Global Industry Analysts Predicts the World Energy-as-a-Service Market to Reach $92.8 Billion by 2026
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Edition: 11; Released: June 2022
Executive Pool: 14262
Companies: 84 – Players covered include Alpiq; Bernhard Energy Solutions; Centrica Business Solutions; EDF Renewable Energy; Edison Energy, LLC; Enel X; energy; engie; Integrity; General Electric; Honeywell International Inc; Johnson Controls International plc; noresco; Schneider Electric; Siemens AG; Veolia Environment SA; Wendel Energy Services and Others.
Coverage: All major geographies and key segments
Segments: Service (Energy Supply, Operation & Maintenance, Energy Efficiency & Optimization); End-Use (Industrial, Commercial)
Geographies: world; USA† Canada† Japan† China† Europe† France† Germany† Italy† UK; rest of Europe† Asia-Pacific† Rest of World.
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Amid the COVID-19 crisis, the global market for Energy-as-a-Service estimated at US$63.8 Billion in the year 2022, is projected to reach a revised size of US$92.8 Billion by 2026, growing at a CAGR of 8.7% over the analysis period. Energy Supply, one of the segments analyzed in the report, is projected to grow at a 7.5% CAGR, while growth in the Operation & Maintenance segment is readjusted to a revised 9.3%. The concept of X-as-a-Service had already arrived in the energy sector. EaaS or Energy-as-a-Service is a new business model that provides bundled energy services helped by financial and technological developments. It constitutes a delivery model of various solutions, combining services, software and hardware. Value for such a service is generated when all these elements are bundled into a single offering. In the usual delivery model, all these elements are sold separately. EaaS on the other hand is sold on subscription basis where customers pay for a package that is all-inclusive and not on the basis of per-unit consumed. For corporate customers the benefit comes from the predictable subscription payments. It also enables customers to pay for the output of asset and not for asset itself. EaaS uses conventional arrangements like EPCs (Energy Performance Contracts), ESCs (Energy Supply Contracts) and PPAs (Power Purchase Agreements). It also uses alternative new models which eliminate or lower the upfront costs associated with owning, funding and operating energy generation as well as storage systems that are capital-intensive.
Solutions range from gird level management and aggregation to campus or home energy management, and from P2P energy trading to EV charging packages.
The future of the energy industry is going to be a highly sustainable and highly synchronized energy platform, comprising a broad array of energy products as well as services that are data driven and which integrate new technologies that promise significant operational efficiencies. And, such an industry would be made of multiple entities including cities, large corporations and start-ups. The current decade is anticipated to witness several more changes than there were in the past one hundred years as the electric grid would be made ‘smart’. All these developments would come into being at the regional, national and local levels. EaaS or Energy-as-a-Service is a new mode of energy delivery that would be integral to the future energy system. EaaS which combines software, hardware and services can offer many benefits over the conventional energy delivery model. It combines energy efficiency services and demand management, facilitates adoption of decentralized energy supply sources like renewables, and optimizes balance between energy supply and demand. For the customer in specific, the benefit is in simplification of a previously complicated service offering. The EaaS service model also necessitates digital, physical and communication infrastructure, which implies that the sector would open door for a wide array of players including utilities, tech companies, industrial companies, renewable providers, telcos, oil and gas companies and tech start-ups among others to profit from the emerging opportunities. And, there could be different scenarios that would emerge in the sector, based on who holds most power and how deeply the technological sophistications penetrate. The shift to EaaS offerings would be sequenced first by digitizing the core capabilities following which, the service and the product range would be extended. In the subsequent step, total energy solutions would be provided.
The EaaS market will continue to be driven by many factors including rise in DER (distributed energy resources), attractive tax benefits from governments for energy efficiency projects, new streams of revenue generation for utilities and generation, and renewable power and storage solutions becoming more affordable among others. Across the world, focus is increasing on developing renewable energy faster because of the many benefits it offers including lower generation costs, reduced footprint and increased energy efficiency. Such an increased focus on renewable energy is anticipated to contribute significantly to EaaS market growth. Increasing energy consumption also constitutes a prominent factor driving market growth. Organizations seeking energy sources that are sustainable are expected to influence market growth in a positive manner in the years ahead. In developed markets such as the US and Canada there are already regulatory standards and policies promoting increased EaaS adoption. However, in developing countries, the concept is still nascent.
The need for reducing energy costs of building is one of the most important growth drivers for the EaaS market. Electricity consumption in residential, industrial and commercial buildings makes up for more than 60 percent of overall energy consumed, at the global level. Owners of those buildings therefore are seeking means for reducing cost of electricity and EaaS which promises to decrease energy consumption considerably is anticipated to witness high future growth. Also, renewable energy generation and consumption is increasing in countries across the world, both developing and developed. Depletion of traditional fossil fuel resources, increasing environmental concerns with conventional power generation and growing burden of fuel commodities imports on countries have been the factors driving consumption of renewable energy. Many governments are also now more focused on energy resource diversification for ensuring energy security. Relying on just one or a few sources can be detrimental to energy security of a nation. This also provides major growth opportunity for EaaS providers. Nevertheless, the nascent EaaS market faces many challenges, more in the areas of execution. Also, the concept of EaaS is yet to take shape in emerging country markets. However, in emerging countries where consumption of energy is fast increasing, EaaS has great potential to impact how energy is generated as well as consumed in the future, which would contribute significantly to future growth of the market.
Energy supply, optimization of energy efficiency and operations & maintenance constitute the three primary services offered by EaaS providers. Energy supply represents the leading service type accounting for major share of the market. With prices increasing continuously, consumers seek strong energy supply sources alternative to grid. However, the energy efficiency & optimization service type, comprising of optimizing currently available building energy services and detection of energy saving possibilities, is anticipated to grow at the fastest rate over the coming years helped by factors such increasing governmental focus on promoting renewable energy and growing need for energy conservation and cost containment for businesses among others. The potential of energy saving is detected through assessment of currently available energy systems in buildings through energy audit. Industrial and commercial are the two end-user categories for EaaS providers with the latter growing at the faster rate. Commercial users include establishments like healthcare facilities, educational institutions, airports, information centers, warehouses, leisure centers, hotels, etc.
In the US, around half of the energy consumed out of the overall consumption in the commercial sector is for heating and lighting purposes in buildings. Increased potential for EaaS in the commercial sector is because of different factors such as growth in occupancy rate and floor area. EaaS partners provide commercial buildings with high energy needs with technical expertise as well as means for limiting capital expenditure on energy efficiency assets. Mercantile and service buildings consume the highest amount of energy among commercial buildings. Increase in the number of such buildings is expected to lead to increased growth for the EaaS market going forward. Growth in the industrial segment is supported by growing investments in clean and efficient power supply. The industrial category is divided into small and medium enterprises and large enterprises. The industrial segment is also propelled by energy efficiency standards and de-carbonization. In the US the Energy Policy Act 1992 is targeted at enhancing energy efficiency on the whole and use of clean energy. more
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