Growing Energy as a Service Adoption Across Customer Segments

Energy as a service, or EaaS, has quickly become an appealing business model for commercial, institutional, and industrial customers looking to outsource energy management functions—particularly as technologies become more complex, and as resilience, sustainability, and decarbonization mandates take hold.

In an article for Smart Energy International, Sasha Wedekind, research analyst at Guidehouse Insights, says across customer segments, EaaS deals provide innovative financing and enable customers to transfer risk, simplify operations, and focus on their core business, while also meeting efficiency or environmental goals.

“EaaS is unlocking this market to efficiency solutions by allowing clients to forego CAPEX, generating immediate cash flow, and offering shorter-term contracts that can be quickly signed and executed,” she said.

According to Guidehouse Insights, the global as a service financing market was estimated to be $1.6 billion in 2020 and is expected to experience a 37% compound annual growth rate of 36.8% between 2020 and 2029. North America is expected to be the largest market for as a service financing for energy solutions in 2020, representing 42% of the total market value.

To capture this market opportunity, Wedekind said EaaS vendors should consider the following:

• Define EaaS relative to other services and financing options: Vendors should focus on defining and articulating what differentiates EaaS from other project delivery mechanisms, contracts, and services.
• Determine target market segments and market to their needs accordingly: Expectations and needs vary depending on customer segment and vendors are expected to target their messaging and communications specifically to the needs of different businesses and institutions.
• Develop a wide range of capabilities: Required capabilities include mechanical systems, DER, microgrids, analytics, the Internet of Things, and software. In addition, vendors are expected to have expertise in sustainability, risk management, operations and maintenance, and administrative functions.