Rusty dinosaurs and the surviving species in the new energy system? Analysing urban utilities in the German and Swiss energy transition

After the nuclear accident in Fukushima, amongst others Germany and Switzerland decided to accelerate the sustainability transition of their energy systems not only by expanding the share of renewables actively but also by quitting nuclear power. Regarding this political level of ambition, energy companies´ strategies play a decisive role in terms of the implementation, progress and success of the energy supply system’s transition. So far scholars in sustainability transition research working on the role of energy companies for the transition process, mainly focused on two actor types: firstly, big energy utilities, the incumbents which often hinder the transition and secondly, the new entrants, small innovative businesses challenging the incumbents with new technologies or business models. However, hardly any scholarly work studies another important actor group, which lies in between: the municipal utilities (“Stadtwerke”). In Germany and Switzerland, some big municipal utilities are part of the ten most powerful energy providers and in Germany they are even seen as the fifth big power besides the “big four”. Hence, the municipal utilities form an important and powerful actor group in terms of the energy transitions’ progress, which need to be studied more in detail. In our work, we analyse i) the structural characteristics of four big municipal utilities in Germany and Switzerland, ii) their business strategies regarding the increase of renewables, iii) how these strategies are influenced by factors from the economic, socio-political and physical environment and iv) how the utilities strategically react to the various influence factors on different scales. We employ the triple embeddedness framework (TEF) by Frank Geels, which considers the interaction of firms with their economic and socio-political environment and facilitates an in-depth case study analysis. For empirical evidence, we conduct an explorative case study analysis with four big municipal utilities in Germany and Switzerland in the cities of Munich, Hannover, Geneva and Zurich. This allows not only for an in-depth analysis of the single municipal utilities, its business strategies and local environment but also for an inter-national comparison of different political settings, which are highly important for the municipal utilities. Methodologically, we firstly employ a document analysis on the utilities structural characteristics and business strategies – on the general firm level but also on the specific business area of renewables. Secondly, we conduct explorative expert interviews with researchers and members of associations in the field as well as the CEOs of the four selected utilities to further reveal the specifics of municipal utilities, obtain an improved knowledge on their business strategies and an overview on important influence factors. Thirdly, we conduct semi-structured expert interviews with different members of the four utilities’ strategic management board, the municipal supervisory board and the renewables department in order to validate and discuss the revealed results and analyse the causal interrelations between the influence factors and the utilities’ strategies. These empirical results will be mirrored with findings from scholarly and practical literature. Preliminarily, our studies show that the four chosen cases are the biggest and oldest municipal utilities in each country, established in the end of the 19th century and they are still mainly in the possession of the cities (min. 75%). The legal form of the utilities varies from being a dependent division of the municipal administration, an independent public enterprise, a private company with limited liability or a corporation. Therewith, the influence from the municipal supervisory board and the room for manoeuvre of the firm varies enormously. Regarding the business areas there is less variation, since all utilities offer a broad range of products in electricity, heat, water and energy consulting. In the area of business strategies, the targets for and the investment in renewables as well as the resources in use are again very divers: some have clear targets to become 100% renewable, others 100% Co2 neutral or there is no such target at all; Zurich and Munich invest intensively in renewables all over Europe whereas Geneva and Hannover focus on the regional and national level. Finally, our first analysis show, that the different relations to their communes and the national laws depict one important set of formal influence factors. In this merely political context, the market liberalisation also plays a fundamental role, since the municipal utilities have to compete in the liberalised energy supply market - since 1998 in Germany, and in Switzerland partly since 2009. As all other energy utilities, the municipal utilities struggle with the multiple uncertainties in the energy supply system, but additionally to the international competition, the municipal actors also need to fulfil their obligations as public service provider for their local urban system. These preliminary results show already, that municipal utilities are important and complex actors with very specific characteristics embedded in multi-scalar environments full of suspense. With our study, we contribute to a better understanding of this actor type, the important context factors and the utilities’ strategic answers in the context of the energy transition. By revealing the specifics in an international comparison, we enrich not only to the scholarly discussion on key actors in the sustainability transition of urban energy supply systems but also provides decision-makers in policy and economy valuable insights for the future design of sustainable and resilient energy governance systems.