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Hydro turbines were originally used to power a theatre in “Grand Rapids”, “Michigan”, in the late 1800s, and then to generate lighting in Niagara Falls, New York, in the early 1900s. In 1893, the “Redlands Power Facility” in California became the first hydroelectric plant in the world to use oscillating current. “The US Army Corps of Engineers” started constructing hydropower projects in the 1920s (Moranet al., 2018). For rural electrification, in 1933, the “Tennessee Valley Authority” built hydroelectric dams on the “Tennessee River.” These dams were copied across the nation, most notably at the “Hoover Dam” in 1937.
Hydropower building received a huge increase during the New Deal era, doubling in production in only 20 years to reach 40% of all electrical consumption when individuals are in the United States (6). Energy production in North America and Europe relied heavily on hydropower dams’ a good place to start (Bilgiliet al., 2018). In this aspect, this study provides significant knowledge about the utilisation of hydropower by Derwent Hydro, the UK based organisation. Moreover, specific target market and market segment, and strategic position will be demonstrated in this study by using different tools and frameworks. The value proposition and the customer value tool also will be utilised in this study.
Derwent Hydroelectric Power Limited owns, develops, and operates nine hydroelectric power plants in England and Wales, with a total capacity of more than 1400 kW. Established in 1988, the organisation has amassed substantial experience-based expertise in every facet of micro-hydro and are able to provide a variety of services including feasibility studies (Howard,Coulthard and Knight, 2017). For new projects, they can offer systems ranging from 1 to 1000 kW, and they also have a few used turbines on hand. Derwent Hydroelectric Power Limited hopes that in the future, more of the UK’s hydro potential will be appropriately exploited.
For almost 14 years, the organisation served on the committee of the “British Hydropower Association,” then on its board of directors from its establishment to the current, demonstrating its commitment to small-scale hydro. When it comes to small hydropower, Derwent Hydro has a proven track record, competence, and understanding that is hard to match. Derwent Hydroelectric Power Limited is one of the few companies in the industry that has been around since the 1980s (Howarda, Coulthardc and Knightd, 2018). The passion for providing realistic options for hydropower facilities hasn’t waned since then; they want to see this wonderful renewable resource exploited to its maximum effect, and it is constantly expanding its knowledge and projects.
A good hydro advancement is a difficult endeavour since no two sites are the same and since each site has numerous factors to resolve, such as supplying a dependable remedy, preserving the surrounding ecology, preserving fish, enhancing the amount of power and revenue, and maintaining prices low sufficiently to make application feasible. Moreover, the organisation has the knowledge and expertise to look at all the variables at once and come up with the most effective solutions (Stanleyet al., 2018). While they build and operate their own systems, the clients include everyone from individuals to estates to corporations to government agencies to non-profits. The “National Trust”, “Derby City Council”, the “Snowdonia National Park Authority” and the “Environment Agency” are among its clients.
Flowing water generates energy that may be used to power a turbine. Dams are man-made constructions where water is channelled from a high-level reservoir and then released into the surrounding area. Water-flowing turbines harvest the kinetic energy of the water and transform it into mechanical energy that may be used elsewhere (Ueda et al., 2019). So, as a result of the turbines’ quick rotation, the turbine generator is pushed, converting “mechanical energy” into “electrical energy”. When using a hydroelectric generator, the amount of power created is determined by how much water flows through the turbine and how far up the waterfall travels (referred to as the “head”). One of the most common types of hydroelectric projects in the UK is a storage reservoir.
Methods of Storage
Hydroelectric power plants employ a reservoir and turbine/generator built inside a dam to store water while producing energy.
A weir can assist guarantee that the river’s natural flow stays unbroken in run-of-river planning. Water is diverted from a river, lake, or dammed reservoir and channelled to a remote powerhouse housing the turbine and generator rather of being held in both “storage” and “run-of-river” projects (Salmon, 2020).
A “pumped storage system” has two reservoirs. Pumping water from the lower to the upper basins is done by using electricity when demand is low, which is typically at night. Once the water has been released, it is used to create power, which comes at a premium cost because of the strong demand for it (Ebhota, 2018). The use of pumped storage may significantly improve overall energy efficiency, even though it is not considered a renewable energy source because of its reliance on electricity.
Hydroelectric power’s contribution to the renewable targets
Around 1.5% (5.700 Gwh) of the UK’s power is being generated by large-scale hydroelectric plants in the Scottish Highlands, as of 2011. (Sammartano, Liuzzo and Freni, 2019). Hydroelectric power plants utilise this tried-and-true technology, which has an energy conversion efficiency of 90% or more. It’s not uncommon for hydroelectric electricity to have a load factor between 35 and 40%.
It is implausible that the volume of progress saw in the 1950s and 1960s in the United Kingdom would be duplicated. The possibility for broad use of this technology is now limited, not only due to environmental concerns, but also because many of the most financially viable locations for schemes have already been seized by other developers (Ebhota, 2018). However, if the UK’s remaining small-scale hydro resources are to be protected, they must be utilised sustainably.
By utilising the STP analysis, the author will be able to significantly develop and identify the specific consumer segment in the market of Derwent Hydroelectric Power Limited. Moreover, through using this tool, the author moreover will be able to discover the appropriate and most specific target audience in the market during the organisational business operation.
In terms of capacity, the small hydropower market may be segmented into two groups: “1 MW” and “1–10 MW”. Through capability, small hydropower is expected to be most prevalent in the 1–10 MW range throughout the projection period. Small-scale decentralised initiatives for rural electrification in underdeveloped countries, particularly in the UK, maybe blamed for the increased proportion of 1–10 MW plants.Mini hydropower and Micro hydropower are the two main segments of minor hydropower. Throughout the projected period, the Mini hydropower category is likely to dominate the market. Rural electricity is a major driver of mini-hydropower construction (Afzalan and Jazizadeh, 2019). Small hydropower is broken down into electrical apparatus, electromagnetic infrastructures, construction projects, and others, such as architectural, construction, administration, ecological remediation, and development of the project, according to element. Throughout the projection period, the public works category is likely to be the biggest. All small hydropower plants include civil works as a considerable portion of their total expenses. Civil constructions like weirs are built to help direct water to turbines while also increasing the water’s height.
The global need for clean energy is propelling the hydropower generating industry forward. The requirement for electricity has risen as a result of rapid industrialization and urbanisation, particularly in emerging nations like China and India. Because of government measures to minimise carbon footprint in nations like the US, Germany, India, Japan, and China to reduce reliance on fossil fuels for electricity production, there has been an increase in the desire for renewable resources. In order to address the rising need for renewable energy, many hydropower producing projects have been developed all over the world notably in Asia-Pacific (Davvetas and Diamantopoulos, 2018). In addition, rising demand for greener power production innovations and stricter emission regulation objectives are likely to fuel the market’s development. Water power accounts for 60.7% of worldwide renewable power output in 2019, as per the “International Energy Agency”. With new hydropower projects approved and increasing consumption for green electricity, the production and demand for water power are predicted to increase throughout the projection period.
It was estimated that there were 37 Major Power Producers in the world by the end of 2013. Over 60% of Scotland’s electricity was produced by six businesses in 2010: “Scottish power,” “SSE”, E. ON UK”, “Centrica”,”RWE” and “EDF Energy”. The electricity sold in the UK is geographically divided into two regions: Great Britain and Northern Ireland. After establishing the “British Electrical Trading and Transmission Arrangements” in 2005, the energy networks of England, Wales, and Scotland started to be integrated more closely (Salminenet al., 2018). BETTA establishes uniform standards for free commerce between Great Britain and the rest of the world, as well as a “GB-Wide System Operator” to manage the transmission network. Ireland’s electrical market is shared by both Northern Ireland and the Republic.
Figure 1: STP Analysis
The “Generic Strategies” developed by Michael Porter are a valuable framework for organisations to employ to find a possible niche in which they might acquire a competitive edge in virtually any sector. Companies can obtain competitive advantage through one of three fundamental strategy possibilities, according to Porter’s “Generic Strategies” model. “Cost Leadership,” “Differentiation,” and “Focus” are three of these concepts (Islami, Mustafa and Latkovikj, 2020.). It is clear from the organization’s vision and purpose statements that Derwent Hydroelectric Power Ltd is pursuing a strategy of distinction in its operations.
According to a differentiation strategy, a company must provide customers with products or services that are valued and distinct from the competition, in addition to offering a low price. When developing its differentiation strategy, a business strives to distinguish itself from competitors in its industry on key characteristics that are highly appreciated by customers. Then chooses one or more traits that many buyers in the business consider to be vital, and it uniquely presents itself to suit those requirements.
With hydropower, which is also known as “water power,” DHPL aims to provide sustainable energy that is both dependable and ecologically friendly (Omsa, Abdullah and Jamali, 2017). Hydropower and the accompanying economic and community advantages are completely realised to the extent possible in the area in which the company operates by working to guarantee that potential is fully realised (Viltard, 2017). As a renewable and long-term energy source, hydropower is usually seen as a proponent of green development. Among other things, Derwent Hydroelectric Power Ltd may provide clients with services including “feasibility studies”, “design”, “construction”, “supply”, “renovation” and “commissioning” (British Hydro Association, 2021). Porter’s Generic Strategy of “differentiation” is implemented in this way, and it is a type of differentiation.
Figure 2: Perceptual Map
(Source: As created by author)
Through considering the above perceptual map, it becomes evaluated that Derwent Hydroelectric Power Limited provides a wide range of choices to the consumers at a reasonable cost. On the other hand, the organisations like Centrica, SSE, EDF Energy, Scottish Power, etc. are providing also a wide range of products and services to their organisational consumers yet charge a high price. However, the company, E. ON UK provides a limited range of services or products to its consumer even imposing a high amount of cost. On the other hand, RWE also provides a limited range of services at a reasonable cost. Thus, by evaluating and considering the entire discussion, within the Renewable Energy Sector in the UK, Derwent Hydroelectric Power Limited has been able to significantly place its organisation in the leading role of the industry by providing a wide range of services to the consumers at a reasonable cost. Through this, across the world, the organisation will be able to provide sufficient service by implementing several hydropower plants in different rural areas in the UK and in the rural areas of India, China, etc. under the Asia-Pacific region.
With its current goods, Derwent Hydroelectric Power Limited may aim to use a market penetration form of focus to concentrate on existing markets extensively. It might also attempt to draw in new customers by offering incentives for current customers to buy its goods, which would lead to a consolidation of power in the market. As a substitute, it might focus on product development to provide innovative items to current markets. It’s possible to make minor changes to current items and resell them to clients in adjacent markets (Manke, Lehmann and Katz, 2020). Alternatively, new delivery methods may be added to increase sales, or the marketing mix might be altered. Existing items may be vastly improved, and new, closely comparable ones can be developed. As a result, existing consumers might be targeted for further sales. As a result, this approach necessitates a significant investment in research and development (R&D). Current models are often modified or replaced in the automotive industry before being offered to existing consumers.
Derwent Hydroelectric Power Limited’s ability to evolve and better serve its customers depends on its ability to innovate, utilise its talents and resources to produce new technology or products and services. When anything new or unique is introduced to the organization’s operations, process innovation happens (Donnelly, 2019). If the company’s goods include something new or innovative, product innovation will happen. Large size and scope can only be achieved by horizontal integration, which involves purchasing or combining with industry rivals.
For example, Derwent Hydroelectric Power Limited may acquire another firm, or horizontal integration may be done by a merger, which means a contract through which counterparts pool their activities and establish a new product. To form a joint venture, two or more parties must agree to work together on a certain project (Reisinger, 2020). In most cases, the partners agree to form a new business together, pooling their cash and splitting the profits and costs. A joint venture might be for a single project or for a long-term commercial partnership, depending on the foreigner’s needs. When multinational corporations want to expand into new markets, they often do so via joint ventures.
One way to make sure that a product or service is aligned with an organization’s target market’s values and expectations is to utilise the “Value Proposition Canvas” approach.
Alexander Osterwalder initially established the “Value Proposition Canvas” as a framework for making sure that the value proposition of a product and the market’s requirement are compatible (Kandee, 2020). Customer segmentation and “value propositions” are examined in relation to one another as a part of the larger Osterwalder “Business Model Canvas”. The “Value Proposition Canvas” may be used to fine-tune a current product or service offering or to build a new one from the bottom up.
Fig.3: Value Proposition Canvas
(Source: B2B International, 2018)
The Value Proposition Canvas is constructed from two fundamental building blocks: the customer profile and the value proposition of the organisation. This section will examine the application of the Value Proposition Canvas to the specific instance of Derwent Hydroelectric Power Ltd to develop a value proposition for the firm being discussed.
Gains – This relates to the advantages that the customer expects and requires, as well as the things that would please consumers and the things that might boost the chance of a value offer being adopted (bin Abdul Halim, 2018). Derwent’s activities revolve around hydropower, which delivers benefits beyond only electricity generation by providing flood control, agriculture support, and clean drinking water at a reasonable cost, in addition to providing energy generation. When compared to other sources of energy, hydropower delivers low-cost electricity that is also long-lasting throughout time. These are the primary benefits that clients of the chosen firm would derive from doing business with them.
Pains- The term “pains” refers to the unpleasant feelings, emotions, and hazards that the client goes through while trying to complete the work (Sire et al., 2019). The fact that hydroelectric facilities are hydrological reservoirs means that they are subject to a variety of environmental and regulatory constraints, such as “spillage regulations” and “reservoir level constraints”; “seasonal water releases; “water quality issues”; and “downstream consequences”. These are some of the “pains” that Derwent customers may be subjected to.
Customer jobs – These are the functional, social, and emotional activities that consumers are attempting to do, the issues that they are attempting to solve, and the wants that they are attempting to satisfy (Carter and Carter, 2020). Hydroelectricity contributes to the battle against climate change. The life cycle of a hydroelectric power plant emits only trace quantities of greenhouse gases. The use of hydroelectric power helps to enhance the quality of the air we breathe. Neither the power plants nor the hydroelectric developments emit any pollutants into the atmosphere, nor do they produce any harmful by-products. Derwent can assist customers in using a sustainable and nonpolluting source of power, which may help reduce the reliance on fossil fuels and the threat of global warming. Derwent can assist customers in using a sustainable and nonpolluting source of electricity.
Customer gains are created by gain creators, which refers to how a product or service generates consumer benefits and how it provides extra value to the customer (García-Muiña et al., 2020). In the instance of Derwent, the benefits include high-quality electricity, environmentally sustainable sources of energy, and cost-effectiveness.
Pain relievers indicate a detailed description of how the product or service alleviates the customer’s discomfort or pain (B2B International, 2018). Derwent’s services will aid in the reduction of the negative consequences of pollution created during power generation, as well as the reduction of the high expenses associated with obtaining high-quality electricity.
Products and services
Hydro site owner/developer/generator Derwent Hydroelectric Power Limited has a total capacity of over 1400kW throughout England and Wales. With a total capacity of more than 1400kW, the firm runs nine different locations. Services include “feasibility studies,” design, construct, supply” and refurbishment, as well as commissioning. It also offers new schemes in the range of 1-1000kW, as well as a limited quantity of second-hand wind turbines for sale (British Hydro Association, 2021).
Since the selected firm is focused on the authorities regulating rural regions in the United Kingdom and the Asia Pacific region, the value of Derwent will be recognised by its clients for the reasons listed ahead. Derwent’s hydropower services will have a payback period of 200–300 years, the highest of any renewable energy source currently available (Ngowi, Bngens, and Ahlgren, 2019). Hydropower also contributes to the support of other variable renewable energy sources such as wind and solar by providing storage and load balancing services. In the long term, other significant sources of electrical generation that rely on fossil fuels will be proven to be more ecologically benign than Derwent’s services (Scharfetter and Van Dijk, 2017). Derwent’s services will also reduce the emission of waste heat and gases, which is common with fossil-fuel driven facilities and is a major contributor to “air pollution”, “global warming”, and “acid rain” (Uamusse et al., 2019).
For these reasons, it is clear that the services of Derwent would be extremely beneficial to the various authorities responsible for the electrification and development of remote rural locations in various parts of the United Kingdom as well as in countries throughout the Asia Pacific region, and that the organisation would most certainly prove to be a truly “valuable” option (Haidari, 2020). Derwent’s services linked with renewable energy sources such as hydropower, as evidenced by the information given in the Value Proposition Canvas above, may assist in bringing about the development of the aforementioned regions in a sustainable, cost-effective, and very simple manner.
Thus, by evaluating the entire study that was discussed the above, it is concluded that nowadays, renewable energy resources are playing the most significant role in order to reduce the utilisation of non-renewable energy. In this aspect, Derwent Hydroelectric Power Limited significantly utilises the STP and perceptual framework. Through this, the organisation has been able to gather sufficient and appropriate knowledge about the organisational market segment according to the demand of their products and the target market throughout the world. Moreover, the utilisation of different strategic management tools enables the organisation to enhance the strategic business options in the market.Moreover, on the other hand, by efficiently using the value proposition canvas model, Derwent Hydroelectric Power Limited will be able to get effective information about the consumer’s preferences in the market regarding their product variants.
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