Demystifying the EaaS Model

Remember the old days of installing software? Every time there was something new, you had to insert a CD or DVD  — or to really date myself, a floppy disk — into your computer. It took time and could be tricky if you weren’t technically inclined. It was an expensive hassle for business owners, too, who had to purchase and maintain licenses for each copy of the software installed.

Software as a Service, or SaaS, changed all that. Today, most applications — everything from Microsoft Office to Google Drive to Salesforce — are hosted by a third-party provider and made available via the web or a mobile app. You don’t need to install or configure anything on your computer, and the SaaS provider handles all maintenance, upgrades, and licensing. It’s more convenient for users and more affordable for businesses.

These “as a service” models are everywhere today. Do you listen to music on Spotify or Apple Music instead of buying albums or songs? That’s Music as a Service. Purchase groceries via Instacart or order take-out using Grubhub? That’s Food as a Service. The list goes on and on.

Energy as a Service, or EaaS, is the same concept. Rather than buying power products like generator sets, solar panels, or an entire microgrid, you purchase energy outcomes — turning ownership and upkeep of the assets over to a third party. Why are organizations ranging from grocery stores to steel mills to school districts increasingly interested in the EaaS approach? Let’s take a closer look.

What’s driving demand for EaaS?

According to the latest research, (from GlobeNewswire by notified) the global market for Energy as a Service was valued at more than $61 billion in 2021. It’s expected to surge to almost two-and-a-half times that size — nearly $149 billion — by 2030. What’s behind this explosion in growth?

First is the energy transition. The electrification of society is adding significant increases in energy demand. The traditional model, large, centralized fossil fuel power plants — just isn’t fast or flexible enough to keep up with demand.

Second are climate concerns. Those weather events we used to describe as “100-year” hurricanes, floods, fires, or heat waves — well, studies published by the AP News show they’re not happening just once per century anymore. That has a lot of organizations nervous about the resiliency of their power supplies. Whether it’s a single tree falling on an electric line or massive outages caused by a Category 5 hurricane, no one can afford a disruption in operations.

Third is the time and cost factor. Unless you’re actually in the energy business, generating, delivering, and managing energy isn’t your organization’s core strength. It requires you to invest capital in assets, operational dollars in upkeep, and a whole lot of time trying to stay on top of what’s happening with energy markets and prices. Many organizations would rather take those valuable resources and put them back into their own operations.

What are the advantages of switching to EaaS?

Given the factors pushing organizations toward Energy as a Service, you’ve probably already guessed some of the key benefits: increased energy resiliency, lower energy costs, and a reduced carbon footprint, for starters. But how does EaaS deliver these advantages? It helps to walk through a few real-world examples:

• A private university on the East Coast lost power during a major ice storm and sent its students home — then took a lot of criticism from parents upset that their children were out driving on icy roads rather than safe inside their dorm rooms. Now, through an EaaS contract, the university has access to six megawatts of natural gas generators that provide backup power.
• A large commercial bakery near Boston was experiencing significant reliability issues but couldn’t afford to purchase backup generation. At the same time, the local electric utility was looking for a way to buy power more affordably during peak loads. In this EaaS arrangement, a third-party investor purchased natural gas generators and made them available to both the bakery (to eliminate worries about power interruption) and the utility (to buy down the cost of electricity).
• A K-12 school district in northeastern Pennsylvania set up an EaaS contract that included rooftop solar PV plus load control technology that dialed back lights and lowered temperatures whenever school buildings had to rely on grid power versus solar power (cloudy days, for example). Over the course of just one year, the district saved enough to pay for two additional teachers.

Resiliency, affordability, sustainability: Are these your goals?

Thanks to EaaS, none of these organizations had to spend capital to purchase power products, nor are they responsible for maintenance, repairs, and updates to those assets. Instead, each organization chose to invest in energy outcomes — resiliency, affordability and sustainability. (And all these EaaS contracts, I’m proud to say, were facilitated by our EaaS team.)

Wondering if Energy as a Service is right for you? Watch for our November follow-up blog which will cover the criteria that makes an organization a good fit for EaaS as well as important factors to look for in a provider. Click here if you would like to be contacted by someone from our EaaS team.