# 4. Business Modelling

## 1. Business Model

![Figure 14 - Business Model Canvas](https://2358608389-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-LG4zxPV0XuZozWlMFuq%2F-LGiTwhFlWdVdbBsf2f1%2F-LGiUWrKH1Pc2kCG-rEo%2FBildschirmfoto%202018-07-06%20um%2009.28.16.png?alt=media\&token=438245cb-775c-41c5-87cf-d452f4b7b078)

We used a Business Model Canvas as shown above to describe our Business Model, which lets you use Smart Contracts to trade energy. The **customer segments** are showing all the actors that we want to create value for. In our example the load owner and the electricity producing operators as well as the grid are the most important ones. In our next step we will have a look at the **value proposition** part of the model. The points are showing the products, services and bundles which will create value for the customer segments. In our example, we want to have more transparency for the load owners and flexible tariffs. Smart Meter are necessary for our business model so producer and load owner can communicate about the consumption. This way, the electricity producing operators will know better on how the load owner is using the electricity and when there will be peaks and the supply with energy can be improved. The **channels** are showing how we will be interacting with our customers. Therefore, we mostly will be using online services. We will be operating a local office to come buy or if there are any questions that need to be answered right away, you can use the customer hotline. The **customer relationship** part will outline what kind of relationship we want to establish with our customers. Since we want to distribute locally produced energy, we want to keep everything within the local communities. The **revenue streams** are showing how and through which pricing mechanism a business model is capturing money. In our case, it is through the selling and distributing the energy and by charging service fees on using the online platform. The **key resources** show assets which are indispensable in our business model. In our business model the key resources are a functional energy management system to match supply and demand, a blockchain where we can program and close the smart contracts on and another important point is the usage of Smart Meter for a better exchange of important and necessary data. The **key activities** show which things we really need to perform well. This mostly will be reliable weather forecasts, the operation planning and the optimization of the energy fluxes. The **key partners** are partners we will be working together with. Our partners are the energy producers and distributors. Once you understand the business model’s infrastructure, you will also have an idea of its **cost structure**. Without investing these costs, the business model would not be working. Our costs are mostly development costs, costs to operate our platform and all the IT-Services and the costs for our personnel. 

## 2. Value Proposition

![Figure 15 - Value Proposition Canvas](https://2358608389-files.gitbook.io/~/files/v0/b/gitbook-legacy-files/o/assets%2F-LG4zxPV0XuZozWlMFuq%2F-LGiTwhFlWdVdbBsf2f1%2F-LGiaScVrAJKR9eWJXoQ%2FBildschirmfoto%202018-07-06%20um%2009.58.04.png?alt=media\&token=ff5114fd-bf19-4890-b44e-26afab84f0c9)

The Value Proposition Canvas is visualizing the design and test on how to create value for the customer. It is split in two parts, the Customer Profile and the Value Map. The **customer jobs** describe the jobs that the customers are trying to get done. In our model, the customer wants to consume electricity for a cheap price and the energy needs to be produced local. The **pains** are showing what is annoying our customers to get their jobs done. They represent negative outcome and customers try to avoid them. As shown above,  the existing electricity tariffs are too expensive and big energy suppliers are also not very transparent in their structures and price building. The customer has very little influence on how energy is being produced. That means, if the energy is produced, for example, by solar panels or if it is produced in a coal power plant. **Gains** are positive outcomes that are customers trying to achieve. For our model, the customers are trying to support the local community and economy. On the value map are **products and services** listed that our value propositions are built on. Our value propositions are described by the electricity as the product and the energy management system, the settlement of costs, the distributed ledger and the platform as services. The **pain relievers** describe on how to eliminate, reduce or minimize customers care about to make their life easier. Our Pain Relievers are the smart contract, which means there will be less paperwork. The platform stands for easier communication and settlement and the flexible tariffs guarantee us a better price for electricity. The **gain creators** show what will help us on how we can produce, increase or maximize outcomes. The platform and its digitalized processes as well as the electricity consumption only through local distributed energy are the gain creators for our business model.