Value Creation with Wood-Based Energy Business Models

Value Creation with Wood-Based Energy Business Models

Wim Westerman (University of Groningen, The Netherlands), Jeffrey Paays (University of Groningen, The Netherlands) and Satu Pätäri (Lapeenranta University of Technology, Finland)
DOI: 10.4018/978-1-4666-4852-4.ch087
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Abstract

Renewable energy sources are increasingly coming into use. This notably counts for non-food based biomass sources, including those producing wood-based energy. A firm that (re-)directs activities to this area can potentially create value. The external and internal environment of the firm sets the outline for the value creation potential. Important in the value creation process are dynamic capabilities to alter resource bases. The authors show this with an example in the mature Finnish pulp and paper industry. A Delphi study helps to identify the main industry- and company-level factors that influence the forest-based energy sector, its value-creation potential, and the future roles of forest and energy companies in it. The results of a study on a power plant in The Netherlands shows how the economic value creation for a specific firm can be assessed. The plant is designed to “vaporize” biomass input, in our case so-called “B-wood,” to a bio-oil that can be used to generate Green Power. The economic value analysis draws upon a risk-oriented production unit positioning analysis that is modeled with multiple scenarios. The results show that innovative business models can fruitfully be identified with multiple experts in sophisticated Delphi rounds and dynamic resource-based approaches appear promising. The authors also find that bio-refinery production chains are economically feasible with relatively small production units with multiple applications. The chapter gives way to a management view that integrates resource-based and economic value perspectives on wood-based energy sources for firms. In that sense, it adds to the literature on value creation with innovative business models.
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3. Literature Review

We begin our review of the literature on value creation with resource-based approaches that enable to identify value-creation opportunities. Next, we discuss the economic perspective on value creation with concrete investments.

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