Abstract The increased environmental awareness coupled with the recent changes in the oil prices triggered the necessity of focusing on effective management of energy systems. Global climate change has caused many people to consider ways of reducing greenhouse gases Renewable energy has become an essential feature in curtailing emission of Green House Gases, while meeting the demand for energy. This paper presents an innovation system framework for development and diffusion of renewable energy technologies. The framework is used to identify opportunities for small and medium enterprises in the renewable energy sector. A case study on a successful development, installation and implementation of solar thermal systems households in Calgary, Alberta, by an entrepreneurial firm, is also presented.