Torn between international competition and municipal claims: Analysing key influence factors on municipal utilities’ business strategies 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, 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. For a better comprehension of this particular actor group, i) we reveal the key influence factors on their business strategies on an economic and socio-political level, ii) analyse how these factors influence different business strategies in particular – on the general firm level and especially in the business area of renewables - and iii) we compare the different socio-political and economic settings in Germany and Switzerland to derive differences and communalities for municipal utilities on a more aggregate level. 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. This is one of the most important influence factors on the municipal utilities’ business strategy and a special feature compared to other actor groups in energy supply. On the other hand, the market liberalisation – which took place in 1998 in Germany and 2009 in Switzerland as partial liberalisation – depict another key influencing factor, since the municipal utilities are forced to compete on the (inter)national market on top of their obligations as a public service provider for their local urban system. Dependent on their binding to the municipality, respectively their form of organisation, the municipal utilities reacted differently to the liberalisation: some invested intensively in renewables all over Europe others strengthened their local energy production, some established strategic allies with other municipal utilities or absorbed other companies. These preliminary results already show, that municipal utilities are 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.