What is Energy as a Service (EaaS)?
As is the case with any other as-a-Service business model, EaaS is an outsourcing system that includes a provider that supplies their client with something of value – in this case, energy and energy management solutions. The typical EaaS transaction involves an upfront contract that requires the client to pay only for the service, freeing them from financial obligations related to infrastructure and equipment.
This delivery model encompasses hardware, software, and services and their across-the-grid synchronisation into energy platforms. In its essence, EaaS is a network of physical devices that are all interconnected and driven by data these devices store and exchange. One of the more popular examples of putting EaaS to good use is smart homes. With the help of solar and wind power supplies and EaaS providers, smart homes are becoming more and more clean. Another appealing aspect is the fact that the management and installation of such solutions are made simpler than with traditional energy models.
What does the EaaS market look like today?
Much like many others, the EaaS industry saw a major upheaval in the COVID-19 era, additionally propelled by the looming climate crisis. Thanks to this, today’s solutions are much less centralised and much more customer-oriented and flexible, with EaaS finding its way into an increasing number of different sectors. We’ve already mentioned smart homes, and other examples include utilities and e-mobility.
As you can see, not only is the number of different sectors that utilise EaaS increasing, but so is the revenue in the existing ones. Energy supply services are ahead, and projected to stay ahead, since this is the main area for most EaaS providers.
The main driving force behind the popularisation of EaaS is its very positive environmental impact. In light of the aforementioned climate crisis, global governments are putting regulations in place that will aim to increase their cleanliness. For example, the UK plans to ensure half of its electricity is renewable by 2025, and Germany aims for 65% by 2030. This inspires both corporate and private entities to consider alternative energy sources.
Although average in terms of growth rate, the Asia Pacific region holds 42% of the revenue share as of 2020. It was surpassed in 2021 by the US, which now holds 43%. The African and Arabian regions currently have the highest growth rate, as is visible on the graph above.
Why does EaaS matter in the business world?
As we’ve discussed in the previous section, the EaaS industry is spreading rapidly across different sectors while simultaneously growing in terms of market size and revenue. You’ve seen that the forecasts for further growth are positive, with large leaps expected in each field. Now let’s take a look at why that is and answer the question of which benefits businesses have from implementing EaaS solutions.
Firstly, and to many most importantly, EaaS is an excellent way to reduce costs. The client is responsible for paying only for the output. The other charges, such as project costs (construction, monitoring, maintenance), servicing, and the components of the asset, are fully covered by the provider. This also results in the provider putting in more effort to ensure functionality and timely delivery. On top of that, charges are not made based on consumed units, but fall under an all-inclusive package, resulting in a unified and predictable subscription charge.
EaaS also improves efficiency by simplifying energy management. Aspects of energy management, such as optimisation, monitoring, and control, are either automated or handled by the provider. This means that no burden will be on the customer. In some cases, the solutions can be bundled as one integrated solution, further decreasing the client’s workload. And, since the base model for EaaS is a subscription payment model, no unexpected charges can arise from this.
Lastly, it’s important to mention how EaaS can also enhance reliability. An issue that energy providers often face is that the power grid is outdated in certain parts of Europe. That is why upgrading the infrastructure is imperative, especially for companies that require a larger amount of energy in order to operate smoothly.
How can EaaS help companies meet sustainability goals?
Another significant benefit of the EaaS model is its environmental impact. As we’ve discussed at the beginning of the article, many governments are starting to tighten the regulations surrounding energy consumption in an attempt to help their countries become more green. Switching to the EaaS model can help you meet those sustainability goals and adhere to both old and new regulations.
One of the main goals of the EaaS industry is to improve sustainability, and one of the main ways it does that is by helping reduce CO2 emissions. By switching to this energy outsourcing model, the customer reduces their reliance on traditional, non-renewable sources such as fossil fuels.
It has been estimated that the average office building wastes around $30,000 each year on energy that goes unused. To help offset this, the EaaS provider can also offer their clients upgrades that will increase their energy efficiency. Since the equipment and its installation are the provider’s responsibility, the client may be more inclined to choose this option. Some examples of this include energy-efficient lighting, HVAC systems, and other features.
Summary
The EaaS industry has gone through a growth spurt following the pandemic and the public’s increase in climate awareness. After many world governments took action to help the planet by moving towards renewable energy sources, companies are starting to turn to alternative energy models.
EaaS has proven to have a positive impact on both the companies that adopt it and on the environment. It helps reduce costs while increasing efficiency and reliability. On the other hand, it also offsets the carbon footprint of many facilities, especially commercial and office buildings. The subscription model on which the EaaS industry is based incentivises many business owners to switch to renewable energy sources and implement energy-efficient systems, bettering both their business and the environment in the long run.
Are you in need of an EaaS platform?
Valcon’s experts with years of experience in various IT fields can provide you with the best EaaS platforms! Our scalable and flexible teams can help you with maintenance and keeping up with your growing workload, upgrade your existing product with new functionalities, or even build a fully operational platform from scratch.
Want to learn more? If you would like to learn more, please reach out to Managing Partner, SEE, Paul ten Haaf at [email protected] and tell us exactly what you’re looking for. We’ll make sure the solution is tailor-made to fit your business perfectly!
