Local energy businesses in the United Kingdom: clusters and localism determinants based on financial ratios

González, Fabián Fuentes, Webb, Janette, Sharmina, Maria, Hannon, Matthew, Braunholtz-Speight, Timothy and Pappas, Dimitrios (2022) Local energy businesses in the United Kingdom: clusters and localism determinants based on financial ratios. Energy, 239 (B). ISSN 0360-5442

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Abstract

This paper presents the first financial analysis of the United Kingdom’s local energy business sector. This analysis relies on financial ratios and degrees of localism as inputs for descriptive statistics, cluster, and canonical discriminant analyses. Our findings suggest that privately-owned energy businesses, typically with limited commitments to localities, account for the great majority of sectoral assets and turnover, and are in comparatively good financial condition. Highly-local energy businesses typically have low profitability and a high reliance on debt. The latter is the key variable differentiating them from other less local energy businesses. Moreover, we find financial commonalities within different groups of local energy businesses, which correlate with their specific level of localism. In the context of increasing digitalisation in energy markets, more technological innovation may help strengthen local energy businesses’ revenue sources and value creation. Further research is needed in terms of investability, specific financing terms and conditions, and geographical aspects of value creation, retention, and delivery to localities. This work can improve the understanding of sectoral dynamics and development needs, with value for policy making to incentivise investment in this emerging sector.

Item Type: Article
Additional Information: Funding Information: This work is part of the EnergyREV research consortium. EnergyREV was established in 2018 (December) under the UK's Industrial Strategy Challenge Fund, Prospering from the Energy Revolution programme. It brings together a team of over 50 people across 22 UK universities to help drive forward research and innovation in Smart Local Energy Systems. This research was funded, in whole or in part, by UK Research and Innovation , grant number EP/S031863/1 . A CC BY or equivalent licence is applied to the AAM arising from this submission, in accordance with the grant's open access conditions. Publisher Copyright: © 2021 Elsevier Ltd
Uncontrolled Keywords: local energy businesses,cluster analysis,canonical discriminant analysis,degrees of localism,financial ratios,cluster analysis,canonical discriminant analysis,local energy businesses,financial ratios,degrees of localism,mechanical engineering,pollution,energy engineering and power technology,energy(all),electrical and electronic engineering,industrial and manufacturing engineering,management, monitoring, policy and law,building and construction,fuel technology,renewable energy, sustainability and the environment,civil and structural engineering,modelling and simulation ,/dk/atira/pure/subjectarea/asjc/2200/2210
Faculty \ School: Faculty of Social Sciences > Norwich Business School
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Depositing User: LivePure Connector
Date Deposited: 30 Sep 2021 16:53
Last Modified: 21 Oct 2021 01:25
URI: https://ueaeprints.uea.ac.uk/id/eprint/81517
DOI: 10.1016/j.energy.2021.122119

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