What is Energy-as-a-Service (EaaS)?
Energy-as-a-Service is a business model that doesn’t rely on centralised energy generation or is particularly asset-focused, predicated on the maintenance of a set customer base featuring non-engaged consumers. Instead, the EaaS approach prefers a complete, integrated, model in which a customer’s energy assets are managed via a ‘smart energy community’. In this way, energy providers can merge markets, deliver more efficient, reliably balanced loads with a number of methods in which to upgrade and grow the grid.
Key requirements of Energy-as-a-Service
The model depends on a number of key requirements, particularly decentralisation and digitalisation, but is also marked by the sale of particular energy generation technologies, analytics and tools, personal services and opportunities to access the centralized grid. It is technology driven and responsive, a product of the increasing innovation that has helped to define the global energy market over recent years, along with demands from consumers for cost-reduction and emissions reduction.
One of the major impacts has been disruption of the standard, centralised, model of energy provision dominated by large utilities, who now have to figure out how to radically change the way they do things in order to avoid being sidelined or even driven out of business. One of the ways utilities in the UK have been responding to these changes, for example, is by acquiring smaller, newer, entrants to the market and also offering new services.
The increasing development of electric mobility and smart cities will only exacerbate this process as customers demand increasingly greener and more affordable energy supplies. Indeed, according to Navigant Research, the EaaS market is predicted to be worth $221 billion by 2026.
Given the complexity of microgrid/DES design, EaaS typically involves working with experienced energy planners in an ‘Energy-as-a-Service company’ who have expertise and a deep knowledge of the energy market. These consultants will then arrange to assess and reorientate the way a business conducts its operations so that its energy-related activities are much more efficient and cost-effective. These assessments will largely be focused on how to save energy, and also how to make it more efficient, and alternative sources of energy provision, often taking advantage of the new players entering the energy market. The EaaS planners may also offer to make up the difference if the predicted energy savings are not achieved. In this way, the end consumer benefits from guaranteed cost-reductions and also valuable expertise from those who know the market best.
Typical areas in which the EaaS company will focus on energy use include the energy use by buildings, in which the EaaS planners will develop a profile of the building’s energy consumption so that the best way of making energy efficiency savings can be discerned.
In addition to the various components that make up the building’s infrastructure, such as heating and ventilation units, elevators and other machinery, the EaaS planners will also look at the behavior of the building’s occupants, suggesting ways in which typical practices can be adjusted or changed in such a way as to generate energy savings and cost-reduction. This will generally involve comparing occupants’ daily routines with charges for energy use at particular times of the day. It may also involve an analysis of the building’s greenhouse gas emissions.