Business model innovation to promote a low carbon economy in Dubai

Abstract

Dubai energy sector is facing two main challenges: energy insecurity that is mainly driven by limitations to accessibility of natural gas and the high levels of carbon dioxide emissions due to a growing economy and power demand. As a result Dubai launched its Integrated Energy Strategy 2030 to diversify its energy resources and include solar energy within its power generation mix. A key issue facing Dubai would be addressing the discrepancy between the cost of solar and the cost of conventional power. This thesis aims to examine the possibility of involving the private sector, in this case the tourism industry in Dubai, given it was identified as one of the fastest growing sectors and one of the largest contributors to Dubai’s economy, in participating in the payment of the premium for solar. To address the thesis aim, the study draws upon literature and semi structured interviews with the Dubai utility (DEWA), tourism department (DTCM), and large hotel chains who were identified as potential off-takers of the solar energy.As a result of the empirical investigation and the use of the Business Model Canvas framework, first the core characteristics of the Dubai energy business model are presented, showing the transition from the traditional model to the current one after introducing solar energy and Independent Power Producers to the energy production. The analysis of the hotel interviews resulted in a set of potential value propositions that could be offered by the Dubai government (through DTCM) to incentivize hotels to pay for solar energy and by that providing initial support to enhance renewable energy promotion in Dubai. The research finds that the implementation and introduction of innovation to business models could play a vital role in facilitating transitions to more sustainable energy systems. The study has also shown that with providing the right incentives, it is possible to attract the private sector to participate in promoting RE production.