Energy-as-a-Service gaining ground

The energy industry is undergoing a seismic shift from centralised generation to the use of decentralised – or distributed – energy resources. The shift is accelerated by digitisation, leveraging cloud-based software and hardware solutions that increase visibility and intelligence. This new ‘energy cloud’ of assets and technology is disrupting the traditional one-way energy industry business model and creating opportunities for businesses. 

Giving businesses more control

Energy is a major cost item and often disparately managed across a variety of business functions. Energy-as-a-Service, or EaaS, gives businesses more control through leveraging outsourced strategic partnership. Done well, it is a holistic, centralised approach to energy management that enhances strategy and enables better decisions.

For most organisations, energy is not a core competence. Implementing energy strategy takes knowledge and expertise as the new energy landscape is far more complex than before. There is a plethora of choices available to transform your energy portfolio today. When it comes to power source, for example, market dynamics, renewables mix, self-generation, resilience measures, new technologies, and financing are some of the many inputs to consider.

EaaS is not just an optimisation tool; it is also an opportunity creator. Renewable generation is intermittent and challenges grid operators to manage the stability of the power system. Increasingly, grid operators value sources of ‘flexibility’ over building new power generation infrastructure to do this. Schemes like demand side response (DSR) reward businesses for reducing demand at peak times; major energy users in turn create revenue from their assets whilst improving their business resilience.

In earliest partnership, EaaS providers place your business objectives at the centre of a plan that also considers your energy maturity, resource capacity, and industry benchmarks. The plan may incorporate products and services like procurement advisory, bill management, storage, renewables, DSR, and EV charging.

Project financing

One of the biggest barriers for any organisation acquiring new technology is the cost-justification for CapEx-funded projects. The ‘as-a-service’ model overcomes the CapEx barrier to pay for services as they are used. 

Energy-as-a-service providers have been particularly innovative in offering new ways to acquire energy, assets, and technologies through ‘funded’ models, power purchase agreements, and pay for performance schemes (i.e., a shared savings model).

While financing is at the heart of EaaS with a shift away from capital expenditure, its scope goes beyond increasing profitability. Other business priorities include sustainability – moving to lower carbon sources of power and resilience – ensuring business continuity and lower risk. 

Improved results

Energy was once the exclusive domain of the facility manager who focused on kWh use alone, or, “how much you use”. 

Today, organisations that maximise their energy management should consider two additional ‘cost drivers’: how you buy it and when you use it. These cost drivers directly impact each other and should therefore be managed together.

Done well, your organisation may find itself in a scenario where an energy decision will have implications for your operations team whilst enhancing financials – like a manufacturing firm looking to create additional revenue through DSR. That’s why the strongest energy management strategies are also cross-functionally created, with board-level backing.

Moving to EaaS

As EaaS gains ground, major energy users will see the benefits of taking on an expert-led holistic approach to implementing energy strategy, without the barriers of having to find capital to fund improvements. One of the key benefits of EaaS is increasing visibility into the impact of your energy strategy and contributing this to the success of the overall business. 

Partnering with energy specialists that offer on-going advice and technology as-a-service, enables businesses to achieve higher profitability, sustainability, and resilience while navigating the growing complexity – and opportunities – presented by the new energy cloud.

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