Product-service-system business models in the photovoltaic industry – A comprehensive analysis

Abstract

The solar industry is experiencing rapid growth, driving fundamental changes in business models and value creation strategies. While research has examined "solar photovoltaics (PV) business models" as catalysts for transformation, it has primarily approached this topic from a technology diffusion and energy policy perspective. As a result, the focus has been on deployment models, providing insights into how, by whom, and where PV systems are installed, rather than exploring the underlying value logic. Consequently, an understanding of how solar companies are doing business remains underdeveloped. This study addresses this gap by examining a subcategory of solar PV business models in which ownership remains with a third-party or community entity rather than the property owner. Commonly referred to as product-service-systems (PSS), these models integrate products and services to fulfil customer needs. They are relevant as they align financial incentives with system performance, encouraging the use of high-quality PV products and maximizing system lifespan. Employing an exploratory sequential research approach, this study combines qualitative data from focus groups with quantitative survey analysis. The findings highlight the advantages and disadvantages of PV PSS business models compared to traditional purchasing models with subsequent self-ownership. They further reveal that these models are driven primarily by financial considerations, with limited emphasis on circular economy principles. Building on these insights, the study develops six key decision criteria – cost structure, revenue opportunity, investment requirements, flexibility in property development, competency distribution, and life cycle management – essential for evaluating solar PV business models. These insights aim to guide procurement departments in selecting PV installation models and support policymakers in creating enabling regulatory frameworks. Theoretically, this study contributes by examining the underlying value logic of solar PV business models, complementing demand-side research in this field, and bridging insights between solar PV business models and PSS concepts.