What is Energy-as-a-Service?
Most current energy technologies burn fossil fuels and emit carbon dioxide, which contributes to global warming. Adopting low and zero-carbon technologies is one way to reduce emissions, but barriers such as high upfront and maintenance costs have impeded the adoption of these technologies. Energy as a Service (EaaS) is a pay-for-performance model in which customers benefit from sustainable-energy solutions without having to pay for energy efficiency upgrades or own the equipment. Under these arrangements, the EaaS provider provides the customer with an energy service, such as lighting, cooling, or heating, in exchange for a recurring fee. There are parallels in other industries like the software industry, where a key business function or an asset is outsourced to a third party who then takes over the operation of that asset. EaaS providers typically handle the installation, maintenance, and operation of energy systems. By leveraging advanced technologies and data analytics, EaaS aims to enhance energy efficiency, reduce costs, and support sustainability goals, helping businesses improve their energy performance without significant upfront investment.
Benefits of the Energy-as-a-Service Model
By shifting from a traditional ownership model to a service-based approach, customers can avoid the high initial costs associated with purchasing and installing energy infrastructure. Instead, they pay for the energy services provided, often through a subscription or pay-as-you-go arrangement. EaaS providers typically take on the responsibility for the installation, maintenance, and operation of the energy systems, allowing customers to focus on their core business activities without worrying about energy management.
EaaS can also support sustainability goals by facilitating the adoption of renewable energy sources and other low-carbon technologies. Providers can tailor energy solutions to meet specific environmental objectives, helping businesses reduce their carbon footprint and comply with regulatory requirements. Furthermore, EaaS models often incorporate advanced technologies and data analytics, enabling more information about and control over energy consumption, which results in better demand management and reduced energy waste.
The EaaS model also offers flexibility and scalability. As energy needs change over time, customers can easily adjust their energy services without the need for significant reinvestment or restructuring. This adaptability is particularly valuable in a rapidly evolving energy landscape, with frequent technological advancements and policy changes.
Barriers to Adoption of the Energy-as-a-Service Model
Our guest notes that energy efficiency and sustainable energy projects have been undervalued and not prioritized in the past. While many companies see energy efficiency and sustainable energy projects as the right thing to do, there are often other items that rise to the top of the to-do list. In addition, businesses and individuals may be unfamiliar with the EaaS concept, leading to hesitation in adopting this model. Projects can take significant time to plan and install, which can also serve as a barrier. To date, the EaaS model has been geared towards primarily larger business and commercial customers that are consuming a higher amount of energy, rather than residences and smaller businesses. However, utility companies and governments sometimes offer energy audits and incentives for adopting energy-efficient equipment, and new companies may eventually serve this market.
About our guest
Bob Hinkle is the founder and Executive Chairman of Metrus Energy. He created the Efficiency Services Agreement that the company has utilized to finance large-scale efficiency retrofit projects. Previously, Bob was vice president of energy efficiency (EE) at MMA Renewable Ventures where he directed the company’s overall energy efficiency financing business and investment opportunities.
Further Reading
For a transcript, please visit https://climatebreak.org/energy-as-a-service-with-bob-hinkle/.
