What is Energy-as-a-Service (EaaS)?
The world is running on energy; without energy, there is no tomorrow. Energy is the one thing that is used across many sectors. Energy is used to generate electricity, transport, and meet human needs. Unfortunately, most existing energy technologies burn fossil fuels that emit toxic gases. Therefore, adopting efficient and low-carbon technologies such as Energy-as-a-Service is necessary to achieve emission targets.
One of the technologies that can help us to achieve energy efficiency and low carbon is Energy-As-A-Service. We have all heard of Software-as-a-service (SaaS), but what is Energy-as-a-Service (EaaS)? It is a delivery model that combines hardware: Software, and Services.
This blog will explain everything one needs to know about EaaS. So without further delay, let’s dive in.
What is Energy-as-a-Service?
Welcome to the world of Energy-as-a-Service (EaaS), where everyone will be able to generate as well as consume energy. Energy-as-a-service (EaaS) is a business model whereby customers pay for an energy service without making any upfront capital investment.
It combines demand management and energy efficiency services and facilitates the adoption of renewables and other decentralized supply sources. And also optimize the balance between demand and supply, which enables people to manage their excess supply through peer-to-peer (P2P) markets. Energy is bundled into a customer-centric subscription model and sold as a secondary product adding to primary products.
As digital, physical, and communications infrastructures are part of EaaS, a wide range of players can be a part of the EaaS market: Utilities, industrial companies, oil & gas majors, tech companies, renewable energy providers, telcos, and start-ups.
Features of Energy-As-A-Service:
Energy-as-a-Service is a delivery model for diverse solutions that combines hardware, software, and services. This bundle delivers value to customers at a subscription price rather than a bulk or one-time investment, which is vast.
- It is subscription-based.
- It is output based
- Service providers bear the upfront cost and maintenance cost
- It is data-driven
How does Energy-As-A-Service work?
To implement energy upgrades, a property owner can use energy efficiency as a service, which allows them to do so without having to put any money upfront. Instead, an energy provider would cover the costs of new equipment, development, design, construction, and maintenance.
EaaS enables you to upgrade your current equipment without significant upfront investments, resulting in lower utility costs. Instead, you’ll enter into a contract with a company that offers energy as a service, with them handling installation and upkeep. In exchange, this business will receive a portion of the money you save by utilizing their efficiency-boosting solutions.
One can sign a contract that provides how long your relationship with the energy company will be, how much money one pays them, and what happens to the equipment they install at the end of the contract. The process is as follows:
- Sign a contract with the EaaS company
- EaaS company surveys the property
- The company takes care of development, design, construction, installation of equipment, and maintenance.
- In addition, the company maintains the installed equipment over the contract period.
- Once the contract ends, one can extend it, purchase it, or return it to the company.
EaaS provides services for demand management and energy efficiency, promotes renewable energy and other decentralized supply sources, and optimizes the relationship between supply and demand.
Benefits of EaaS:
The EaaS provides long-term benefits. Most of the work is taken care of by EaaS companies, such as investing in new equipment, construction, and maintenance. As a result, you can take advantage of zero upfront installation costs, reduced maintenance, and better energy management.
- No upfront installation cost
- EaaS company responsible for the maintenance
- Environment Friendly
- Increased sustainability
- Predictable expenses because of the Subscription model
Challenges of EaaS:
The recent developments, the ever-changing energy industry, volatile pricing, and digitalization processes posed challenges in the EaaS industry. These challenges are hindering the growth of ESCOs. In addition, local levels match user supply and demand, resulting in inefficiencies at different system levels in EaaS.
Lack of scale limits the spread of tech and service offerings, which creates declining customer numbers that result in falling revenues that are inadequate to maintain the infrastructure, much less prepare it for a higher level of services. As a result, energy companies are reduced to providing a bare minimum of power services.
Energy-as-a-service has the potential to revolutionize how building customers use utilities and energy. As ESCOs choose to take all the aspects of ownership, software, analytics, operations, and maintenance, the customer has no headaches, and the customer can decide whether or not to renew the contract with ESCOs.
In conclusion, energy as a service is a business model you should explore because it will increase sustainability on your property while also saving you money.