Energy-as-a-service (EaaS) is becoming an attractive business model for financing microgrids, but the concept must be applied in a scalable and consistent, yet flexible way according to microgrid developers participating in a recent conference on the topic.
Microgrid developers at the Microgrid 2020 Global Conference held by Microgrid Knowledge shared their thoughts on how to make project builds viable, including financing, energy-as-a-service, and tailoring the facility to the needs of the customer.
Microgrid customers don’t want to purchase microgrids, they want to purchase energy solutions, according to Krystal Watson, Chief Commercial Officer with Scale Microgrid Solutions. Developing microgrids is not as much about building projects but solving customer problems and helping them figure out what solution is needed. Developing microgrids comes down to having a good project and optimizing the capital spend, she said, while having flexible but standardized models for financing.
“We have to have standardization in order to scale, but we also have to have flexibility built into that standardization,” Watson said, because every customer need is different and tailoring the object in a standardized way is important. It’s often not even about the technology, she said, and customers might not even know which technology mix is right for their objectives.
“Technology has really become a means, not an end and energy-as-a-service allows us to do that,” Watson said.
When developing a project it is critical to identify who the off-taker is, which can be a single tenant or in other cases, sub-metered community projects that are becoming more popular as technologies and regulations allow. Once the off-taker is identified, the best technology solution must be devised, she said. Objectives of off-takers can include solving resiliency or sustainability issues or decreasing their energy spend, Watson said.
“Customers know their objective oftentimes, but don’t know how to solve them,” Watson said. Understanding what financing is available for development and construction is important, including having money for initial development phases like conducting interconnection studies.
Energy as a service is defined first and foremost as a solution that requires no up-front capital to the energy user and one that is focused on outcomes, such as on-site energy, according to Matthew Walters, Head of Distributed Energy Systems, Americas at Siemens. The trend of this model is moving away from an owner/operator owning the facility on-site to one where the microgrid developer manages it over its entire lifecycle in terms of serving, maintenance and operation, he said.
In order to develop a new platform to explore the energy-as-a-service model, Siemens Smart Infrastructure and Financial Services groups created a new entity, called Calibrant Energy to offer solutions at no up-front cost for its corporate and industrial customers as well as municipalities, universities, schools and hospitals. Calibrant will build onsite energy solutions that seek to deliver immediate cost savings, cost certainty, resilience and low-cost grid augmentation, according to a news release. Technologies will include solar, integrated solar-battery solutions, hybrid systems, standalone batteries, microgrids, combined heat and power, and centralized heating and cooling infrastructure upgrades. Such a platform is necessary in order to offer scalable and repeatable solutions across multiple technologies that are streamlined and consistent for customers and investors, according to Watson. The company feels that there is a significant amount of up-front development and structuring needed in order to deploy flexible, scalable solutions in the market.
“If you have seen one microgrid, you probably have seen one microgrid, so you have to achieve flexibility when it comes to technology,” but also be able to scale the project and have repeatable solutions, specifically in how to deliver energy through the energy-as-a-service model, he said.
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