustration of how a firm creates and delivers value to the customer and company. Here, Johnson’s (2010) business model framework consists of 4 different elements: a Customer Value Proposition (CVP), and Profit Formula, and Key Resources and Key Processes. Within this framework, it is the CVP that “describes how a company creates value for a given set of customers and at a given price” (Johnson, 2010, p. 24). The CVP is achieved through an in-depth analysis and identification of an un-met customer need or demand, which is then turned into a product or service for a given price (known also as an offering) (Johnson, 2010). According to Johnson (2010), a CVP requires strong communication between both the customer and the company.

2.2.2 Value Capture

The second core feature of a firm’s business model is its ability to capture value. According to Teece (2010), a firm’s business model must possess the ability to deliver and capture value simultaneously. Capturing value can come in many forms, e.g. increased market share, revenue, customer loyalty, long-term service contracts, increase in firm knowledge acquisition, etc. Chesbrough and Rosenbloom (2002) examined the issue of value capture through business models by investigating early stage technology. From their investigation, they saw the business model as a “focusing device that mediates between technology development and economic value creation” (Chesbrough and Rosenbloom, 2002, p. 532). Furthermore, successfully commercializing technology must be matched with specific business models so as to provide and create revenue (Chesbrough and Rosenbloom, 2002). This mediation between technological characteristics and economic output can be achieved through a better understanding of the functions of a business (Chesbrough and Rosenbloom, 2002). Some of these functions include (1) defining the structure of the value chain within the firm, (2) estimating the cost structure and profit potential, (3) describing the position of the firm in the value chain Understanding the structure of a value chain can help identify how a firm plans to deliver it product or service, and also, appropriate the value captured from that delivery (Chesbrough and Rossenbloom, 2002). Shafer et al. (2005) state (based on Hamel’s 2000 interpretation of business models) that value creation and capture is based upon the “unique” relationships a firm establishes within its value network. According to Shafer et al. (2005), it’s the role the firm plays in this value network and the relationships it creates that are critical elements of the firm’s business model. When estimating the cost structure and profit potential of product or service created, Johnson (2010, p.24) defines value capture occurring within a firms profit formula, which “defines the way the company will capture value for itself and its shareholders in the form of profit”. This profit formula includes a revenue model, a cost structure, a target unit margin, and resource velocity (Johnson, 2010). Teece (2010, p. 184) also offers a framework (Profiting from Innovation framework) by which innovating firms can capture value from technology. Teece (2010) offers two ‘extreme’ models that can help firms capture value. The framework provides the necessary information

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on how a firm should design their business model, how to select business models based upon the innovation, and provides awareness on value chain configuration (Teece, 2010). Teece (2010, p. 184) outlines these frameworks as (1) an Integrated Business Model (innovating firm bundles innovation and product together - assumes the responsibility for the entire value chain), (2) Outsourcing (Pure licensing), and (3) Hybrid approaches (“outsource manufacturing; provide company owned sales and support”).

2.2.3 Value Delivery

As outlined previously in the theoretical literature, value delivery is strongly integrated into how a firm creates and captures value. Amit and Zott (2001) state that an example of a driver of value creation lies in a firm’s complementarities and efficiency (both examples of value delivery). Chesbrough and Rosenbloom (2002) and Shafer (2005) agree that value capture can come through how a firm acts within its value chain (another avenue for value delivery). We believe that Johnson (2010) provides a clear definition of how a firm delivers value from its business model: from its key resources and key processes. Johnson (2010, p.25) states that these key resources and key processes are “the means by which the company delivers value to the customer and itself”. They include “critical assets, skills, activities, routines, and ways of working that enable the enterprise to fulfill the CVP and profit formula in a repeatable, scalable fashion” (Johnson, 2010, p. 25).

2.3 Business Model Reinvention, Adaptation, and Innovation

For a firm to achieve successful value creation, capture, and delivery, they must be willing to reinvent, adapt, and or, be innovative when it comes to their business model. These types of changes are necessary to keep up with the dynamic and constantly changing environments (Voelpel et al., 2004). Revising a business model can help maintain viable strategies and additionally provide disruptive competitive advantages (Voelpel et al., 2004). However, simply reinventing or innovating a business model is not as easy as it may seem. According to Johnson (2010), many people do not have a strong understanding of what a business model is, nor would they understand when, how, or why to change it. Based on previous work by Moore (1993) and Tucker (2001), Voelpel (2004) states that reinvention is necessary due to two specific reasons: (1) firms no longer work in a single industry, but across a range of industries, and (2) competitor imitation is unavoidable. One way of achieving business model reinvention, adaptation, and innovation can be achieved through an internal firm process with shared working environments, where diverse viewpoints and ideas are obtained from both employees throughout the organization and the stakeholders connected to the firm (Voelpel et al., 2004). A second technique for achieving business model reinvention, adaption, and innovation can be achieved through a better understanding of a firm’s external environment. As Voelpel et al. (2004, p. 268-269) states, business model reinvention and adaptation comes from “making sense of socio-cultural dynamics and opportunity gaps, reinventing customer value proposition(s), and reconfiguring the business network and its value chains”. Johnson (2010) sees these opportunity gaps as the process where firms identify new customers and markets to serve, and where new customer value propositions (CVPs) are developed along with new business models to meet those new demands. Teece (2010, p. 187) states that the successful

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reinvention or creation of CVPs comes from the “understanding of some ‘deep truth’ about the fundamental needs of consumers and how competitors are not satisfying those needs”. A third approach to reinventing, adapting, or innovating business models can be achieved through co-development partnerships with other firms (Chesbrough & Schwartz, 2007). According to Chesbrough and Schwartz (2007, p. 55), these types of partnerships “embody a mutual working relationship between two or more parties aimed at creating and delivering a new product, technology, or service”. These types of partnerships can be effective in creating innovative business models options “that can significantly reduce R&D expenses, expand innovation output, and open up new markets that may otherwise have been inaccessible” (Chesbrough & Schwartz, 2007, p. 55). Successful partnerships are achieved through shared objectives, understanding what capabilities are necessary to achieve those objectives, the successful alignment of business models, and discussions of futures collaborations. Voelpel et al. (2004) explain that business model reinvention does not necessarily mean “cannibalizing” existing firm models, but instead places more emphasis upon experimentation through systemic strategic management. This can be achieved by evaluating ones new “provisional” business model against the “current state of the business ecosystem” and predicting its evolution (Teece, 2010, p. 189). So long that business model reinvention can establish “relevant new customer value propositions, as well as sensible value for all value chain stakeholders, companies can achieve new bases of sustainable competitive advantage in today’s fast changing business environment” (Voelpel et al., 2004, p. 273-274)

2.4 Strategic Management of Business Models

Business models can quickly become transparent and easy to imitate by competitors, and firms must strategically manage internal characteristics and create sustainable competitive advantages to avoid this from happening (Teece, 2010). In order to create these sustainable business models, the use of a strategic analysis filter is necessary (Teece, 2010). These steps include (1) Market Segmentation, (2) the creation of a CVP for each segment, (3) the design and implementation of mechanisms to capture value from each segment, and (4) the implementation of ‘isolating mechanisms’ to hinder or block imitation by competitors, and the disintermediation by customers and suppliers (Teece, 2010). These “filters” enforce strategic analysis that help business models avoid imitation, create differentiation, establish sustainable business models, and help create barriers for incumbents (Teece, 2010). Examples of what strategic management of business models can achieve include “systems, processes and assets that are hard to imitate”, a “level of opacity….that makes it difficult for outsiders to understand in sufficient detail how a business model is implemented”, and potential reluctance by competitors to imitate “if it involves cannibalizing existing sales and profits or upsetting other important business relationships” (Teece, 2010, p. 182). Business model strategy not only involves the protection of internally designed models, but also the identification of new opportunities to go after. George and Bock (2011, p. 99) define the business model as the “design of organizational structures to enact a commercial opportunity”, where “the business model develops in parallel with the entrepreneur’s knowledge and resource base as the organizational structures are developed that will ultimately create value by exploiting the underlying opportunity”. These specific organizational structures that allow for these entrepreneurial activities to occur include (1) the resource structure (“the static architecture of the firm’s organization, production technology, and core resources leveraged to serve customers”), (2) the transactive structures (the

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organizational configuration that determines key transactions with partners and stakeholders”), and (3) the value structure (“the system of rules, expectations, and mechanisms that determine the firm’s value creation and capture activities”) (George & Bock, 2011, p. 99)

2.5 Industry Specific Business Model Design

The final method that businesses can use to achieve value creation, capture, and delivery is through the design of business models based upon the specific industry that they operate in. For this section, we examine business model literature that stems from the renewable energy industry. Wustenhagen and Boehnke (2008) have identified three areas that have limited new firms from commercializing within the renewable energy market: (1) environmental externalities, (2) high initial capital intensity and long lead-times, and (3) the power of incumbents. Environmental externalities deal with the current debate between the private vs. public benefits of renewable energy technologies (Wustenhagen & Boehnke, 2008). While an introduction of these renewable energy technologies may create a public benefit through a reduction in usage of fossil fuels, it may not “necessarily translate into reduced private cost for the consumer, because the environmental externalities of conventional energy systems….are not fully internalized in market prices” (Wustenhagen & Boehnke, 2008, p. 86). Based on previous literature by Villiger et al. (2000), Wustenhagen and Boehnke (2008) describe that a firm can overcome this challenge through the creation of a new value proposition that places greater emphasis upon the private benefits (on top of the public benefits) and unsolved customer needs. A second approach that Wustenhagen and Boehnke (2008) highlight is a properly configured value creation which can help overcome the high initial capital costs and incumbent challenges. Firstly, in order to avoid high initial capital costs, firms should focus on the components that are critical to their competitive advantage and outsource larger parts of their value chain (Wustenhagen & Boehnke, 2008). Secondly, partnering or co-operating with other firms can help businesses to avoid one-on-one competition with incumbents (Wustenhagen & Boehnke, 2008). A final approach that can help firms deal with the specific challenges within the renewable energy industry would be through the creation of innovative revenue models (Wustenhagen & Boehnke, 2008). These revenue models could include: (1) renewable energy firms offering their renewable energy technology through new leasing and contracting methods to customers, (2) a greater focus on after-sales services to generate profit, and (3) a better use of available subsidies.

2.6 Stakeholder theory as a tool for understanding the power balance

and relationships within Business Models

Examining stakeholder theory in relation to business models is important because it helps to bring greater clarity to the variety and types of actors operating within a firm’s external environment. Moreover, by applying stakeholder theory, it helps firms to understand (1) the business implications that stakeholders have upon their business model; (2) the feasibility in

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business models when catered to different stakeholder groups; and (3) provide the possibility of gaining a better knowledge in the power balance between business models and stakeholders.

Stakeholder theory, defined by Freeman (2010, p. 48), is seen as “(t)hose groups who can affect or are affected by the achievements of an organization’s purpose”. This definition is seen by Fassin (2009, p. 116) as a combinatory version that includes “two dichotomous views” – a claimant definition and an influencer definition. While a variety of definitions have been built upon Freeman’s original version of stakeholder theory, for the purpose of this investigation, we chose to use Fassin’s (2009) definition of stakeholders which has been divided into three different categories: stakeholders, stakewatchers, and stakekeepers. These three groups are classified as consisting of “internal constituents and stakeholders who have a real stake in the company, the pressure groups that influence the firm, and the regulators who impose external control and regulations on the firm” (Fassin, 2009, p. 121). According to Fassin (2009), real stakeholders are defined as those who “possess a legitimate claim, power, and influence” which the firm has a responsibility to. Stakewatchers are seen as those who “do not really have a stake themselves but protect the interests of real stakeholders, of as proxies or intermediaries” (Fassin, 2009, p. 121). And finally, stakekeepers can be labeled as “the independent regulators, who have no stake in the firm but have influence and control” (Fassin, 2009, p. 121) Fassin (2009, p. 121) explains their role and those who enforce regulations and constraints “while the firm has little reciprocal direct impact on them”.

It is important to understand how these three different stakeholder groups can potentially influence a business. Freeman (2010) classifies these influences by a stakeholder as economic, technological, social, political, and managerial. An economical effect on a firm by a stakeholder can consist of influences upon a firm’s profitability, cash flow, and stock prices (Freeman, 2010). A firm can also affect the economic “well-being” of a stakeholder by having some sort of financial stake within that particular group (Freeman, 2010). Technological effects by a stakeholder on a firm include the prevention of use of specific technologies and or a constraint on what technologies can be produced (Freeman, 2010). Social affects by stakeholders include “altering the position of the firm in society, changing the opinion of the public about the firm, or allowing or constraining what the firm is about to do with “society’s permission”. The firm may have social effects on a particular stakeholder as well by helping constraining the stakeholder to engage in certain activities, or by giving the stakeholder a “cause” to rally around” (Freeman, 2010, p. 93). Freeman (2010) states how these social effects evolve into political effects, stating how actions taken by stakeholders are undertaken to achieve some sort of social purpose. Finally, managerial effects by a stakeholder can include a firm being forced to change it’s “management systems and processes, and even its managerial style and value” (Freeman, 2010). Freeman (2010, p. 95) states that by analyzing stakeholders in this way “we can understand in more detail the cause and effect relationship between an organization and its stakeholders”.

2.7 Institutional Isomorphism and its ability to explain the relationship

between stakeholders and a firm’s business model.

As previously discussed, we believe that the business model is greatly influenced by its relationship to different stakeholders. Fassin (2009) has helped us to classify the different types of stakeholders, while Freeman (2010) has described the types of influence that stakeholders can create. But the question remains – why are business models affected by these

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pressures? We believe that institutional isomorphism can help better explain the relationship between stakeholders and a firm’s business model.

Powell and DiMaggio (1991, p. 63) have identified that the “bureaucratization of the corporation and the state have been achieved”; where bureaucracy is seen as the common organizational form and homogeneity is spreading throughout them. What Powell and DiMaggio (1991) seek to understand is why this homogeneity is occurring throughout these organizations. “In the initial stages of their life cycle, organization fields display considerable diversity in approach and form. Once a field becomes well established there is an inexorable push toward homogenization” (Powell and DiMaggio, 1991, p. 64). Different organizations are structured into specific fields (by competition, professions, or the state), and subsequently influenced by powerful forces, making them become more similar to one another (Powell and DiMaggio, 1991). As identified by Powell and DiMaggio (1991, p. 65), “organizations may change their goals or develop new practices, and new organizations enter the field. But in the long run, organizational actors making rational decisions construct around themselves and environment that constrains their ability to change further in later years.” Based on theory by Meyer and Rowan (1997), Powell and DiMaggio (1991) explain that examples of this include organizations adopting innovation not out of desired performance improvement, but instead as a way to remain legitimate within their industry. This too occurs with the adoption of strategy (Powell and DiMaggio, 1991). As outlined by Powel and DiMaggio (1991, p. 66) “(t)he concept that best captures the process of homogenization is isomorphism”. Powell and DiMaggio (1991) have identified three mechanisms through which institutional isomorphic change happens: Coercive Isomorphism, Mimetic Isomorphism, and Normative Isomorphism.

Coercive isomorphism can be seen as stemming from “formal and informal pressures exerted on organizations by other organization upon which they are dependent and by cultural expectations in the society within which organizations function. Such pressures may be felt as force, persuasion, or as invitations to going in collusion. In some circumstance, organizational change is a direct response to government mandate: manufacturers adopt new pollution control technologies to conform to environmental regulations” (Powell and DiMaggio, 1991, p. 67). This form of isomorphic pressure has led to an increase in homogeneity and conformity within firms and industries, leading to the adoption of certain standards, rules, organizational forms, and rituals (Powell and DiMaggio, 1991).

Mimetic isomorphism derives from organizational imitation and modeling (Powell and DiMaggio, 1991). The underlying force of this isomorphism derives from a certain level of firm and industry uncertainty (Powell and DiMaggio, 1991). Based on theory from March and Olsen (1976), Powel and DiMaggio (1991, p. 69) describe that “(w)hen organizational technologies are poorly understood…..when goals are ambiguous, or when the environment creates symbolic uncertainty, organizations may model themselves on other organizations”. However, it is important to note that imitation and model is not always done consciously; it can also occur within a firm/industry unconsciously (Powell and DiMaggio, 1991).As stated by Powell and DiMaggio (1991, p. 70) “(m)uch homogeneity in organizational structures stems from the fact that despite considerable search for diversity there is relatively little variation to be selected from. New organizations are modeled upon old ones throughout the economy, and managers actively seek models upon which to build (Kimberly, 1980)”. Mimetic isomorphism, in its essence, is when organizations model themselves after similar organization that they see as being more successful or legitimate (Powell and DiMaggio, 1991).

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Normative isomorphism, defined by Bruton et al. (2010, p. 422-423) “represents organizational and individual behavior based upon obligatory dimensions of social, professional, and organizational interaction. Institutions guide behavior by defining what is appropriate or expected in various social and commercial situations”. This normative perspective is guided by values and norms; a standard of ‘social obligation’ that exercise influence and create a necessity to comply with (Bruton et al., 2010). The sources of this form of isomorphism, outlined by Powell and DiMaggio (1991), stems from the creation of a cognitive standards set within university education and the growth of professional networks.

3. Methodology

This section begins with the discussion of a choice in qualitative research approaches in

order to best achieve the objectives of this paper. Following this, the selected research

approach and strategic study objectives are discussed, leading to the choice in an inductive

approach for the investigation. The selected approach will be supplemented with the use of

case studies from three different countries (Denmark, Norway, and Sweden), investigating

three different companies. The data collection for these case studies consist of a triangulation

of data (documents, observations, interviews) with a majority of the data coming from semi-

structured interviews.

3.1 Research approach

3.1.1 Qualitative research

As defined by Merriam (1998, p. 5) qualitative research can be considered an “umbrella concept covering several forms of inquiry that help us understand and explain the meaning of social phenomena”. Moreover, qualitative research is based upon “the view that reality is constructed by individuals interacting with their social worlds” and that the reason for investigating this is to understand “the meaning people have constructed….how they make sense of their world and the experiences they have in the world” (Merriam, 1998, p. 5). In our study we are investigating a social phenomenon: we aim to investigate business models within the waste-to-energy sectors in Sweden, Norway and Denmark; their approaches and techniques in creating, capturing and delivering value; and moreover, how different stakeholders influence the actual business model. We believe that a qualitative investigation is the appropriate research tool that can help cover these different forms of “inquiry”, and can give us a deeper understanding of the larger social phenomena at play when it comes to business models in the waste-to-energy industry. As outlined by Merriam (1998, p. 5) “(I)n contrast to quantitative research, which takes apart a phenomenon to examine component parts….qualitative research can reveal how all the parts work together to form a whole”. Understanding all the factors that influence the creation, capture and delivery of value within a waste-to-energy firm’s business model, in addition to the influence that stakeholders have upon these business models, will help develop greater clarity into how these different issues and factors interrelate and create a firms business model. These issues are not as easily measured through a quantitative method. The measurement of value and the influence of stakeholders upon a firm’s business model are difficult because it is subjective and difficult to illustrate through a quantitative method. Therefore, we find that our investigation is more suited towards a qualitative study.

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An additional aspect of a qualitative investigation that we find relevant to our investigation is that the researcher is the primary instrument for data collection and analysis. From this perspective, the researcher possesses the ability to adapt and change if need be to help better conduct their investigation. Therefore, we chose to work from a qualitative standpoint throughout our investigation in case new areas of interest are encountered and change to our investigation is necessary. An additional characteristic of qualitative research that is important to our investigation is to be able to work inductively. Based upon our theoretical framework, we aim to develop new theory that can bring to light new issues in the development of business models within the waste-to-energy industry and the effect stakeholders have upon them. Furthermore, qualitative research uses words and pictures in the analysis rather than numbers to express what conclusions that have been drawn from the investigated phenomena. (Merriam, 1998)

3.1.2 Research approach choice

The selection of a research approach can provide the ability to generate a more well-designed and informed investigation. A well formulated research approach can help guide the author with strategic choices that will be relevant to the study and can help adapt the research to possible constrains. (Saunders et al., 2007) Our research approach is similar to an inductive approach, where the goal is to develop theoretical contributions to the area of business models through the use of qualitative methods, case studies, multiple case studies, and content analysis.

3.2 Research strategy

3.2.1 The Case study approach

The use of a case study method is one of the most challenging research strategies when conducting an investigation, deriving from the need to gain a deeper understanding into complex social phenomena (Yin, 2003,). While case studies can be used in an exploratory, descriptive and/or explanatory manner, Yin (2003) argues the choice in these strategic methods is based upon two specific conditions; the type of research question(s) being asked (this includes research questions that ask “how” and/or “why” that are tailored for an explanatory purpose), and the degree of control the scholar has over contemporary behavioural events. Yin (2003) outlines that the selection of research questions provides the greatest insight into differentiating which strategy is most appropriate for the specific study. When using an exploratory approach, Yin (2003, p.6) states that the use of “what” questions are used to “develop pertinent hypotheses and propositions for further inquiry”. On the other hand, “how” and “why” questions are more effective in conducting an explanatory study that can deal with answering questions regarding “operational links needing to be traced over time”. For our study, we chose to use a combination of both explanatory and exploratory approaches through the use of case studies; aiming to not only identify the operational links within three specific firms, but to further develop propositions for further inquiry. The degree of control over and access to actual behavioural events can also help give clarity to which strategy to use. As outlined by Yin (2003, p. 7) “(t)he case study is preferred in

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examining contemporary events, but when relevant behaviours cannot be manipulated”. Furthermore, the use of case studies when examining contemporary events allows for the addition of “direct observation of events being studied and interviews of the persons involved in the events” (Yin, 2003, p. 8). It is for these specific reasons we have chosen a case study approach to help bring greater insight and depth to our investigation.

3.2.1.1 Different types of case studies

A multi-case study design has been selected, consisting of the examination of three different firms within the waste-to-energy industry in addition to the study of the primary stakeholders (the local municipalities of Jonkoping, Trondheim, and Copenhagen) that influence their business model. A multi-case examination would potentially allow us to contribute a deeper understanding of how business models operate and function within this industry, and moreover, the role the stakeholder plays in influencing them. Yin (2003) advocates that the use of multiple cases is preferable due to the greater chance in answering ones research questions in addition to providing greater in depth analysis through a compare and contrast approach. As Yin (2003) states, it is always better to gain analytical conclusions from two or more cases than those coming from a single one. The second step in developing a case study is the choice between a holistic or embedded approach; both referring to the specific unit(s) under analysis. A holistic approach is an analysis of an organization as a whole, whereas the embedded approach refers to the analysis of multiple sub-groups or units within an organization (Saunders et al., 2007). In our investigation, a business model (in one aspect) represents the overall functions and operations within a firm used to assist in creating, capturing, and delivering value. Hence, the appropriate unit of analysis is the whole firm. Therefore, we find it appropriate for this study to use a holistic approach when analysing these firms in our case studies.

3.2.1.2 Case selection

Our case selection consists of the selection of three different waste-to-energy facilities within Scandinavia. These include Jönköping Energi AB (Sweden), Vestforbrænding (Denmark) and Statkraft Varme AS (Norway). The selection of these specific companies was done through a theoretical sampling, as opposed to a stratified or random sampling, due to their ability to illuminate and extend relationship and logic among potential constructs (Eisenhardt and Graebner, 2007). A more in depth analysis of each firm is conducted within the findings section of this paper.

3.3 Data collection method

3.3.1 Primary vs. secondary data

The data collection method when conducting an investigation can consist of either primary, and or, secondary data. Secondary data consists of the reanalysis of previously collected data for some other purpose (Saunders et al., 2007) whereas primary data collection refers to the gathering of information from various forms of observation and/or interviews. The preferred methods for primary data collection are discussed in the next section.

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In this investigation both primary and secondary data have been collected. The secondary data collected consists of academic articles regarding the development of energy policies in Sweden, Norway, and Denmark; newspaper articles, magazine articles, academic articles, and books on current issues within on business models, the renewable energy, and waste-to-energy industries; and brochures and internet material provided by the investigated waste-to-energy firms on the history of their company. The secondary data is used to provide a general outline of the current issues surrounding this industry and a historical background of business models in the background section of this paper, and a more in depth historical background of the firms is provided in the findings section. The primary data collected, which lies at the foundation of our study, consists of interviews conducted with the three different waste-to-energy companies (Jönköping Energi AB, Vestforbrænding and Statkraft Varme) and their primary stakeholders (their local municipalities: Trondheim, Jonkoping, and Copenhagen). These interviews are supported with secondary data provided by the firms and stakeholders.

3.3.2 Preferred data collection method when conducting Case studies

Yin (2003) states that there a six different sources of data collection (each one considered relevant) when using a case study method. They include interviews, direct observations, participant-observation, physical artifacts, archival records, and documents (Yin, 2003). One is not considered to be superior to another, and instead can be considered complementary (Yin, 2003). However, Merriam (1998) states that when a qualitative research is being conducted, most of the primary data is collected through interviews. Additionally, Saunders et al. (2007, p. 139) discuses that to strengthen the quality of a case study, multiple sources of evidence are necessary; hence the “data collection techniques employed may be various and are likely to be used in combination”. In our investigation, we use a triangulation of data method collection techniques to strengthen our findings and theoretical contributions. This triangulation is achieved through the use of multiple investigators, interviews, interviews with different companies in different countries, direct observations (only done in Sweden), secondary data, and interviews with waste-to-energy stakeholders (representatives from the municipalities that they operate within)

3.3.2.1 Interviews

As stated previously, an important source of information gathering when using a case study approach is accomplished through interviews (Yin, 2003). Interviewing is necessary when one cannot observe behavior, feelings or people’s interpretation of the world (Merriam, 1998). It can be however difficult when selecting which type of interview to conduct. There are two main types of qualitative interviews: semi- structured and unstructured/in depth (Saunders et al., 2007). A semi-structured interview consists of a previously devised list of topics and questions that the interviewer wishes to cover. This type of interview provides room for the interviewer to ask the question in the order he sees fit in to help maintain flow of the conversation, in addition to allowance for follow-up question to bring clarity to the topic at hand. Unstructured (or in-depth) interviews are more informal than semi-structured interviews. There is no preset list of questions prior to the interview, but instead a clearly set list of topics that are to be covered in no preset order.

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During this investigation, the primary data collection consisted of semi-structured interviews with different managers from the three waste-to-energy companies. Additionally, three semi-structured interviews were conducted with the stakeholders of these companies (Jonkoping Municipality, Trondheim Municipality, and Copenhagen Municipality). Our reasoning for choosing semi-structured interviews is that it provided the ability to ask the same questions to the different waste-to-energy firms and the same questions to the stakeholders. It is important to note that two different sets of questions were created for the waste-to-energy firms and for the stakeholders (municipalities). Asking the same set of questions to both groups would simplify the organization of the findings and provide a greater ability to compare, contrast, analyze, and interpret them.

3.3.2.2 Interview objects and the interview process

Table 1. - Interview objects used in study

Date Name Company Position Duration Visit/Telephone 5/6/11 Ulrika Gotthardsson

Fridolf Eskilsson Jönköping Energi AB

Information manager Heat manager

2 hours Visit

5/13/11 Marcus Müller Vestforbrænding Operations Manager 1 hour Telephone 5/11/11 Arvid Wisløff Statkraft Varme

AS V.P. of strategy, administration, & technical staff

1 hour Telephone

5/3/11 Søren Nielsen Copenhagen municipality

Waste Planner 45 min Telephone

5/11/11 Hans-Einar Lundli Trondheim Municipality

Energy & Climate Advisor

40 min Telephone

5/9/11 Björn Söderlundh Jönköping Municipality

Vice Director Jönköping Rådhus AB

1.5 hours Visit

The choice of who to interview is an important issue when collecting data, depending primarily on (1) what the investigator is seeking to have answered, and (2) from which perspective the investigator is trying to gather information from (Merriam, 1998). For this investigation, we have chosen to interview upper management from the waste-to-energy companies in addition to interviews with representatives from the local municipalities that they operate in. The selection of waste-to-energy firms from Norway, Denmark, and Sweden was done to gain a broader perspective and understanding of their business models and how they operate. In addition, interviewing the local municipalities that the waste-to-energy firms operate in was done to (1) to gain a different perspective in how they (as stakeholders) might potentially influence the firm’s business models, and (2) was also done due to the complicated ownership structures within some of these companies. Both Jonkoping Energi AB and Vestforbænding are owned by their local municipalities (in the case of Vestforbænding, it is owned collectively by all 19 Danish municipalities), whereas Statkraft Varme AS (also once formerly owned by the municipality) is now privately owned. To keep consistency throughout the investigation, all municipalities were interviewed because of their position as being a primary stakeholder to the waste-to-energy firms. Outlined below were steps taken during the interview process with both the waste-to-energy firms and the municipalities. In their book Qualitative Research in Practice, Darlington and Scott (2002) describe the importance of following a set of stages during an interview process. These stages include:

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finding and selecting participants, establishing a rapport, initial contact, the interview, recording, and ending. Each stage acts as an outline for the successful collection and quality level of data (Darlington & Scott, 2002). The initial stage begins with the selection of participants (for more information about selected interview subjects see Table 1). As outlined by Darlington and Scott (2002), it is difficult to predict how many participants will be needed for the investigation, and will be best determined through a better understanding of the theoretical and practical implications. From a theoretical standpoint, the ideal number of participants will be determined by the research topic and questions (Darlington & Scott, 2002). Moreover, seeking participants with a wide range of experiences is also important to “obtain the broadest possible reach of the range of perspectives on the topic under investigation” (Darlington & Scott, 2002, p. 52). Through the aid of Strauss and Corbin (1990), Darlington and Scott (2002, p. 52) outlined this process as a ‘negative case analysis’ which helps to “add variation and depth of understand” to the investigation. Since the purpose of this study is to (1) investigate the approaches used in business models within the waste-to-energy firms in creating, capturing and delivering value, and (2) identify and explain the influence that stakeholders have upon these waste-to-energy firms’ business models, it was important to obtain as a wide range of perspectives as possible to help bring greater clarity to the investigation. Our diversity in participants range from: (1) position within waste-to-energy firms and municipalities, (2) number of participants from waste-to-energy firms and municipalities, (3) geographical location of waste-to-energy firms and municipalities and (4) ownership structure of waste-to-energy firms. However, due to practical constraints (labor intensive and time), this was the limit on how many participants could be involved in the investigation (Darlington & Scott, 2002). To identify the correct employees to conduct interviews with, e-mails were sent out to selected companies with a general description of our investigation with the idea that they could guide us to the correct person. This same process was done with the municipalities (stakeholders). Darlington and Scott (2002) identify the second step of the interview process as establishing a rapport between the researcher and the participant. This sense of connection and/or relationship is important so that the participants feel as relaxed as possible and are able to answer the questions to the best of their ability. Participants were provided with interview guides and were able to selected the form/location of the interview (face-to-face or via telephone). The third step involves the initial contact (Darlington & Scott, 2002). It is important to contact the interview object in advance in order to explain what the research is about and answer any potential questions that the interviewees might have (Darlington and Scott, 2002). An ongoing e-mail and telephone correspondence with all interview subjects was conducted, providing the participants the opportunity to ask questions and/or obtain further clarification on the research topic. During this process, participants were asked permission to have the interviews recorded and whether their names could be published in our study. This is important to determine before the actual interview and is a way to follow an ethical way of conducting research. (Darlington and Scott, 2002) The fourth and fifth step included the actual process of conducting the interviews and recording. The interviews were conducted with representatives from all three waste-to-energy firms and municipalities (see Table 1 above), and an interview guide was used throughout the duration of the interview (see appendix 1 and appendix 2). All interviews were recorded, in

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addition to one of the authors taking notes. All interview locations were chosen by the participants. The final step, outlined by Darlington and Scott (2002) is the end process of the interviews. All participants were thanked for their contribution and cooperation in this study. Once again, all participants were asked whether their names could be published in the study. Half of the participants in the study asked for a copy of the findings section before submission to approve what had been written. All participants were provided with the opportunity for follow-up questions post-interview.

3.4 Data analysis method

In order to analyze the collected data in the most appropriate and effective method, we have chosen to follow specific strategies outlined by Yin (2003) for analyzing case study evidence. Our first strategy for analyzing the data will be by following our primary theoretical propositions that led to this investigation (Yin, 2003). These theoretical propositions guided our original objectives, the design of the case studies, and how the data was collected (Yin, 2003). In essence, the theoretical propositions will act as a guide in organizing our analysis: where data will be examined in comparison to the theory outlined in the frame of reference. A second strategy that will be used in analyzing the collected data is through the use of a cross-case synthesis (Yin, 2003). Here, all analytical results from each case will be compared to one another, helping to give way for theoretical contributions.

3.5 Thesis trustworthiness

3.5.1 Validity

The issue of validity deals with whether the results that were obtained from an investigation are really what they appear to be (Saunders, 2007). According to Merriam (1998) two types of validity exist: internal and external (generalizability). Merriam (1998) defines internal validity as the question of how research findings are matched with reality. This is because “the assumptions underlying qualitative research is that reality is holistic, multidimensional, and ever-changing; it is not a single, fixed, objective phenomenon waiting to be discovered, observed, and measured as in quantitative research” (Merriam, 1998, p. 202) . The way that a researcher deals with the validity of qualitative research is by becoming “the primary instrument of data collection” – by getting closer to the participants and reality (Merriam, 1998, p.203). According to Merriam (1998), if researchers are able to view reality in this way, then internal validity becomes the strength of the qualitative research. Furthermore, there are several strategies outlined by Merriam (1998) that have been used to enhance the validity of this investigation. These include: (1) Triangulation (multiple sources, multiple investigators, etc.), (2) Member Checks (4 seminars conducted with advisors), (3) Peer examination (4 seminars with fellow students as examiners), (4) Collaborative modes of research (consistent contact with firms regarding findings and results), and (5) and clarification of the researchers bias (our understanding of business models and the effects that stakeholders have upon them) (Merriam, 1998).

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External validity (also referred to as generalizability) deals with “the extent to which the findings of one study can be applied to other situations. That is, how generalizable are the results of the research study?” (Merriam, 1998, p. 207). The goal of this investigation is to not to generalize our findings based on the results of the empirical investigation, but only to be able to explain what is going on within our particular research setting. This is in line with Merriam (1998, p. 208) who states that in qualitative research....(a) small non-random sample is selected precisely because the researcher wishes to understand the particular in depth, not to find out what is generally true of the many”. However, one way of enhancing this investigation and the external validity would be through “reader or user generalizability” strategy, where the investigator provides detailed descriptions of how the investigation was conducted so that reader could determine whether these findings are transferable or not (Merriam, 1998, p. 211)

3.5.2 Reliability

Reliability refers to where the research findings (results) from an investigation can be replicated to create the same results again (Merriam, 1998). As Merriam (1998, p. 205) describes, this issue can be considered problematic because “human behaviour is never static”. However it important to understand that the purpose of qualitative research is not to isolate human behaviour but “to describe and explain the world as those in the world experience it” (Merriam, 1998, p. 205). Based on previous research by Lincoln and Guba (1985), Merriam (1998, p. 206) describes how reliability should be focused more upon “the ‘dependability’ and ‘consistency’ of the results obtained from the data. That is, rather than demanding that outsiders get the same results, a researcher wishes outsiders to concur that, given the data collected, the results make sense – they are consistent and dependable. The question then is not whether findings will be found again but whether the results are consistent with the data collected”. In order to achieve greater dependability of our results, we have followed the techniques outlined by Merriam (1998). These include (1) The investigators positions, (2) Triangulation, and (3) an Audit Trail (Merriam, 1998). Firstly, we have described our own position regarding our understanding of business models and how stakeholders influence the business model. Secondly, we have used a triangulation method (as previously discussed) to strengthen our internal validity and reliability. And finally, we have outlined how the data was collected, how each section is divided, and provided the interview questions as a reference (located in appendix 1 and 2).

4. Results

The following results chapter highlights and summarizes interviews conducted with the different waste-to-energy firms and one of their stakeholders (their local municipalities). Each section is divided by country; first by interview with the waste-to-energy firm, following with the interview with those firms’ local municipalities. The results are presented in the same flow that the interviews were conducted (see appendix. 1 for interview structure). In addition, statements made by the interview subjects have been, to the best of our ability, supported with secondary data.

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4.1 Case Study – Jönköping Energi AB

Interviews were conducted with representatives from Jönköping Energi AB (Fridolf Eskilsson

and Ulrika Gotthardsson) and Jönköping Municipality (Björn Söderlundh). Both interviews

are supported with secondary data.

Jönköping Energi was founded in 1907 under the name Jönköping Elekticitetsverks (Jönköping Electricty Works) (Jönöping Energi AB, 2011, a) In 1997, the organization was converted into multiple limited liability firms by Jönköping Municipality, owned and overseen through the municipality run Jönköping Rådhus AB. It was here Jönköping Energi AB was created. Today, Jönköping Energi AB is in charge of overseeing the production and distribution of district heating, electricity, steam, district cooling, the trading of electricity, and the building and operation of broadband communications (Jönköping Energi AB, 2011, a) In 2006, Jönköping Energi AB began operations at the waste-to-energy plant known as “Torsvik”. Here, the plant currently supplies heating and power to approximately 30,000 houses, flats, offices, and shops within the Jönköping Municipality. According to Jönköping Energi (2011, b) the Torsvik plant is able to supply 50% of the annual district heating needs through the incineration of 160,000 tons of waste per year. The Torsvik waste-to-energy facility is currently able to produce 340 GWh/yr of district heating and 100 GWh/yr of electricity.(Jönköping Energi AB, 2011,b)

4.1.1 Interview with Jönköping Energi AB

The interview with Jönköping Energi AB was conducted on May 6th, 2011 with two

representatives from the company: Fridolf Eskilsson (Head of District Heating) and Ulrika

Gotthardsson (Head of Information).

Jönköping Energi AB’s purpose as a firm is centered on two main areas: acting as an energy supplier for the municipality and also as a firm that can help build and develop a better municipality. Mr. Eskilsson stated that “as a municipality owned company this is a very important part of our purpose because we do not only take the customer(s) interest into consideration but also the entire city of Jönköping and the region. This can include renewable energy, but it can also be about developing some part of the areas that need encouragement in the form of infrastructure or electricity networks”. Mr. Eskilsson described that this type of municipality development is encouraged by the politicians and local government. This type of social development includes the expansion of the fiber optic communication networks for better internet access and more environmentally friendly energy sources. As further indicated by Mr. Eskilsson, “our job is not only to promote and bring in more renewable energy; it is also about creating jobs and other things”. Through the help of financial revenues gained by Jönköping Energi AB, in addition to loans guaranteed by the Jönköping Municipality, they are able to support the development of other businesses working under the ownership structure of Jönköping Rådhus AB (the umbrella corporation of all municipality owned firms, including Jönköping Energi), such as the newly formed Jönköping Energi Biogas AB and the expansion of Torsvik. Mr. Eskilsson stated how “we have gained a reputation of economic stability, so we have the strength to take risks when it comes to the development of this new plant”. Jönköping Energi AB began burning waste in 2006. However, the planning and development of the Torsvik Waste Facility came in 2002 after the passing of new EU legislation and regulation regarding laws on landfill. Similarly, at this time, the municipality also recognized these issues surrounding waste management, and according to Ms. Gotthardsson “it was clear

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that waste incineration was a good way to go”. The Torsvik plant currently receives 160,000 tons of waste for incineration every year. Ms. Gotthard described how 25% of the waste comes from Jönköping Municipality; around 65% of the trash comes from within a 200km radius of Jönköping, and around 10% is imported from Norway. Jönköping Energi AB enters into a procurement process with different municipalities looking to sell their household trash, with Jönköping Energi AB setting a price on how much they would charge to take in other municipalities’ household waste. This process that Jönköping Energi AB is a part of is known as the “Swedish Public Procurement Act (2007; 1091-LOU) which is largely based on the EU directive 2004/18/EC concerning public procurement” (Swedish Competition Authority, 2011). However, there is a different process when it comes to obtaining industrial waste, which is handled through private businesses operating throughout Sweden. Jönköping Energi AB works with many waste entrepreneurs, such as Sita Sverige AB and Stena Metall Group. According to Sita Sverige AB (2011), the firm seeks to “build solid long-term relationships with customers and other partners regarding waste management issues” by providing collection, sorting, recovery and recycling for them. While Jönköping Energi AB does rely upon the European Waste Market for its energy (which according to them is still a seller’s market), according to Mr. Eskilsson, “from an economical aspect, there is a limit of how far away the waste can come from”. Overall, Jönköping Energi AB receives two sources of income: (1) for receiving trash and (2) for selling the energy produced by the trash. According to Mr. Eskilsson, 25% of their income comes from receiving trash. Mr. Eskilsson stated that “This is still a great business: to be able to receive two sources of income. However, more companies are beginning to see the advantages of this business”. According to Ms. Gotthardson, this is one of the reasons for why Jönköping Energi AB has begun to diversify its approach in delivering clean energy to the municipality of Jönköping - through the building of a second incineration plant for biomaterials to create a long-term sustainable heat energy source. According to Jönköping Energi AB (2011, c), the heating needs vary during the year, and therefore there is a need for several types of heat production in the district heating system. Mr. Eskilsson stated that (including the process of waste procurement) Jönköping Energi AB does operate under a business model for their waste-to-energy plant in Torsvik. One aspect of this business model includes the pricing strategy of the energy created from the plant. Mr. Eskilsson stated that “in the waste-to-energy business you have a set market price on electricity; you have a market based price on waste; and on the heating price you can say that this where we can remain flexible. If we are unable meet our expected income quota, then we are able to increase the heating prices to meet it”. Because of this, Jönköping Energi AB is able to decrease the prices during the summer when there is a low demand (yet still have a high margin), and increase the prices in the winter when consumption is much higher. Mr. Eskilsson continued by saying that “we try to communicate these low costs to our customers because it is very profitable for us to have them as customers during the summer. However, during the winter it becomes quite expensive when creating district heating due to the extra costs of having to burn fossil fuels to meet the high demands for energy”. However, Jönköping Energi AB is able to make up for these losses occurred within district heating by increasing their prices in heating. Ms. Gotthardsson mentioned that this is something that Jönköping Energi AB have been criticized about in the past regarding their ability to produce both heating and electricity from waste-to-energy, where customers have believed that Jönköping Energi AB have a larger control over prices. However, Ms. Gotthardsson described how this criticism has created

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customers who have become confused regarding firm’s control over specifically electricity prices. It was explained that the electricity produced is not sent directly to the customer, but instead distributed through a grid where prices are set by the Nord Pool Spot. According to Nord Pool Spot (2011) they provide “a market place to producers, energy companies and large consumers on which they can buy or sell electrical energy”. Ms. Gotthardsson describes how they try to combat this issue by communicating to the customer how dependable and reliable they actually are as a business and as a heat energy supplier. According to both Ms. Gotthardsson and Mr. Eskilsson, Jönköping Energi AB tries to communicate often with the customer about these types of issues. One way they do this is by illustrating the high costs of other clean energies alternatives (such as geothermal) in retrospect to the district heating that they supply. Jönköping Energi AB sees this issue of competition with other energy suppliers initially occurring when a customer has a choice in where they get their energy from (before any high initial investments have been made by the customer). However, once a customer has committed to receiving their district heating from Jönköping Energi AB, Mr. Eskilsson and Ms. Gotthardsson agree that this competition becomes limited. Jönköping Energi AB stated that there is a large amount of value in the product that they create as a business. As previously mentioned, the company is able to provide clean and reliable energy while also being able to support the development of other local municipality firms with the revenues that they generate. However, Mr. Eskilsson stated that uniqueness of Jönköping Energi AB district heating also lies within its ability to supply clean energy without overloading the electricity grid for heating demand, their ability to provide 24 hour customer service, and their ability to cover a majority of steps in the value chain (besides inbound logistics). Additionally, Jönköping Energi AB has also been successful by offering district heating along with the installation of broadband. Ms. Gotthardsson stated that “customers can receive a cheaper price for broadband installation if they install district heating at the same time”. Mr. Eskilsson stated, “It is very important that what we provide is a reliable product and service. It is reliable from a technical, economical, and environmental way”. Ms. Gotthardsson added that “our message is that this alternative (Jönköping Energi AB’s waste-to-energy) is really convenient and efficient, and if you get a problem then you can call our support to solve it”. However, Ms. Gotthardsson mentioned the criticism Jönköping Energi AB has received in the past regarding their ability to support other municipality owned businesses, stating that customers have communicated “why do you have to make profits as a municipality owner company – I’d rather keep the money myself”. However, this amount of money given back to the municipality is dependent upon whether the firm is able to generate revenue. Mr. Eskilsson stated that “2010 was a good year but some years before that weren’t that great – this is because of the weather changes”. Jönköping Energi AB has begun to increase its contact with its customers. Mr. Eskilsson described how “if you can sit with the customers and talk about what they can do to increase efficiency, then we can get them more involved with us and see us as even more reliable. One of the ways we would like to do this is to provide them with statistical support so that they can go online to be able to view their levels of energy consumption and help them to see other value that we can bring to them. We hope to involve them in our business in a greater sort of way”. According to Jönköping Energi AB (2011, d), private consumers have the ability to login to an area called “my pages” and view their invoices, statistics of consumption, and contract information. Additionally, businesses that are connected to the district heating are provided services by Jönköping Energi AB to become more energy efficient, reduce their costs, and improve their environmental friendliness (Jönköping Energi AB, 2011, e). Ms. Gotthardsson added that “our message is not buy as much as you can, but more solving their

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needs. Saving for them (the customer) is also important because it also benefits us as well, so it is a win-win situation”. Both Mr. Eskilsson and Ms. Gotthardsson added that “it is hard to explain, but we can see that when we try to provide these types of things, the customer is not aware of the values that we would like them to be aware of. They are much more aware of comparing prices and convenience, but the other values are not very well known……we have not done a good job communicating this to the customer”. However, according to both interviewees, these types of issues are very complex for the customer to understand. Jönköping Energi AB is currently in the process of changing its price model to create more transparency for the customer. Mr. Eskilsson discussed how “this is an important project. We see that there is a growing focus on energy efficiency among consumers, so this is a very important change for us to make so the customers can understand how we are pricing our product”. The people currently involved in creating this customer pricing model include the customer service department, the pricing department, and hired technical consultants. In addition to this, Jönköping Energi AB has also identified another issue regarding the development of energy efficient houses. Mr. Eskilsson stated that “one issue that we are focused on is the really high energy efficient houses that consume small amounts of energy. These types of houses can create economic problems for us because they pay the same initial investment to connect the building to the network (district heating) but they consume less energy than ordinary houses. So to connect that house will be less profitable or maybe not even profitable at all”. Jönköping Energi AB has been trying to combat this problem by increasing their district heating network. Mr. Eskilsson stated that he “thinks that one advantage for us is that we have a large district heating network and we include a lot of industrial customers that are able to produce a lot of excess heat, and if you can store it in any way and distribute it later on, that could be a great advantage”. This would help to limit the amount of waste Jönköping Energi AB would have to initially burn. Jönköping Energi AB has also identified that there might be future changes in the waste-to-energy industry that could affect their business, including the de-regulation of municipality owned energy facilities. Mr. Eskilsson stated that if this change went into effect, Jönköping Energi AB would be forced to divide the whole company structure to make it possible for the customers to be able to choose different dealers in district heating. However, this has not been voted on yet by Riksdagen (the Swedish parliament). Mr. Eskilsson added that “some of the big energy actors, such as E.on and Vattenfall, say that this would be really good because they can see that this would create an opportunity for them to buy these kinds of district heating networks around the country, and they would gladly do that”. Ms. Gotthardsson added that “all the different district heating companies in Sweden have a cooperation through the trade organization, Svensk Fjärrvärme (Swedish District Heating Association), and all are very active in this issue”. Ms. Gotthardsson continued describing how this cooperation between different district heating companies has provided the ability to potentially lobby against this possible change, in addition to providing the opportunity to discuss current decreases in the demand for heating. As of the 28th February, 2011, this issue has become a focus of attention for the Swedish District Heating Association (Svensk Fjärrvärme, 2011). According to both Mr. Eskilsson and Ms. Gotthardsson, Jönköping Energi AB’s ten most important customers in the Jönköping area consist of 50% of the heating consumption. Mr. Eskilsson discussed how “we have a couple of really big customers that are quite important to us, but most often we don’t have any large margins on that kind of business. It is more important for us to support them and to get them to stay in Jönköping with low energy prices.

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Again, we are a tool to increase work opportunities in the area”. Mr. Eskilsson added how the customers are the most important stakeholder to their business”. Finally, Mr. Eskilsson identified the strong influence coming from the EU. Mr. Eskilsson stated how “the EU is important in the future because they can regulate the industries. They (EU), for example, regulate in the bio energy sector. They can also influence the market situations such as procurement legislation, etc. The tax situation is also a factor, for example, the carbon tax, which is even better for our industry because we have a low influence on the carbon emissions”.

4.1.2 Interview with Jönköping Municipality (Jönköping Rådus AB)

The interview conducted with Jönköping Municipality took place on May 9th, 2011 with Björn

Söderlundh.

Mr. Söderlundh is the Vice CEO/CFO of Jönköping Rådhus AB. He is in charge in overseeing all the companies (19 total) owned by the municipality. Mr. Söderlundh described Jönköping Rådhus as a “mother company” that was established to help more effectively use the revenues generated by the firms instead of increasing taxes throughout the municipality. Mr. Söderlundh also described how Jönköping Energi AB is an important company to the municipality for undertaking environmental changes, and that one of the reasons why the municipality owns these types of companies is out of “tradition”. According to the 2010 annual report from Jönköping Rådhus AB (2010), Jönköping Energi AB and Jönköping Biogas AB have been able to reduce their CO2 emissions by 5300 tons. Mr. Söderlundh stated how “The municipalities have always been involved in the ownership of energy companies. 10-15 years ago, when many of the firms were restructured into companies, some municipalities decided to sell their energy companies to bigger private energy companies, but we decided to keep ours”. Mr. Söderlundh added that “We have begun to see the value in these companies. It is a good income source”.

Mr. Söderlundh discussed how the municipality is currently in discussions with Jönköping Energi AB on how to finance the expansion of Jönköping Energi AB’s waste-to-energy facility to include the burning of biomaterials to supplement the waste incineration. He added that “we are trying to see how we should finance this second step (at Torsvik) in the most efficient way…..we are using far too much oil in the system during the coldest periods of the year”. It was explained that the expansion of Jönköping Energi AB was not supposed to originally happen, and that instead, a state owned Finnish Green Diesel plant was supposed to have been built there, being able to meet the municipality’s unmet demand for district heating. However, due to the financial crisis, the Finnish government decided not to expand into Sweden.

Mr. Söderlundh described that his job involves the oversight of the financial and legal aspects of all Jönöping Municipality owned companies, including Jönköping Energi AB. Jönköping Rådhus has developed general ownership instructions for all municipality companies (Gemensamt ägar direktiv) and firm specific ownership directives (Särskiljt ägar direktiv). Mr. Söderlundh described one aspect of the firm’s specific ownership directive: “The specific ownership directive says for example that Jönköping Energi AB cannot buy another company without the approval from us (Jönköping Rådhus AB) and they can’t make investments larger than 25 million SEK. So for example this Torsvik stage 2 is an issue that has

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come up for approval to the mother company Jönköping Rådhus AB and also one stage further into the municipal council where they vote about it. So in big issues like selling part of the company or buying companies they have to get the owners approval. However we can also affect their daily work since we set the specific ownership directives that state what kind of business that should be doing and in what way. It says here that the main purpose of the company is to deal with delivery and sale, district heating and cooling, broadband, waste management with energy extraction. So in this you have what they are allowed to do. Thereby if they want to start something new they have to come to us. However, when it comes to daily operations, they are in charge over overseeing that. It is not the purpose that we sit here in Rådhuset and have all the competencies in all the different areas. This is not possible for us.”

In addition to these directives, Mr. Söderlundh described how Jönköping Municipality uses the revenues from the waste incineration (approximately 1/3 of annual revenues) to finance other projects within Jönköping, including the current investment into Jönköping Biogas AB; “The municipality sees potential in this company (Jönköping Biogas AB) so you have to work with it and develop it. This of course costs a lot of money so this is why the business is not doing very well. Then the CEO of all Jönköping Energi companies (Håkan Stigmarker) was probably not very happy about working with this bio-fuel company because it has such a bad economy”. Mr. Söderlundh added that “this is something that the municipality decided that they wanted to proceed with and then we decided how it should be managed. So this is an example of where we as the municipality decided what they have to work with”. However, Mr. Söderlundh described how current pressures from the EU and Swedish national law have influenced municipalities’ ability to help other firms owned by them. These laws describe how a municipality is not allowed to use tax generated money to help fund companies owned by them. According to Mr. Söderlundh, these laws were established because of “complaints against Sweden and the municipalities stating that there were not equal levels of competition within the market”. Mr. Söderlundh added that (in addition to creating equal competition through no municipality aid) that there have been other discussions regarding whether the municipality is breaking the rules of free competition when it comes to the municipality acting as a guarantor for loans taken on by Jönköping Energi AB. Mr. Söderlundh stated that “everything that they (Jönköping Energi AB) and other firms borrow from the bank goes through us and the municipality guarantees it. This makes the situation, of course, that Jönköping Energi AB is receiving the lowest interest rate possible. So this is an example where private companies say that it is not fair competition because they (Jönköping Energi AB and other municipality owned businesses) get a better interest rate. So Jönköping Energi AB has a greater financial situation than other companies. So to adhere to laws, we are in fact investigating this now – whether we should take a fee from Jönköping Energi AB that makes up for the better loan conditions. This is in fact a form of state aid”.

Mr. Söderlundh pointed out some of the risks that are involved in supporting a company like Jönköping Energi AB, specifically the current 1.1 billion SEK project being taken on by Jönköping Energi AB by expanding the waste-to-energy plant to include the burning of biomaterials. Mr. Söderlundh stated that “it is important to understand that you can’t fail in such an investment. This would be a huge problem for a municipality of our size in Sweden”. An additional risk that Mr. Söderlundh pointed out had to deal with the freedom of information act: “One thing that we have to take into consideration is the freedom of information legislation (everything that you want to see in a municipality you are entitled to as a citizen). The same transparency that exists in the municipality we also have in our companies….from this perspective it can be a problem when competing with other businesses – we can’t go to them and ask them for their business plan, but they can do that with us. However, no one has asked for the business plan from Jönköping Energi AB yet and I hope

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that no one will. It is difficult to see what comes out of that. I can see the advantages of having municipality owned companies, but definitely at the same time there are also problems”. Mr. Söderlundh stated that in addition to the financial and legal oversight they have over Jönköping Energi AB, they work actively with the municipality environmental agency and local politicians in developing strategies for the company to follow. Such strategies and discussions have included decisions not to expand the district heating area and what would happen if de-regulation occured. However, Mr. Söderlundh pointed out that even if de-regulation happens, “Torsvik as an energy supplier for the region is still a good investment, and it will be there for a very long time. By that, it has a very big value. One must hope that the government thinks and discusses if this really is efficient (to de-regulate). Moreover, Mr. Söderlundh pointed out they do not have control over who sits on the board of Jönköping Energi AB (held by local politicians).

4.2 Case Study – Statkraft Varme AS

Interviews were conducted with representatives from Statkraft Varme AS (Mr. Arvid Wisloff)

and representatives from Trondheim Municipality (Mr. Hans-Einar Lundli). Both interviews

are supported with secondary data.

In 2001, Trondheim Energi became Statkraft Varme AS after the purchase of the district heating facilities and network by the Statkraft Group from the Trondheim Municipality. After this purchase, Statkraft Varme AS took over control of the waste-to-energy facilities at the Heimdal district heating plant and the local distribution system. The Heimdal waste-to-energy plant is able to meet 30% of the Trondheim heating requirements through the production of 530 GWh/yr of districting heat. 70% of the district heating produced by the Statkraft Varme AS occurs through the incineration of solid waste at the Heimdal production plant. In addition to these facilities in Trondheim, Statkraft Varme AS also owns district heating plants in Klaebu, Porsgrunn, Horten, Jarslo, and Tonsberg. Additionally, as recent as 2009, Statkraft Varme AS purchased five district heating plants in Sweden. (Statkraft, 2009) Statkraft Varme AS is part of the Statkraft Group, a wholly-owned company by the Norwegian State. The Statkraft Group has been involved in the district heating industry since 1982. The company currently employs 107 people within Norway and Sweden, and is the leading national actor in the expansion of district heating .Additionally, the Stakraft Group is also currently involved in the production of other sources of energy, including hydropower, wind power, gas power, and osmotic power. (Statkraft, 2011)

4.2.1 Interview with Statkraft Varme AS

The interview with Statkraft Varme AS was conducted on May 11th, 2011 with Mr. Arvid

Wisloff (V.P. of Stakraft Varme AS).

Statkraft Varme AS business model is centered and designed around their value chain. This value chain begins at the operations level and continues through to the service. Inbound logistics are handled by Trondheim Municipality companies. As Mr. Wisloff stated, “(w)e are an energy company fully integrated from production to end user”. In addition to their business model, Statkraft Varme AS organization and activities are also built around the value chain.

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According to Mr. Wisloff “the value that Statkraft Varme AS creates is clean and reliable energy to its end customers”. These end customers in the Trondheim area include households, industries, and municipality owned buildings (schools, retirement homes, etc). However, according to Mr. Wisloff, Statkraft Varme AS does not integrate these customers feedback into their business model, but he acknowledged that this is becoming a potential focus for the business in the future in order to create a better product. “Our only focus currently is creating a stable and secure product”. Mr. Wisloff stated that the heating that Statkraft Varme AS produces is regulated, and “in order to deliver district heating, companies must apply for licenses to specific concession areas throughout the area. Under this law all new houses built within these concession areas must connect to the district heating company awarded that area”. According to Mr. Wisloff, Trondheim Municipality would like Statkraft Varme AS to become the primary provider of district heating because of its sustainability and environmental friendliness. However, Mr. Wisloff added that Statkraft Varme AS does not see this as good business because it would be too costly to provide heat in the low populated areas of Trondheim. According to Mr. Wisloff, district heating is not a very big business in Norway. Due to this limited market, Statkraft Varme AS does not see itself as having any direct competitors, and according to Mr. Wisloff, Statkraft Varme AS is a “monopoly”. Mr. Wisloff acknowledged that Statkraft Varme AS does see some of the primary energy companies in Norway as competitors. However, many of these are now owned by the Stakraft Group (this includes Hydro and Wind Energy). Mr. Wisloff also made clear the level of difficulty for competitors entering the district heating industry without a third party endorsement from the state. This type of assistance comes from the state owned group Enova, which subsidizes companies to transition customers from oil to clean district heating. Mr. Wisloff stated how Statkraft Varme AS is currently not satisfied with the support from Enova, and “would like to set up better agreements with them”. Additionally, due to laws passed by the Norwegian government, Statkraft Varme AS must match their prices of district heating to other energy sources. Statkraft Varme AS considers the district heating industry to be a profitable business. According to Mr. Wisloff, Statkraft Varme AS are able to generate profits from the waste that they receive and from the energy they produce from that waste to the end customers. Mr. Wisloff stated that “these two areas of income are primary parts in our profit formula”. Mr. Wisloff added that “an efficient energy grid also helps us to generate even more profit”. However, Mr. Wisloff wanted to remind the interviewer that due to Statkraft Varme AS being owned by the Norwegian government, 90% of total net income is collected by them, “so there is very little room to operate with the leftover income”. However, any projects that Statkraft Varme AS would like to invest in is usually given approval and granted funding by upper management of the Statkraft Group. Mr. Wisloff added that while this generally tends to be the case, Statkraft Varme AS has not received funding the past three years to invest in new projects. In addition, they are currently waiting on funding for their recently developed strategy from 2010. Statkraft Varme AS developed strategy in 2010 to invest and grow in Norway and Sweden. Mr. Wisloff stated that “the Statkraft group is the only company with national ambition to grow”. This strategy has included the past transactions of five new biomaterial energy plants in Sweden (where they are known as Statkraft Varme AB), and now currently involves the focus of regional districting heating growth. According to Mr. Wisloff, “Statkraft Varme AS sees the potential in smaller district heating plants in newer areas as a potential business

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opportunity”. Statkraft Varme AS has identified that there is a greater opportunity to expand into smaller markets rather than focusing on larger areas which are already being supplied district heating. Mr. Wisloff outlined that state run institutions, such as NVE2 and Enova3, have been useful for this expansion. Furthermore, Mr. Wisloff added that Statkraft Varme AS has also been trying to expand the use of biomaterials as an alternative energy source. Statkraft Varme AS purchased the district heating from Trondheim Municipality in 2002 and immediately began to expand further in to and out of the city. Mr. Wisloff stated that “the reason why Trondheim Municipality was unsuccessful in running the district heating facility was because they were unable to develop efficient price policies to compete with other alternative energy prices, and that they also were unable to successfully handle the high investment costs that came with district heating”. When Statkraft Varme AS purchased this, 1-2 billion NOK were invested into the Heimdal waste facility and additional 1 billion NOK were invested in expanding the grid. Mr. Wisloff added that since this acquisition, Statkraft Varme AS has invested 80 million NOK annually to obtain more customers. According to Mr. Wisloff “these investments are expected to produce 20-25 additional kwh of power to new customers over the next 10 years”. However, Statkraft Varme AS is finding it challenging to meet the large demand with the current Heimdal plant they are using. To solve this issue, Statkraft Varme AS is planning on building an additional plant to meet the current growth of the city and the increase in demand for energy. Mr. Wisloff stated “(H)ere in Trondheim, we operate and own the waste-to-energy plant, but I think the municipality would like to own it again. However, they do not understand the business model when selling energy or creating revenue. We think that we are the best ownership structure for this business”. According to Mr. Wisloff, Statkraft Varme AS’ biggest customer is the Trondheim Municipality. The acquisition of customers, along with the Trondheim municipality, has come from Statkraft Varme AS being awarded specific concession areas due to the constant growth in and around the Trondheim area. During this process of concession, Statkraft Varme AS must enter into a bid process and match any competitor’s price that is being offered. According to Mr. Wisloff, this concession process does not give the customer a choice in where they get there energy from. However, he added that this process does allow for the cheapest energy price to be given to the customers. Mr Wisloff also said that these prices are subject to change based on the prices of alternative energy and any additional tax charges that might come from the grid. Mr. Wisloff acknowledged that the fluctuation in these prices has had both a negative and positive affect for Statkraft Varme AS. He stated that “when the overall price of energy is high, Statkraft Varme AS of course profits from this. However, on the other hand, while having cheap energy prices may help us to get more customers, it has caused an overload in the grid and an inability to supply clean district heating. This has forced us to rely upon other fuels to meet this demand, such as oil during the winter time”. Mr. Wisloff said that Statkraft Varme AS has been trying to fix this by finding innovative efficient ways of delivering clean heating. Statkraft Varme AS was able to successfully learn last year how to store hot water on the grid and to use the energy more efficiently. “This might not

2 “The Norwegian Water Resources and Energy Directorate (NVE) is a directorate under the Ministry of Petroleum and Energy. NVE’s mandate is to ensure an integrated and environmentally friendly sound management of the country’s resources promote efficient energy markets and costs-effective energy systems and contribute to efficient energy use.” (Norwegian Water Resources and Energy Directorate, 2011) 3 “Enova SF is a public enterprise owned by the Royal Norwegian Ministry of Petroleum and Energy. Enova SF's main mission is to contribute to environmentally sound and rational use and production of energy, relying on financial instruments and incentives to stimulate market actors and mechanisms to achieve national energy policy goals.” (Enova SF, 2011)

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seem very innovative, but it is a new way for doing things for us and we earned a lot of money from it…by being more efficient in our operations”. Statkraft Varme AS stakeholders, identified by Mr. Wisloff, includes the Norwegian state, the municipality, the waste delivery firms, and the end customers. Mr. Wisloff stated “Statkraft Varme AS is 100% owned by the Norwegian state. Not only do they act as a primary stakeholder, but also as a regulatory system for the business. However, our most important stakeholder is the end customer”. Mr. Wisloff added how important it was to maintain a good relationship with the state, saying “if we do not have a good relationship with them, then we won’t get what we need to do what we want”. Mr. Wisloff stated that a previous regulatory tax on the burning of waste from the Norwegian state made it cheaper for the municipality of Trondheim to send their waste to Sweden instead of the Heimdal waste plant. “Not only was this affecting our ability to create energy, but it was also not environmentally friendly”. Mr. Wisloff added that when Statkraft Varme AS did burn waste during this time, the taxes were carried over to the customer. However, this tax no longer exists and Statkraft Varme AS is now receiving all waste from the Trondheim Municipality. Mr. Wisloff described how Statkraft Varme AS is aware of the risks of this potentially happening again where it is cheaper for the municipality to dispose of their waste to other countries, but he does not believe that this is likely to happen again. He added that Statkraft Varme AS is currently receiving trash from other municipalities now to support the current demand for energy.

4.2.2 Interview with Trondheim Municipality

The interview with Trondheim Municipality took place on 11th May, 2011 with Mr. Hans-

Einar Lundli (Energy and Climate Advisor)

Mr. Lundli is currently an energy and climate advisor in the environmental department for Trondheim Municipality. Mr. Lundli stated that one of his primary tasks within the municipality is to act as an advisor along with the state on the creation and extension of concession areas, and who, in their opinion, should be awarded these concession areas. Mr. Lundli explained that these concession areas are the creation of new parts within the Municipality that must be connected to the district heating network. Mr. Lundli described how companies, such as Statkraft Varme AS, must apply to the state to be awarded the right to supply these areas. Mr. Lundli also stated that “this system is totally necessary because if they didn’t have this system or rule, the new buildings in the concession areas would not connect to the district heating system….this is because district heating is still expensive and it is cheaper to use electricity as heating…..the high costs of district heating lie in the high installation costs of the water pipes”. Mr. Lundli goes on to say that once a concession area is awarded to an energy provider, they become the sole provider to that designated area. Mr. Lundli mentioned that “because of this concession process, Statkraft Varme is not a monopoly due to other companies having equal opportunity to provide energy to the newly created concession areas”. Mr. Lundli described how both Trondheim Municipality and the Norwegian government are interested in having more buildings connect to the district heating network because of the growing environmental issues in using electricity. According to Mr. Lundli, 30% of the heating in Trondheim comes from district heating, and the other 70% comes from electricity and oil. As a way to compete with the other energy sources, the government created a law in

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which Statkraft Varme AS energy prices are forced to be lower than the electricity prices. Mr. Lundli explained that Statkraft Varme AS however has not always been interested in applying for some of these concession areas due to their size and potential lack of growth. As he described, “this has caused a few issues with stakeholders that are operating there and also the municipality”. One example, as explained by Mr. Lundli occurred in 2007 when a factory outside one of the concession areas applied to generate their own heating as a response to Statkraft Varme AS refusing to include them in their awarded concession area. Statkraft Varme AS explained that they would eventually extend out to that area in 8-10 years, and that it wasn’t in their current plans to extend beyond the concession area they had applied for. However, Mr. Lundli explained that once this company applied to generate their own energy, Statkraft Varme AS responded immediately and ended up reaching an agreement to supply them with energy. Mr. Lundli explained that this agreement was reached because the business that had been applied for would have a large amount of spillover heat from their generated energy and be able to supply the surrounding area with this heat. Mr. Lundli also explained how Trondheim Municipality has the ability to enforce an “important regulation” on the type of buildings that must be connected to the district heating. This type of regulation is not included in the concession agreements awarded to the different energy firms; it is up to the municipalities to decide on the type of buildings that, by law, must be included. Mr. Lundli stated that “we have our own regulations saying that if a building or a building set is larger than 500m2 then it has to be connected to the district heating grid. In addition, let’s say for example that there is a single house of 200m2, but it is very likely that there will be more buildings created in the future in that area, then this building too must be connected to the grid”. However, Mr. Lundli stated that even though many of these buildings by law must connect to this grid, once they have connected, they still have a choice in whether to the district heating or not. However, in regards to the price of this installation, Mr. Lundli stated that it is almost twice as expensive to install district heating in Norway in comparison to Sweden. He said “Part of it (the high costs) is due to higher salaries, but that is only part of it. We just don’t understand why it is so expensive. This is a major barrier for having more district heating in Norway”. Trondheim Municpality created an energy and climate plan back in June 2010 to help encourage an increase in the use of district heating. Their plan is for 70-80% of district heating to come from the incineration of trash. However, a current issue that is hurting this climate plan is that it still remains much cheaper to send the waste to Sweden as opposed to keeping it in Norway. Mr. Lundli estimated that 80% of Norwegian waste contracts are currently going to Sweden. Mr Lundli also stated that “when discussing the environmental issues surrounding the transportation of waste, it is difficult for Norwegian Power Plants to argue for why they should be given the contract as opposed to being sent to other places”. However, Trondheim Municipality is currently under contract to deliver all waste to the Statkraft Varme AS facility in Heimdal.

4.3 Case Study – Vestforbrænding

Interviews were conducted with representatives from Vestforbrænding (Mr. Markus Müller)

and representatives from Copenhagen Municipality (Mr. Søren Nielsen)

Vestforbrænding was founded in 1970 (Vestforbrænding, 2011b). They are an environmental company working in the waste management field to reduce wastage and pollution.

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Vestforbrænding currently operates Denmark’s largest incineration plant in Glostrup, producing both district heating and electricity for its customers. Additionally, they operate six recycling centers in the surrounding. Vestforbrænding is 100% municipality owned, with ownership divided among 19 municipalities in Denmark. These municipalities are spread around the Copenhagen and Northern Zealand areas. The company operates under a non-profit-cost-coverage basis, which means that should, in the long run, make neither profit nor loss. Currently, Vestforbrænding is handling 900,000 tons of waste a year. Out of this waste, 62 % is incinerated, 33% is recycled and 5% is passed on to special treatment. At Glostrup, four waste-to-energy plants incinerate a total of 600,000 tons of waste per year. Out of this Vestforbrænding is able to produce 200,000 MWh of electricity and 1.2 GWh of district heating (Vestforbrænding, 2011a)

4.3.1 Interview with Vestforbrænding

The interview with Vestforbrænding was conducted on May 13th, 2011 with Mr. Marcus

Müller (Operations Manager).

Vestforbrænding is a municipality owned waste management company that operates throughout 19 municipalities in Denmark. The overall organizational structure of the company consists of each municipality having a specific set of politically elected representatives on the board of Vestforbrænding, with the size of the municipality usually dictating the number of places a municipality can have at the board. This board meets 4 times a year when the budgetary and tax issues are discussed and set. Mr. Müller described how sometimes these positions on the board at Vestforbrænding can usually be negotiated between politicians through different kinds of deal. He stated that “I would not say that this is a professional board, but more a politically driven board”.

Vestforbrænding is a nonprofit cost coverage company that gives back 100% of all revenues generated by the waste-to-energy company. Mr. Müller described the business model of Vestforbrænding consisting of different elements, including strategy, history, and varied economic models. Mr. Müller described that this model is predominantly driven by strategy, adding “with non-profit cost coverage, it is hard to make a business model driven by a bottom line. We have to have different factors within the business model so it is a little fluffy I would say”. He continued by saying that this strategy is driven by the environment, describing how Vestforbrænding has continually developed as a firm; from simply waste incineration during the 1970’s through to waste-to-energy production today. He added that “Then we went further and wondered whether “there are any other waste management activities that we could get in to”….and then we started with recycling stations and the collection of glass, cardboard, and metal. So I would say it is now environmentally driven combined with more and more services for the customers and citizens”. Mr. Müller outlined that in order to achieve this, Vestforbrænding has covered a majority of its value chain besides the collection of waste, which he described as privately service hired and paid for by the municipality. In addition to the waste services and energy production that Vestforbrænding offers, the company also has been working with private companies to in the small production of biogas. Mr. Müller described how this small development of biogas from waste was never meant as an alternative to the energy produced from waste incineration, but instead more of an experiment to try and produce more environmentally friendly ways to produce energy.

Mr. Müller described how the newest part of Vestforbrænding’s business model involves activities within their offered customer services, connecting it to a greater customer awareness

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regarding environmental issues. He stated how “this higher awareness has created a demand for more information and for new activities from the waste management plant”. Some of these activities include campaigns to decrease the consumption of paper based advertisements and better use of resources. Mr. Müller described that some of the campaigns are results from mandates placed upon Vestforbrænding by local politicians, saying “they give us a mandate to influence the people regarding means and resources, so we are provided enough for around 5-7 campaigns a year and to have some people educated, to take in visitors from school - kindergarteners and also adults – this is something the politicians have given us the opportunity to do”. It is these types of things that Mr. Müller describes as being important drivers for the company – education and environmental issues – that are important for Vestforbrænding. Mr. Müller described that “you have to tell them a story that the waste that they are generating is being recycled and used for energy…those are the stories that people want to hear and that is what motivates them, and we can deliver those stories”.

Vestforbrænding does not currently import waste to support the production of energy at the incineration plant. Mr. Müller described how “We don’t yet have the approval of our board to import waste….I mean we could do it, but again when you are not driven by a bottom line and instead driven by local politicians where these guys look at the municipality and say: OK, if we import 50,000 tons of waste from wherever, this is approximately 5000 trucks running back and forth through my municipality, and I don’t want that. Frankly, I do not give a shit about the bottom line, it might be good business but I do not want to be a mayor in a city and have to answer to why there are so many trucks on the road. So their motive is different”. Mr. Müller described how Vestforbrænding is currently able to meet up with the demand for energy production through the incineration of waste, but also how the financial crisis of 2008 resulted in a severe drop in the total amount of waste being produced by the municipalities (industrial and household). “You could really tell that something what happening out there because people didn’t have enough money to change kitchens or buy new stuff. I mean, it was simply obvious that something was happening out there. Now it has stabilized, and we are 15% below peak amount. But of course, this discussion would be really interesting if we had gone below with say 30%, then we might have had a problem serving our heating customers. Then it would be a different discussion about importing waste from Jönköping for example. But as long as we can meet our demand from customers with both electricity and district heating the politicians will not want extra imports of waste from outside our catchment area”. Mr. Müller described that when this crisis occurred, Vestforbrænding was forced to rethink some of its waste flows. This meant the redirection of waste fractions to the incineration plant as opposed to being exported. Mr. Müller explained that when it comes to the import and exporting of waste it becomes very competitive between countries. He said “the incineration business in Sweden is obviously one of our competitors because they do not have a state tax. In Denmark, we have a waste tax of 330 DKK per ton. As far as I know, Sweden does not have it, so you can have a 330 DKK price different, which still makes it very favorable to transport waste 300-500km east. We do not do that, but the private waste companies do it”. Mr. Müller stated how the industrial waste within Vestforbrænding’s catchment area has become liberalized and is free to be sent to the spot that is the cheapest, saying “this is the name of the game right now – try to make some kind of deal or contract with private entrepreneurs because they have all the industrial waste. If the waste has a high caloric amount, then we can give them some special prices….we have cleared that with our board”. The fees and prices that are set when it comes to taking in trash are varied, depending upon the type of trash (industrial or household) and to the type of

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customer. Mr. Müller described how Vestforbrænding has in the past considered extending its value chain into the collection of trash, but as he further explained: “…but when you are municipally owned, why should you enter a field where the private competition is working and already doing the job?....Because you are going to risk public money competing with private companies….and that first of all is a political issue….should public money go to that - entering a market where there is a healthy competition? No you would not do that. In principle it is mind your money. Why should you gamble with that money going into competition with private companies? So no, you would not do it. You would do it if it was a market that was not working or if it was a market with some sort of private monopoly. Yes then it could be a different story, but if you have healthy competition out there and they are obeying the law and they are doing the environmentally correct thing, then you would not enter it.”

In addition to special prices for trash, Vestforbrænding also has some special prices in the produced energy for different customers. According to Mr. Müller, the customers who are able to take heat in the summer are very attractive customers and are provided special prices. However, Mr. Müller described how prices are not specifically set to keep larger customers in the Copenhagen area, saying “because Copenhagen is such a big area we have a lot of customers and a very dynamic market. So we have not thought about being price wise active to make companies stay….however, it could be a thought”.

Mr. Müller described how the issue surrounding the de-regulation of the waste-to-energy industry in Copenhagen is becoming a growing discussion throughout Vestforbrænding and the municipality. He described how:

“It’s been talked about and it is thought about, but it is really not clear how and what it is going to look like. The trend is that the liberal government we have now want to privatize and they started to privatize the industrial waste. We will now have to wait and see if they will also privatize municipal waste. The model now is that all municipalities have to deliver a municipal treatment plant - this is a public activity right now. What you could do is to ask people to make a tender (procurement) on it. Then you get the competition and you get a lot of different dynamics in this field. That could be one of the things that could happen here if the liberals and their ideas survive the next election. If they do that, then why should the public own an incineration plant? Because you have an investment; Vestforbraending is an investment of 2.5 billion DKK. Why should the public own a 2.5 billion industry and risk that they will not win the tender? If they do that, the municipalities would drop their share in the incineration plant here. They would probably not drop their activities and engagement in the rest of Vestforbraending, the recycling stations and all those that I told you about, education, school kids and all that stuff. All those soft parts, or whatever you call it; they would probably still have an interest in that. As an incineration plant owner I don’t believe they would be interested in that and that is going to be the major discussion in the next couple of years about what is going to happen. Personally I cannot see why a municipality should own an incineration plant when they have to make tenders for their own waste. Somebody would buy the incineration plant and bid on those tenders and try to make a living off that”.

However, Mr. Müller added that he could also see the problems of having the whole waste-to-energy industry privatized, describing “It’s hard to say what the market would look like, if there would be a market close to a monopoly, which it actually is going to be because there are only 4 or 5 incineration plants left on Sjælland (Zealand) here in the Copenhagen area. I mean, are we going to have a healthy competition between 4-5 competitors in a relatively open market? I don’t know. If it is going to be similar to a private monopoly, then I would rather prefer a public monopoly”. He described that one result of privatization would be an increase in prices for citizens and businesses to get rid of their waste and a decrease in public

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awareness campaigns. Mr. Müller described that the differences in motives between a publicly and privately owned company, describing how “our motive is to be informative and educational. We have to do the stuff that privately owned companies don’t do. You don’t see them going out there taking care of public awareness campaigns – they don’t do that. They run the business so that they are a bottom line operator. They cut the crap and get the job done, but they don’t have the side activities like we do”. According to Mr. Müller, Vestforbrænding considers its most important stakeholders to be the board members, the municipality, and the local politicians. He stated that “these are the owners of Vestforbrænding. They founded us and they can kill us too if they want to. So we have to serve them…..we have to please them so that they are happy. We can’t operate without them”. In addition to these stakeholders, Mr. Müller described how different political groups that are appointed to create laws and legislation in both Denmark and the EU can also be considered stakeholders.

Mr. Müller ended the interview by describing key issues that will affect the waste-to-energy industry in the future by stating: “I think that when it comes to the waste market in general the big driver in the next ten years is resources. That is the next mega trend. I don’t think the setup we have right now is sufficient to handle that problem. I do not know if it is a question to be publically or privately owned and if that is going to be the issue. The issue is going to be how we most effectively get the resources out of the waste treatment back into the cycle. If you do some basic research on the internet how much recourses are there left? How much copper is it left? How much phosphor etc.? Can we continue in this way? Can we dig out all copper? And put it into a mobile phone or whatever? And then throw it away and buy a new one using more copper. This is not going to work. We are going to run out of those elements, there are not going to be more of those elements left. China is buying half of Africa because of those metals that are in Africa. But for Europe it is going to be a strategic issue to get hold of those resources that is why recycling is going to be big. So it is going to be a completely different story we have to address and we have to find ways to solve the problem. If private companies can do it better than public ones, then so be it but that is going to be the main issue”.

4.3.2 Interview with Copenhagen Municipality

The interview with Copenhagen Municipality took place on 3rd May, 2011 with Mr. Søren

Nielsen (Municipality Waste Planner)

Mr. Nielsen is currently involved in overseeing the management of waste of two of the municipality’s facilities: Amagerforbrænding and Vestforbrænding. According to Mr. Nielsen, the Copenhagen Municipality has an ownership stake in Vestforbrænding along with 18 other municipalities in Denmark, with their municipality having the largest stake with 19%.

Mr. Nielsen described how Copenhagen Municipality has the ability to influence Vestforbrænding from both a strategic aspect and financial aspect. He described how “ if they (Vestforbrænding) want to obtain a loan to get more incineration capacity or some district heating building, then they have to get all the municipalities (who own the plant) to decide in their city halls. So we have a “veto” possibility when it comes to major new facilities”. Mr. Nielsen also described how they are able to influence Vestforbrænding strategically through their representative on the board at the waste-to-energy firm on issues regarding budgets,

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future plans, and upper level management personnel. However, they do not interfere with day-to-day operations and other hiring taking place at the company. Mr. Nielsen described how “we try to keep an eye on these companies to not use too much money on administration. These companies are quite far from the public democracy. They are managed by our politicians in a board of many other politicians and if they make money it is supposed to be kept in the company. Technically they have a very free role and we have to make sure that they don’t use money too freely and too often. So that is one policy that we follow up”. ‘ In addition to this, Mr. Nielsen described how the Copenhagen Municipality is also trying to influence Vestforbrænding by trying to recycle more and burn less trash. According to Mr. Nielsen, Vestforbrænding has a limit of waste that they can burn, and that the Copenhagen Municipality would prefer to have Vestforbrænding recycle more rather than burn trash. Mr. Nielsen stated that “They (Vestforbrænding) have to follow what the board says, but they can also work rather freely just as long as they are in the line with what is drawn up by the board. It is up to Vestforbrænding to implement the policies created, and of course there are a lot of different ways they can choose. So they can choose for themselves pretty freely”.

Mr. Nielsen described how the municipality follows both EU and state government directives when it comes to the management of their waste-to-energy facilities, and that they work cooperatively with Vestforbrænding to be as effective as possible.

5. Analysis

5.1 – Jonkoping Energi AB

5.1.1 Value Creation, Capture, and Delivery at Jönköping Energi AB

Jönköping Energi AB’s value creation process within their waste-to-energy business model begins with the value drivers throughout their firm, set forth by Amit and Zott (2010). Jönköping Energi AB possesses four different forms of efficiency throughout their organization. These include (1) efficiency in the energy that they create by burning waste with minimum amounts of harmful emissions, (2) their ability to create district heating, cooling, and electricity from one resource, (3) their revenue efficiency by receiving income from both the procurement of waste and selling of energy, and (4) their reduction in information asymmetries by working closely with Jönkoping Rådhus AB. Their complementarities include the bundling of goods and services into their product by providing both broadband instillation (along with district heating instillation) and their 24 hour customer service program. Their lock-in effects are achieved through the customer’s difficulty in switching energy providers once they have invested in the installation of district heating. Finally, their novelty lies within (1) their ability to supply clean energy without overloading the electricity grid and, (2) acting as a tool for social development by helping to create jobs, support local businesses (by giving cheaper prices for energy), and provide financial support to other municipality owned companies.

Shafer et al.’s (2005) description of how a firm can create and capture value through differentiation and unique relationships is similar to what Jönköping Energi AB has been able to achieve. Firstly, their key source of differentiation is that they are municipality owned.

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Through this ownership structure, they have been able to secure greater financial support and low interest rate loans that have helped them to diversify their activities (such as the upcoming waste energy plant expansion into biomaterial burning). Additionally, another form of value creation comes from the relationships it has established with different waste suppliers and customers. This includes their involvement with the Swedish Competition Authority for the procurement of municipal waste, their contracts with Swedish industrial waste entrepreneurs and municipalities in Norway, and their strong interaction with customers regarding energy efficiency solutions.

In addition to these other forms of value creation, Jönköping Energi AB has also been able to create value through specific value propositions tailored to both its customers and municipality (as outlined by Johnson (2010) and Morris et al. (2005)). Firstly, Jönköping Energi AB is currently fulfilling the municipality’s need for better waste management services and financial support of other publicly owned businesses. Secondly, they have been able to work closely with customers to create more effective ways them to become efficient in their energy use, such as the “my pages” web support site.

When analyzing Jönköping Energi AB’s ability to capture value from their waste-to-energy business model, they have been able to achieve this through a number ways. As Teece (2010) states, one aspect of value capture occurs through long-term service contracts and revenue. Jönköping Energi AB has been able to do this by being the sole provider of waste-to-energy in the Jonkoping municipality, and have acted as a tool for generating value for them. Chesbrough and Rosenbloom (2002) and Johnson (2010) state that value creation for a business comes through firm generated cost structures and revenue models. Jönköping Energi AB has been able to coordinate multiple sources of revenue along with their district heating, such as the installation of broadband and procurement of waste from different places. Furthermore, they have been able to maintain flexible district heating prices in order to maintain customers and compensate for additional costs of burning additional fuels during the winter season when demand is high.

When analyzing Jönköping Energi AB’s ability to deliver value, we compare it to Johnson’s (2010) factors of achieving the customer value proposition. Here, we see that the most critical asset that JEAB has that allows them to continuously delivery clean and reliable energy to the consumer is Jönköping municipality. Without their support (both financially and legally) Jönköping would not be able to continue to function at the same level.

5.1.2 Jönköping Energi AB’s Business Model Reinvention, Adaptation, and Innovation

As outlined in our theoretical framework, one method a business can use to create, capture, and deliver value is through business model reinvention, adaptation, and innovation. When examining Jönköping Energi AB’s business model, there are specific examples of when this has occurred.

The first identified form of business model adaptation that has modified the value created by JEAB stems from their interaction with customers. Due to a rise in customer criticism, Jönköping Energi AB identified that customers were becoming more aware of the issues surrounding energy efficiency, and their desire for a greater understanding of how they could potentially save money and become more efficient in their energy usage. This identification of customer concerns is in line with Voelpel et al. (2004), who discusses how a firm can better

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adapt their business model by identifying different social dynamics. In order to solve this problem, JEAB is currently working on a more transparent pricing model that involves input from many different parts of their organization (such as the customer service department and the pricing department), their customers, and hired technical consultants. This too is in line with business model theory developed by Voelpel et al. (2004), who described how business model reinvention can be achieved by having shared working environments, where diverse viewpoints and ideas are obtained from both employees throughout the organization and the stakeholders connected to the firm.

A second form of business model adaptation that was identified was Jönköping Energi AB’s current plans for diversifying their approach in energy creation. This involves the expansion of the Torsvik power plant to include the burning of biomaterials. According Jönköping Energi AB (2011, c) the demands for heating varies throughout the year, and therefore there is need for several types of heat production in the district heating. However, according to Ms. Gotthardsson, an additional reason for this expansion (that is not mentioned on Jönköping Energi AB’s website) is due to their high dependence on trash from outside of the municipality (65% from within a 200km area, and 10% from outside Sweden). This type of business model reinvention is similar to Voelpel et al. (2004), who describe how reinvention does not necessarily mean the cannibalization of an existing model, but instead a greater emphasis upon experimentation through systemic strategic management. While Jönköping Energi AB is not cannibalizing its existing waste-to-energy business model, it is strategically trying to diversify itself by becoming less reliant upon the waste industry when creating waste.

Overall, when analyzing Jönköping Energi AB’s business model, it does not include many of the different components of reinvention, adaptation, or innovation that lead to the desired value. This is because as a municipality owned firm, they receive specific directives from the municipality that must be followed and that limit them to many changes. These directives state that Jönköping Energi AB’s sole purpose as a company is to simply deal with the delivery and sales of energy, district heating and cooling broadband, and waste management with energy extraction. Anything that they wish to change must be approved by the municipality. However, we believe that another reason for their limited amount of business model reinvention, adaptation, and innovation is due in part to them being a monopoly within this specific industry, and that competition is very limited in this industry due the barriers created through municipality ownership. Additionally, what is interesting to note is that while Jönköping Energi AB was adaptive in their business model in certain circumstances, they were more reactive than proactive. When analyzing their decision to become more transparent in their pricing strategy with customers, this could potentially lead to high competitor imitation.

5.1.3 Strategic Management of Business Models at Jönköping Energi AB

This issue of potential competitor imitation is where the strategic management of business models comes into play. According to Teece (2010), in order for a firm to avoid competitor imitation, a business must use strategic analysis filters to be able to create sustainable business models and barriers of entry. When analyzing Jönköping Energi AB, we see that they have been successful by segmenting their market, creating value propositions for those specific segments, and additionally providing potential barriers for competition. Jönköping Energi AB segmented their market by identifying their top ten customers who consume 50% of the total

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created energy by JEAB; they created a specific value proposition by offering them cheaper prices, which in turn created a price barrier that may hinder other competitors from entering that market segment. This method has helped Jönköping Energi AB to continue in creating and capturing value for their firm and customers. However, another potential reason for why they provide cheaper prices is due to their goal in helping to develop Jonkoping Municipality. By providing cheaper prices to these customers, they will be able to keep more businesses in Jonkoping and provide greater financial stability to the region.

5.1.4 Jönköping Energi AB’s Industry Specific Business Model Design

A third method that a firm can use when creating, capturing, and delivering value deals specifically with issues and challenges concerning the industry that they operate within. When analyzing Jönköping Energi AB, their challenges within the waste-to-energy industry have included (1) convincing customers of their high level of efficiency and reliability as a firm, (2) their ability in avoiding high initial capital costs for other projects, and (3) their identification of future problems regarding the development of energy efficient homes. Jönköping Energi AB has been persistent in communicating to their customers their reliability and efficiency as an energy supplier. They have achieved this by creating value propositions that focus upon the benefits of using their product in comparison to geothermal and other technologies, in addition to offering enhanced customer services and customer integration. This is in line with Wustenhagen and Boehnke (2008) who state that when dealing with environmental externalities (such as the public vs. private debate) a firm must create better CVP’s to convince the customer of the private benefits on top of the public benefits. Secondly, Jönköping Energi AB has been able to avoid large initial capital costs (in comparison to other competitors) by being provided financial support from the municipality. This has been done through the granting of low rate interest loans and other forms of financial aid granted to them to pursue the development of the Torsvik waste-to-energy plant and its new extension. This is also in line with Wustenhagen and Boehnke (2008) who state that in order to over-come these types of challenges, businesses should partner with other firms to avoid one-on-one competition. While this is not directly a partnership between the municipality and Jönköping Energi AB due to their ownership of the firm, it is still a form of partnership which has helped Jönköping Energi AB to avoid direct competition. However, this lack of direct competition can be attributed to Jönköping Energi AB having a monopolistic control over the local market. Thirdly, Jönköping Energi AB has identified a potential issue regarding the development of new energy efficient homes throughout the municipality. According to Jönköping Energi AB, having these new buildings connected to their district heating grid would almost not be profitable at all because of their small consumption of energy. In order to combat this problem, Jönköping Energi AB has begun to increase its district heating network by partnering with larger industrial customers who produce excess heat. By using the excess heat produced by these customers, they will be able to reduce the amount of waste needed to be burned to supply heat and meet the slowing demand of the energy. This again is what Wustenhagen and Boehnke (2008) state regarding effective partnerships to avoid competition. The competition in this case is the firms that build the energy efficient homes and businesses. While this is not one-on-one competition, it is still a form of competition that is affecting Jönköping Energi ABs businesses.

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5.1.5 Jönköping Energi AB’s Stakeholders

When analyzing Jönköping Energi AB, we were able to identify several different stakeholders that influence their business model knowingly and unknowingly. As outlined by Fassin (2009), it is possible to classify these stakeholders by different groups, i.e. stakewatchers, stakekeepers, and stakeholders. These stakeholders for Jönköping Energi AB include the Jonkoping Municipality government, their customers, the Swedish government, the Swedish Competition authority, their waste suppliers, the EU, and the town and its residents of Jonkoping. Each group has placed some sort of pressure or has a stake in the company that affects their business model. The real stakeholders, as outlined by Fassin (2009), are those who possess a legitimate claim, power and influence, and who the firm has a responsibility to. Jönköping Energi AB real stakeholders consist of the Jonkoping Municipality mother company, Jonkoping Radhus AB, Jönköping Energi AB’s customers, the local residents, and their waste suppliers (contractual obligations). The stakewatchers, as identified by Fassin (2009) are those do not really have an interest in the company but protect the interests of real stakeholders. These consist of the Swedish government and the EU. And finally the stakekeepers, outlined by Fassin (2009) as being those who enforce regulations and constraints were identified as the Swedish Competition authority regarding the procurement of waste. What is important to note is that while Jönköping Energi AB’s competitors may influence their business model in some way, they are not stakeholders to the company. As outlined by Freeman (2010), these different stakeholders possess the ability to influence the firm in many ways – economically, socially, technologically, politically, and managerially. The real stakeholders of Jönköping Energi AB (Jönköping Radhus, their customers, waste suppliers, and town residents) possess the ability to influence them economically socially, and politically. The stakewatchers affect them politically and socially, and the stakekeepers affect them economically. While Jönköping Energi AB identified that their most important stakeholder as their customers, we believe that this is not true. Instead, we see the Jönköping Radhus AB as being there most important stakeholder to the firm. They are the owner of the firm and possess the ability to control how Jönköping Energi AB operates, both financially and legally. As outlined in our interview with the Municipality, they provide Jönköping Energi AB with specific directives to follow; they oversee all financial and legal issues and have the ability to strongly influence their business model. The first example is how the Municipality has decided for Jönköping Energi AB to change their business model and pursue the development of biogas. A second example consists of Jönköping Radhus AB acting as a guarantor for all loans for Jönköping Energi AB. Without these loans, Jönköping Energi AB would be unable to pursue large projects or expansion. Thirdly, due to a Swedish law known as the freedom of information legislation, Jönköping Energi ABs business model is open to the public to be viewed. This transparency can have a large effect on Jönköping Energi AB. Overall, as outlined by Freeman (2010), Jönköping Radhus AB possesses the ability to affect many aspects of Jönköping Energi AB – economically, technologically, politically, and managerially. We believe that their customers are not their most important stakeholder because Jönköping is not as greatly affected by their decisions due to them acting as a monopoly within their industry. Furthermore, due to the high customer lock-in effects that come with using Jönköping Energi AB’s district heating, the customers’ inability to switch energy providers does not enable them to have a large amount of power over Jönköping Energi AB.

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Overall, one can see that Jönköping Energi ABs business model being very much tailored to the directives outlined by Jönköping Municipality. They have limited freedom to operate independently, and a majority of their revenue is used to develop other municipality owned businesses. This relationship defines the power balance between the firm and municipality.

5.1.6 Understanding Jönköping Energi AB’s stakeholder relationships through Institutional Isomorphism

Jönköping Energi AB is greatly influenced by a majority of their stakeholders. However, simply identifying and explaining the effects that these stakeholders have upon Jönköping Energi AB does not explain why they are exerting these types of pressure on their business model. As outlined by Powell and DiMaggio (1991), firms that adhere to these types of pressures do so to remain legitimate, and can be explained through the concept of institutionalism. From our investigation, we see that Jönköping Energi AB is influenced greatly through coercive pressures. Powell and DiMaggio (1991) outline these coercive pressures as informal and formal pressures from different groups that can be described as force, persuasion, and invitation to collusion where firms conform to certain standards, rules and forms. We see that a majority of changes that have affected Jönköping Energi AB’s business model have come through force and persuasion from the municipality owner, Jönköping Radhus AB, and different governmental directives and agencies. If Jönköping Energi AB does not follow the specific directives set forth to them by these different groups, it will affect the legitimacy of their organization and greatly affect their ability to operate. Additionally, the relationship between the municipality and Jönköping Energi AB can be described as a form of normative isomorphism. As outlined by Powell and DiMaggio (1991), “institutions guide behavior by defining what is appropriate or expected”, which in turn is also guided by values, norms, and standards of social obligation. As outlined in our interview with Mr. Soderlundh, the reason for why Jönköping Energi AB is owned by the municipality is done out of tradition. This idea of tradition is a value that lies within this community, and works toward fulfilling social obligations. Furthermore, it is expected that Jönköping Energi AB act as a tool for social development for the municipality.

5.2 Statkraft Varme AS

5.2.1 Value Creation, Capture, and Delivery at Statkraft Varme AS

Statkraft Varme AS value creation begins with three sources of value drivers within their firm: their efficiency, lock-in capabilities, and the novelty of their product. Firstly, this efficiency exists within their ability of maintaining an effective and efficient energy grid to deliver the energy that they create to their customers without overloading it, and secondly, their efficiency in pricing policies that are dictated by the Norwegian government. Their lock-in capabilities within their business model come from being awarded specific concession areas throughout the Trondheim municipality that makes them the sole supplier of district heating to that area and the residents and businesses that reside there. And thirdly, the novelty in their product comes from their ability to create clean and reliable energy for their end customers. These three drivers of value creation are in line with Amit and Zott (2001) definition of sources of value creation within a firm’s business model. However, what is

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important to note here is that one of these drivers, lock-in, can also be identified as a negative aspect for Statkraft Varme AS. While being awarded specific concession areas allows them to bring in more customers, due to specific pricing policies set by the Norwegian government, Statkraft Varme AS by law must match the cheapest current energy market prices. While the pricing policies may be efficient, it can hurt them if they have too large of a customer base locked-in to their energy supply. As described by Mr. Wisloff, this issue has sometimes hurt them. A second source of value creation that exists within its business model is through its process of differentiation in relation to its competitors. Statkraft Varme AS has a unique relationship in the sense that it is not municipality owned, but instead owned by the Norwegian state. This allows them to more easily secure capital and funding to pursue their development of waste-to-energy production, in addition to allowing them to pursue further growth both within and outside of Norway. This is similar to Shafer et al. (2005) and their understanding of value creation and ability to secure funding to pursue a business’ value creating core activities. Again, however, while Statkraft Varme AS may state that this unique relationship may be beneficial to them, as outlined in our interview with Statkraft Varme AS, they have not received funding over the past few years for new projects. With 90% of their income being taken by the Norweigian state, their ability to operate independently has been limited. Statkraft Varme AS ability to capture revenue from its business model comes through their understanding of their value chain and how to appropriate value. As stated by Statkraft Varme AS, their business model is centered on their value chain, where they consider themselves as an energy company fully integrated from production of energy to end user. This understanding of how their value chain operates allows them to appropriate value accordingly captured from the value created. This is similar to theory outlined by Chesbrough and Rosenbloom (2002) and Shafer et al. (2005). A second way Statkraft Varme AS is able to capture value from their business model comes from their understanding of their cost structures. They have identified that working in specific concession areas throughout Trondheim Municipality would be too expensive for them to operate, and for that reason, have chosen not to expand into certain areas. Understanding the cost structures associated with these areas has helped them to identify which areas to expand in to that can help them create more revenue. However, their profit potential is unclear due to the constant change in energy prices throughout the market. This fluctuating change affects their pricing of the energy that they create, because by law they must meet that price. These forms of value capture are similar to business model theory outlined by Johnson (2010). From this, one can assume that Statkraft Varme AS is opportunistic in which areas it chooses to deliver energy to. Statkraft Varme AS ability to deliver value from their business model, similar to that described by Johnson (2010), is through its critical skills it has developed through energy storage. Statkraft Varme AS have been able to learn how to successfully store hot water on their grid and deliver it at a later point to their end user. One reason for why they pursued this is by being able to earn more money by burning less trash. However, what we were able to identify as being the main reason for this is connected directly to the prices of energy. The constant fluctuation in prices has affected their grid capacity in delivering district heating - when prices are cheaper, demand is higher, which in turn affects their grid capacity and burning of waste.

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5.2.2 Statkraft Varme AS Business Model Reinvention, Adaptation and Innovation

When analyzing Statkraft Varme AS ability to reinvent, adapt, and be innovative with their business model, we identified that there were very few times that this actually happened. They have limited contact with customers and the municipality, and only have adapted or been innovative with their business model when it has come to making money for the company. As outlined by Voelpel et al. (2004), successful business model reinvention can occur when a business makes sense of opportunity gaps and cultural dynamics. Statkraft Varme AS has identified that it does not make sense for them to expand into heavily populated areas that are already receiving district heating, and instead have identified opportunities to expand into Sweden and less residential areas throughout Norway. Furthermore, they have identified that expanding into these areas is not only due to higher competitive forces, but also due to the pricing constraints that concern their energy production. This is also in line with Johnson (2010), who states that reinvention can be identifying new customers and markets. These pricing issues are what have led to Statkraft Varme AS to become more innovative with their business model. By successfully learning how to store hot water on their grid, they have been able to become less reliant upon burning waste and more efficient in their energy production and storage. This too is in line with Voelpel et al. (2004) who states that a firm should experiment with their business model without cannibalizing their extant one. However, one issue that has forced them to change their business model are the laws regarding which houses must be connected to the district heating grid. These laws state that houses of a specific size must be connected to the district heating grid. Statkraft Varme AS have been able to successfully deal with this law by working cooperatively with Enova who helps by providing subsidies to connect these houses to the grid. This is in line with Chesbrough and Schwartz (2007) who state innovative business models can be achieved through co-development partnerships with other firms. Together, Enova and Statkraft Varme AS have been working to delivering their district heating services to more people throughout the Trondheim area and Norway.

5.2.3 Statkraft Varme AS Strategic Management of their Business Model

The only form of strategic management identified with Statkraft Varme AS was their identification of new opportunities to pursue within their industry. This includes their purchase of the heating plant and network from the Trondheim Municipality in 2002, and their investment into new areas into Sweden and smaller parts of Norway. This identification of specific areas to invest in is similar to the strategic analysis filters outlined by Teece (2010). Statkraft Varme AS identified different market segments to invest into and have implemented mechanisms to capture value from these segments and to hinder competition (comes from the awarding of concession areas that they apply for when investing in these new areas). However, they do not create CVP’s for each segment. This is due to their limited customer integration into their business model. It is our understanding that their limited strategic management of business models is due to them acting as a monopoly within the waste-to-energy industry.

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5.2.4 Statkraft Varme AS Industry Specific Business Model Design

Statkraft Varme AS business model is very much influenced by specific challenges and issues occurring within the waste-to-energy industry. Firstly, because of their ownership by the Norwegian state, they have become a monopoly within this industry, avoiding direct competition from other firms. Secondly, they work with NVE in obtaining concession areas to further help the growth of their company into new areas. In both cases, working with the state and this organization has helped them to avoid competition. The only form of competition that may take place in this process is during the awarding of concession areas, where other firms are provided a chance to come in and compete to become the concession area’s energy supplier. This ability to avoid one-on-one challenges from competitors is in line with theory described by Wustenhagen and Boehnke (2008), who state that properly configured value creation can help hinder competition. Statkraft Varme AS configured value creation consists of an understanding of how and where to grow. Moreover, according to our interview from the Trondheim Municipality, due to the 70% of energy being provided by electricity and 30% coming from district heating, the government has created a law where Statkraft Varme AS energy prices must be lower than the electricity prices. This is due to Trondheim’s apparent demand for higher amounts of district heating than electricity. Due to this specific law, one can assume that their value creation comes from cheaper prices, which in turn has helped them to avoid competition. What is interesting to note when analyzing Statkraft Varme AS business model from an industry perspective are the issues regarding the awarding of concession areas. Statkraft Varme AS described how in some cases it was not “good business” for them to go into specific concession areas because of the small population. However, we found out from our interview with Trondheim Municipality that sometimes Statkraft Varme AS has been forced to take on specific concession areas due to unhappy customers. This example refers back to the situation between Statkraft Varme AS and a factory operating outside of their concession area. Statkraft Varme AS communicated to this factory that they would expand out to that area in 8-10 years. Because of this, the factory applied to become the sole provider of district heating for that area due to the large amounts of spillover heat that they produced. However, once Statkraft Varme AS learned of this application, they decided to expand. This is a form of competition in an indirect form.

5.2.5 Statkraft Varme AS Stakeholders

When analyzing Statkraft Varme AS, the waste-to-energy firm identified that their stakeholders include the Norweigian State, the waste delivery firms, the municipality, and the end customers. Moreover, Statkraft Varme AS identified that their most important stakeholder as their customers. However, we believe that Statkraft Varme AS stakeholders also should include the EU, NVE and Enova. Again, using theory by Fassin (2009) we classify these stakeholders based on their relationship to the firm (stakeholder, stakewatchers, and stakekeepers). Statkraft Varme AS real stakeholders can be identified as the Norwegian state, Trondheim Municipality, and their customers; their stakewatchers consist of primarily the EU; and their stakekeepers include NVE, Enova and the waste delivery firms. As previously noted in our analysis of Jönköping Energi AB, these types of stakeholders possess the ability to influence a firm’s business model economically, socially, technologically, politically, and managerially (as outlined by Freeman, 2010). When analyzing Statkraft Varme AS, we believe that the real stakeholders to the firm, the

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Norweigian State and Trondheim Municipality, possess the greatest amount of power to affect the firm. The Norwegian state sets energy law prices, budgets, and can affect their overall societal opinion through the way they operate. Overall, the Norwegian state affects Statkraft Varme AS economically, technologically, socially. Without their financial support, they would not be able to expand or possess certain technologies, and furthermore, their ability to set prices affects how people may view Statkraft Varme AS as a business. Trondheim Municipality also possesses a large amount of influence over Statkraft Varme AS. They act as an advisor during the concession area awards process; they set laws regarding which houses must be connected to the district heating grid, and most importantly, they decided on where they want to send their waste to. According to Mr. Lundli from Trondheim Municipality, it is still cheaper for them to send their waste to Sweden and other countries than sending it to Statkraft Varme AS. He described how it is difficult for energy suppliers to argue for why the waste should be sent to them as opposed to being sent abroad. Overall, Trondheim Municipality affects Statkraft Varme AS politically and economically. Thirdly, the customers of Statkraft Varme AS have the ability to affect Statkraft Varme AS socially and economically. As previously mentioned larger customers who possess the ability to create spillover heat retain the ability to influence Statkraft Varme AS to take them on as customers or instead have them become direct competitors. Additionally, as outlined by Mr. Lundli, while a building of a specific size might be forced to connect to the district heating grid, it does not necessarily mean that they have to use that energy (they still possess the ability to choose where they get their district heating from). The stakekeepers (NVE, Enova, and the waste suppliers) possess the ability to affect them economically. NVE and Enova possess the ability to award subsidiaries and concession areas to Statkraft Varme AS, while the waste suppliers possess the power to sell their waste to another energy company. Finally, the stakewatchers (the EU) possess a small amount of influence over Norway regarding landfill regulation. Even though Norway is not in the EU, they still follow guidelines established by them because of them operating in the EU jurisdiction economically.

5.2.6 Understanding Statkraft Varme AS stakeholders though Institutional Theory

As previously discussed, it is important to understand this relationship between stakeholders and their effects on the waste-to-energy firms. The ability to define these affects will help understand why they are happening. From our analysis, we see that the pressures that are placed upon Statkraft Varme AS by its stakeholders can be classified as a form of coercive pressure. As defined by Powell and DiMaggio (1991) this type of coercive pressure is defined as informal and formal pressures from different groups that can be seen as force, persuasion, and invitation to collusion, where firms conform to certain standards, rules and forms. In the case of Statkraft Varme AS, a majority of these pressures stem from formal pressures that force the business to operate and function in a specific manner. If Statkraft Varme AS were not to adhere to these pressures, they might not be considered legitimate within their industry.

5.3 – Vestforbrænding

5.3.1 Value Creation, Capture, and Delivery

Vestforbrænding’s value creation process within their waste-to-energy business model begins with the value drivers throughout their firm, set forth by Amit and Zott (2010). Vestforbrænding has established lock-in effects with their customers due to being only one of two waste-to-energy suppliers throughout the Copenhagen municipality. This is due to them

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being owned by 19 municipalites throughout the region, giving them greater monopolistic affects. Overall, if the customer wants to have district heating in their house they must get it from Vestforbrænding. The firm provides complementarities in the form of not only providing district heating and electricity to the community and its customers, but also by providing the whole community with recycle stations and the collection of glass, cardboard, and metal. They are novel in the sense that they not only act as an energy provider, but also as a firm that possesses a strong social and environmental aspect in their business model. This is also what differentiates them from its competitors (Shafer, 2005). They work to educate customers and the community on environmental friendly behavior by establishing campaigns throughout the community, and by also educating visitors at their waste-to-energy facility. They are efficient in the way that they work closely with the owner municipalities, and have agreements with waste management firms to deliver to their facilities. Furthermore, Vestforbrænding are efficient because of their ability to offer their customer a specific recycling service, which in turn provides a “purer” waste upon incineration. Due to the monopolistic control throughout the Copenhagen region, it has enabled them to capture a large portion of revenues from that industry. This goes in line with Teese (2010) argument that value capture comes from increased market share and revenue. Furthermore, they are also able to capture value by controlling major parts of their value chain (except for picking up the waste). This enables Vestforbrænding to capture large parts of the value created. This is in line with what Chesbrough and Rosenbloom (2002) outline of value capture within business model, where a deeper understanding of the value chain can help a firm capture greater value. An interesting point to note is that when looking at Johnson’s (2010) definition of value capturing through profit formulas, Vestforbrænding does not have a specific profit formula. This is due to 100% of their revenues being taken back by the municipalities. This would mean that they are capturing value specifically for its stakeholders (in this case the municipalities). Vestforbrænding delivers value by providing the customers with clean energy generated from their waste-to-energy facilities. By comparing it to Johnson (2010) definition of value delivery coming from a company’s key resources and key processes, here we could say that Vestforbrænding’s key resources are the waste coming from their catchment area (the 19 municipalities). Without these resources, they would not be able to deliver the value to both itself and their customers. However, they are currently able to meet this demand from the customers for both electricity and district heating. Furthermore, a key process (as outlined by Johnson (2010)) is Vestforbrænding’s ability to function as an energy provider and as an informative and educational entity for the community. According to Mr. Muller, this is important because the customers do want to hear these stories and Vestforbrænding can provide them.

5.3.2 Vestforbrænding’s Business Model Reinvention, Adaptation, and Innovation

Vestforbrænding has been innovative in its business model. In the 1970s they began to incinerate waste coming from the municipalities in order to solve landfill and waste issues. Then Vestforbrænding went further by incorporating other waste services. The reason for incorporating these services was due to an increase in customer awareness regarding environmental issues. This goes in line with Voepel et al., (2004) stating that these types of changes occur because of environmental changes occurring outside the firm. Vestforbrænding

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successfully identified that the external environment was changing through close customer cooperation. Customers had become more aware of environmental issues, which in turn lead to Vestforbrænding choosing to work more proactively then reactively in changing its business model to meet this changing demand for greater environmental awareness.

5.3.4 Vestforbrænding’s Strategic Management of Business Model

Since Vestforbraending can be considered a monopoly, and they do not have any other competitors in this market, they have not engaged in any of the theoretical strategic business model issues outlined by Teece (2010); Market segmentation, capturing value from each segment, creation of a CVP for each segment and implementation of isolating mechanisms. Vestforbraending state that they have a sufficient supply of trash that generates enough heat and electricity to cover the demand of both district heating and electricity in their area. They are not expanding either; instead they have their 19 owner municipalities working as supplier of waste for them. One could say that they are working in a sustainable cycle with no need to grow. However, it is important to take note that the municipalities have a strategic influence in the company as owners. The municipality representatives, that together constitute the board, have a say in strategic issues such as budget proposals, future plans and the appointment of upper level management in the company. But in regards to their day-to-day operations they have a very small amount of control. Furthermore, Vestforbrænding is working strategically by segmenting their market, as outlined by Teece (2010). The segmentation consists of offering special prices for certain customers. Customers who are able to take heat in the summer are very attractive to Vestforbrænding and therefore they are able to receive better prices than smaller energy consumers.

5.3.5 Vestforbrænding’s Industry Specific Business Model Design

Vestforbrænding has been able to successful tailor its business model to meet the challenges that arise from this industry. As outlined by Wustenhagen and Boehnke (2008), one of these challenges is outlined by the private benefits on top of public benefits. Vestforbrænding have specifically tailored value propositions which emphasize recycling, energy efficiency education, and overall, the stability and reliability of the energy that they create. Secondly, they have tailored their value creation process by being publicly owned, allowing them to overcome high capital costs. Thirdly, they have created revenue models which have allowed for cheaper prices to be acceptable when taking in trash, in addition to offering cheaper prices to their larger customers. However, one interesting issue that was outlined by Mr. Muller was the financial crisis of 2008 and how it greatly affected the amount of waste that was being produced in the Copenhagen Municipality. He described that due to the lower amounts of waste being produced, Vestforbrænding struggled to keep up with energy production. If this issue were to happen again, a solution would be to begin to partner with more waste suppliers through the country, and or, find new areas outside of the country to collect waste from. This is in line with Wustenhagen and Boehnke (2008) who state that an effective solution to properly configure a business’ value chain would be to co-partner with other firms. However, this would be done not to avoid competition, but more so to survive as a business. Moreover, it is

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important to note that currently at this time, Vestforbrænding does not have approval from their board to import waste. However, they have chosen not to do so because they are not driven by a bottom line. Another challenge that is important to note is the current debate in Denmark regarding the de-regulation of the waste-to-energy industry. Mr. Muller argued that privatization of this industry would lead to an increase in energy prices for their customers, a possible decrease in public awareness regarding waste management, and huge differences in motives between private and publicly owned companies. To possibly overcome these challenges, Vestforbrænding might have to tailor a specific value proposition to the country of Denmark, placing more emphasis on the public benefits of being publicly owned as opposed to the private benefits. This would go against theory outlined by Wustenhagen and Boehnke (2008).

5.3.6 Vestforbrænding’s Stakeholders

Vestforbrænding identified their stakeholders as their board members, the municipality, the local politicians, the EU, and other regulatory agencies in Denmark. However, we believe that the customers are also an important stakeholder to mention because of Vestforbrænding constant communication with them. Again, using theory outlined by Fassin (2010), we classify these stakeholders into different categories. The real stakeholders consist of the local politicians, Vestforbrænding’s board members, customers, and the municipalities; the stakekeepers are the regulatory agencies, and the stakewatchers consists of the EU.

Vestforbrænding’s real stakeholders force the greatest amount of pressure upon their firm in the form of economic, social, politically, and managerially. They have the ability to decide on budgetary issues, they affect what social agendas Vestforbrænding can pursue (in the amount of money they budget for that), they are able to decide who works in upper management, and they are able to influence them politically in the sense of how social agendas can evolve into political agendas that affect their company. The stakewatchers and stakekeepers only influence politically. Their agendas and policies enforce Vestforbrænding to follow specific rules and regulations regarding the burning of waste and what policies they must follow as an organization.

5.3.7 Understanding Vestforbrænding’s stakeholders through Institutional Theory

Again, it is important to understand this relationship between stakeholders and their effects on the waste-to-energy firms. The ability to define these affects will help understand why they are happening. From our analysis, we see that the pressures that are placed upon Vestforbrænding by their stakeholders are primarily coercive. Again, as outlined by Powell and DiMaggio (1991), this type of coercive pressure is defined as informal and formal pressures from different groups that can be seen as force, persuasion, and invitation to collusion, where firms conform to certain standards, rules and forms. Vestforbrænding adheres to these social, economic, political, managerial, and technological pressures through force and persuasion. By not adhering to these pressures, Vestforbrænding could jeopardize their ability to operate as a firm. However, from our analysis, we believe that there also forms of normative pressures which have influenced Vestforbrænding. Copenhagen municipality, its politicians, and board have

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defined Vestforbrænding’s behavior as a firm through defining what is appropriate and/or expected of them. We identified from our interview with the municipality, who stated that they had communicated to Vestforbrænding that they needed to burn less waste and push more recycle projects forward. This issue too was reiterated by the board of Vestforbrænding. It is these issues which have set standards for Vestforbrænding to operate within their industry as an environmentally friendly organization that focuses on public awareness and efficiency.

6. Discussion

The purpose of this investigation was to firstly identify the methods used by these different waste-to-energy companies in how they achieve value creation, capture, and delivery. Firstly, from our investigation, we believe that there is less emphasis upon such methods such as business model reinvention, adaptation, and reinvention, in addition to the strategic management of business models. Whenever these kinds of methods have been used by these companies, it has been in the form of a reaction to specific issues that have forced them to change their business model. This includes such issues as the procurement of waste, the diversifying their activities, and customer related issues. We believe that one reason for their limited focus on these types of methods is due to their monopolistic control within their regions and their limited amount of direct and in-direct competition. In our opinion, this limited amount of competition has led to a more reactive than proactive stance in the management of their business model. However, we believe that all three firms do place a large amount of emphasis on their business models when it comes to the design based on industry specifics. While all are similar in the value that they create, capture, and deliver, each company is currently dealing with individual challenges throughout their industry which has greatly affected their business models. In the case of Jönköping Energi AB, their heavy reliance upon waste from outside the municipality has forced them to diversify their activities regarding the creation of energy. In the case of Statkraft Varme AS, they have had to tailor their business model around which areas of concession they choose to pursue, which in turn has lead them to pursue less populated areas for providing energy. And in the case of Vestforbrænding, their industry specific challenges have included challenges in obtaining waste and potential de-regulation of the industry, forcing their business model to adapt and offer different types of value propositions through the form of education and environmental friendliness. Overall, we believe that from these three waste-to-energy firms focus more upon industry specific business model design as a method for creating, capturing, and delivering value. The second purpose of our investigation was to investigate the stakeholders within this industry and understand the pressures and influences they have upon a firm’s business model. When analyzing all cases, we see that all firms are similar in who their stakeholders are – customers, local and state governments, and political organizations. This is due to their ownership structures; being publicly owned by either their municipality or state. Each organization is affected by coercive pressures which dictate the businesses directives and operations. Additionally, in the cases of Jönköping Energi AB and Vestforbrænding, both firms were also affected by normative pressures which dictated their norms, values, and standards throughout their organization. These normative pressures have led to these companies acting as a tool for social development in the areas that they operate – either as a way for educating their customers or as a way for spurring the growth and development of new areas. Overall, we see that the pressures that stakeholders place upon these businesses come in the form of either coercive or normative pressures.

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7. Further Research

Other areas of research that would be interesting to investigate would be through conducting the same study again, but instead with privately owned firms. Here, one could identify if the methods they use in creating, capturing, and delivering value are similar to that of publicly owned firms. Moreover, it would be interesting to identify the stakeholders that affect their business model and the pressures that are placed upon them from and institutional theory perspective. We also believe that investigating business models within specific countries of these types of firms (both public and private) would allow for more generalizability regarding the methods they use within their business model in creating, capturing, and delivery value, and in addition, a greater understanding of the stakeholders and the pressures they place upon that firm.

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9. Appendix

Appendix 1. - Interview guide for Jönköping Energi AB,

Vestforbrænding and Statkraft Varme AS

1. Please could you state your name, position within your firm, and a description of your current

duties?

2. Could you talk about Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS mission, vision and goals?

3. Could you briefly discuss the current organizational structure of your firm?

4. Could you provide a brief history of Jönköping Energi AB, Vestforbrænding and Statkraft

Varme AS

a. When did you start burning waste?

5. What made you decide to start burning waste in the first place? a. What were the driving factors?

i. Rules/regulations, Technology push? Strategy?

6. Do Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS currently use a business

model? a. If yes, could you describe it? How does it function/operate? b. If yes, who is in charge of creating the business model? How was it created? Who was

involved? What does it look like currently? c. If no, why do you not use one?

Value creation

(Value Drivers)

1. How would you define the value that you create?

a. How do you create this value?

2. In our investigation on business models we have identified that the primary drivers of value are novelty, lock-in, complementarities and efficiency. We would like to discuss some of these drivers.

a. How do you believe your product is novel? b. How do you lock customers in to your product/service c. Does your product/service offer any complementarities? d. How would you describe your level of efficiency when creating and delivering your

product/service? e. How is your product/service better than your competitions product/service? (What do

you do differently?)

(Differentiation)

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1. Who would you consider to be your competitors?

2. Could you define your core competencies (skills and abilities) and capabilities?

a. How are they different from your competitors?

3. Could you describe some of the relationships that you have with: 1. Suppliers, 2. Customers, 3. Partners?

a. How do you believe that these relationships are different from your competitors?

4. As previously discussed, how do you believe that the value drivers are different from your competitors? In general terms how do you believe that you do it differently?

(Customer Value Proposition)

1. In the development of your business model, did you ever identify an unmet customer problem

that needed to be solved? a. Did you ever talk to customers

i. If yes, whom did you talk to? ii. If not, why didn’t you feel it was necessary to do this?

Value Capture

1. How do you believe you capture value from the value that you have created? a. Do you believe that you could capture more value (in these terms, economic returns)

from the value that you have created? b. How would you do this?

2. When you first started out, did Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS have a choice in what type of technology to use to achieve the successful burning of trash?

a. If yes, why did you choose that technology over another?

3. Did you develop your business model/business around the use of this technology, or was your business model/business based on another concept? (Explain if needed – BM as a tool for mediating between technology and economic output)

4. Can you describe your value network and where you fall into it? a. Could you describe some of the relationships you have within this network and how

they have affected Vestforbraending (positives and negatives)

5. Do Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS have a profit formula? (Revenue model, cost structure, target unit margin, and resource velocity)

a. Where do your profits go? Reinvention/Adaptation/Innovation

1. Have you ever reinvented your business/business model?

b. If yes, how and why?

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a. Did you obtain ideas for business reinvention from people within your organization? Your stakeholders?

c. If no, have you ever considered changing your business model/business? a. If yes, when, how and why?

2. Have there been any changes in this industry that have affected your business/business model? a. If yes, how have they affected your business/business model?

3. Have you ever changed your position in the value network? (i.e. obtaining and/or outsourcing trash collection, customer service, etc)

a. If yes, how and why?

4. Have you ever changed the management structure of the company? a. If yes, how and why? b. If not, why have you not found it necessary?

5. Have you ever examined your external environment for potential changes that may affect your business/business model?

a. If yes, how have you done this? Why have you done this? Could you provide some examples?

(Innovation)

1. Do you innovate within your company?

a. If yes, how? How has this affected your business/business model i. IF – Do you innovate within your business model?

b. If yes, have any of your customers or stakeholders influenced your innovation process?

2. Have you ever worked with another firm to create a new product, technology, or service?

a. Could you describe it? b. E.g. what type of partnership? What did you achieve? What did you learn? Would you

work with them again? Do you have any future collaboration/partnerships planned?

(Further Questions)

1. IF you have made any changes to your business model, do you think that any of these changes

have affected your competitors in any way (i.e. disruptive changes)

2. If Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS has a Customer Value Proposition have you ever reinvented it?

a. If yes, how did you do this? What did you identify as a necessary change?

3. IF THEY HAVE A BUSINESS MODEL – have you ever tried new business models altogether? Do you have multiple business models?

Strategic Management of Business Models

1. Could you describe some of the strategies when it comes to your business model/business?

a. i.e. strategies regarding your value chain, customers, competitors, etc i. Short term, long term?

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2. How would you define your market? a. Are you segmenting your market in any way?

i. Who is largest customer? How much energy do they purchase?

3. Do you offer all your customers the same time of product/service/price? a. If no, why?

4. Have any of your strategies hindered other firms from entering the market? a. If yes, how? Specific strategy? Specific Competitor?

5. Do Jönköping Energi AB, Vestforbrænding and Statkraft Varme AS have any competitors? a. If yes, who are your main competitors?

i. IF they have BM – have you developed a specific business model around dealing with a specific competitor?

1. If yes, how so?

6. Do you consider your company to be entrepreneurial? a. If yes, how so? Examples b. If no, why not?

Industry Specific Design

1. How have you convinced your customers to use Jönköping Energi AB, Vestforbrænding and

Statkraft Varme AS?

2. How did you fund the waste-to-energy venture? a. Did you encounter any specific barriers when first entering the industry?

3. Could you describe some of the current barriers within the waste-to-energy industry? a. How have these affected your business model/business?

4. How has the ownership structure affected your business model/business?

Stakeholders

1. Who do you consider being your most important stakeholders, (the definition of a stakeholder

is: any person or group that can affect or are affected by your companies objectives?) a. Why are they most important to you? In what way?

2. Do you adhere to their needs?

a. How? Why?

3. Do you in any way prioritize between these stakeholders when it comes to fulfilling their specific needs?

a. Why? How?

4. Can you adhere to all their needs at the same time? a. If yes, how do you do that? b. If, no how do you deal with their specific needs?

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5. Do you have to, by any kind of pressure, follow any stakeholder’s specific need? Can you in any way change this pressure? What does this pressure look like? How does it affect your business model/business?

6. Who do you consider being your primary (most important) stakeholder? a. Why are they the most important? b. Have you tailored your business model in any way to adhere to their needs? How?

Why?

7. Did you look at any other companies in the waste-to energy industry when designing your business model?

a. If yes, who? In what way? Why this specific model? 8. Did you get help from any specific persons or organizations when setting up your business and

business model? a. If yes, who? In what way?

Appendix 2 – Interview guide for municipalities of Jönköping,

Copenhagen and Trondheim

1. Could you begin by stating your name, your title within the municipality, and a small

description of your duties?

2. Could you talk a little bit about the type of relationship your municipality has to

Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS? (e.g. the ownership structure

between the your municipality and Vestforbrænding/Jönköping Energi AB/Statkraft Varme

AS)

3. Does the municipality possess the ability to influence Vestforbrænding/Jönköping Energi

AB/Statkraft Varme AS in any way? (e.g. the type of technology they use, the type of business

structure used, the type of people hired)

a. If yes, how have you influenced them?

4. Has your municipality established an agenda, policies, rules, goals, etc., for

Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS?

a. If yes, what kind?

b. How have they affected Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS?

(e.g. Successes and failures)

5. Does Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS have to follow what you

have put forth to them?

a. If yes, have they adhered to it?

b. How do you make sure they are following your agenda/policies/etc.

c. Are they rewarded for adhering to what you have set forth? Are they punished?

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i. If yes, could you provide examples?

6. Is Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS dependent upon you for

anything?

a. If so, how are they dependent upon you? e.g. resources,

7. If something isn’t working at Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS,

does your Municipality possess the ability to change it?

a. If yes, could you provide examples of when this has happened?

8. Does Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS possess the ability to change

anything freely within the organization without your approval? i.e. room to experiment with

new ideas, structures, technologies, etc.

a. If yes, what types of things have Vestforbrænding/Jönköping Energi AB/Statkraft

Varme AS changed without your approval?

9. Have Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS ever wanted to change

anything within their organization, and you have said no?

10. Does your municipality have a say in who Vestforbrænding/Jönköping Energi AB/Statkraft

Varme AS hires?

11. Do you as a municipality create, set, and establish your own rules, policies, and agendas?

a. If yes, could you talk about this process of creation? How is it done?

b. If no, who sets these standards for you to follow?

c. Must you follow these standards?

12. Do you follow the EU directives and guidelines established when it comes to the

environment?

a. If yes, how have they shaped your environmental policies?

b. If no, why do you choose not to follow it?

13. Is Vestforbrænding/Jönköping Energi AB/Statkraft Varme AS the only energy provider in

your area?

14. Do other firms have the ability to come in and compete with Vestforbrænding/Jönköping

Energi AB/Statkraft Varme AS?

a. If not, could you describe why?

15. Could you talk about some of the future plans for Vestforbrænding/Jönköping Energi

AB/Statkraft Varme AS?

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