Energy as a Service or “EaaS” is such a new and innovative concept that its definition is still somewhat unsettled. However, while the concept may be new, there’s no doubt that it’s a response to demands by commercial and industrial (C&I) customers frustrated by the ever-changing energy marketplace.
Relatively few companies claim to be EaaS providers, today, so it’s hard to say precisely who or what is an EaaS suppler. However, it’s possible to identify the type of companies that should be most capable of meeting the challenges posed by EaaS.
What is EaaS?
EaaS is the result of a cry for help from larger C&I customers who are confused by all the energy-related options available and thus lack the confidence to undertake major projects. They want to do the right things, but don’t know how. Eaas is intended to satisfy the needs of C&I customers wanting a single-point solution to simplify and improve their energy situation with:
- Guaranteed (lower) energy costs,
- High(er) reliability and resiliency,
- Sustainability options,
- Optimized operations,
- No major capital outlay, and
- No requirement for additional staff.
Basically, these customers want a surrogate to manage all aspects of their facilities’ energy needs, not just installing energy efficiency hardware. They want what is called an “Energy as a Service (EaaS) provider”.
“as a Service”
If the “as a Service” part of EaaS is confusing, the Uber business model provides a helpful analogy. Uber provides a transportation service that takes people from place-to-place and eliminates the risks and inconvenience of car ownership such as purchasing, financing, maintaining, licensing, insuring, cleaning, fueling, navigating, driving and parking.
With the Uber service, a user simply enters a pick-up request, a destination, number of passengers and pays with a few buttons pushed on a smartphone. Uber automatically knows where to pick-up the customer, dispatches the closest vehicle and calculates the fastest routes to the customer pick-up point and to the destination, based on real time traffic data. Considering the convenience and the alternatives, Uber’s fees are very attractive to users. That’s called Transportation or Mobility as a Service: TaaS or MaaS.
Just as Uber manages all aspects of the user’s transportation experience, Energy as a Service manages and optimizes the energy purchasing experience to minimize cost, risk and confusion.
EaaS vs EPCs
It might seem that EaaS is similar to Energy Saving Performance Contracting (ESPC), however the differences are significant.
An ESPC arrangement generally entails an ESCO (Energy Services Company) or similar entity analyzing a consumer’s energy efficiency needs then installing Energy Efficiency Measures (EEMs) and guaranteeing the efficiency of the EEMs. It’s the consumer’s responsibility to pay for the ESCO’s work and the EEMs. This is often done through a 5 or 10-year financing or lease arrangement and hopefully with the energy cost savings from the EEMs. In the end, the consumer may have a more efficient system, but remains vulnerable to all of the original supply, reliability and price variability of energy marketplace.
With EaaS, on the other hand, it is the EaaS provider that supplies the energy to meet all of the consumer’s energy needs. The EaaS provider guarantees lower energy prices and is responsible for meeting the reliability, sustainability and quantity goals of the consumer.
To do this, the EaaS provider determines the best solution to achieve the consumer’s energy goals and then implements, finances and takes the risk for that solution.
Choosing an EaaS Provider
Being an EaaS provider is a multifaceted endeavor that requires the provider to accept and fulfill very complex, diverse, far-reaching and costly responsibilities.
EaaS providers must have broad, deep and coordinated technical, financial, energy, analytical and various other resources and capabilities. It also helps if the EaaS provider is hardware and supplier-agnostic. This gives the provider much more flexibility in developing solutions.
Companies specializing in limited areas such as photovoltaics or energy consulting typically won’t have the expertise or resources to be credible EaaS providers. In fact, the nature of EaaS is such that the number of companies with the capabilities to be EaaS providers is limited.
An EaaS provider should first of all have the experience base and financial resources to deliver complex energy-related projects on a turnkey basis. Second, an EaaS provider should have extensive capability across multiple disciplines including energy markets & supply, non-traditional financing & billing, on-site & off-site distributed energy resources, HVAC, energy management, heat & power microgrids and end-to-end energy solutions.
Ultimately, an EaaS provider needs to demonstrate the foresight, flexibility and creativity to develop complete energy solutions that give customers the confidence to outsource their energy futures. Such solutions will be some combination of buying, selling, using, saving, storing, producing and distributing energy and power with existing technologies and those to come.
Broad Capabilities & Qualifications
EaaS providers are likely to be utilities, large MEP/energy contractors, Architect, Engineer and Construction (AEC) firms and those with a multitude of in-house, energy, financial and project-related skills including:
- Engineering design & project management,
- Energy auditing & building commissioning,
- HVAC maintenance & replacement,
- Building Information Modeling (BIM),
- Construction & prime contractor experience,
- DER including wind and solar,
- Data collection & analysis,
- Power sales and purchasing
- Natural gas supply, and
- Project financing.
Those companies with the highest integration of all or most of the areas above and a proven record of using their expertise to successfully deliver guaranteed energy saving projects through a single point of responsibility will be the most desirable Energy as a Service providers.
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