Mainstreaming solar: Stretching the regulatory regime through business model innovation

•The regulatory regime usually only affects one or two business model components.•Niche shielding and mainstream regulations can limit the business model design space.•We found a range of empowerment strategies delivering different business models.•A high level of shielding triggers fit strategies, rather than stretch strategies.•Business model innovation is a distinct means of stretching the regulatory regime.

This paper explores how the regulatory regime for Solar PV, defined as a combination of niche shielding and mainstream regulations, affects niche business models, using the Dutch and Flemish regulatory regimes as examples. The regulatory regime does not influence all components of the business model: only one or two components are usually affected. The level of niche shielding influences the dominant niche empowerment strategy. We also identified substantial heterogeneity in fit-and-conform and stretch-and-transform empowerment strategies for dealing with the regulatory regime. These strategies are reflected in business models, and differ in terms of temporal focus, motivation and shielding characteristics targeted. Finally, we show that business model innovation, sometimes in combination with technological innovation, can be used for stretching the regulatory regime. Organizational components of the business model are usually redesigned for this purpose.