Ellie Gabel is investigating how Energy as a Service (EAAS) can restructure the power sector in a subscription-based model, if it can overcome key challenges.
The AS-A-Service model takes over many sectors. These subscription-based frameworks began with software, but then moved into industries such as transportation and manufacturing.
Energy as a service is now beginning to grow across utility companies and could change the future of the power economy.
At the same time, businesses and policymakers need to be careful to separate true innovation from buzzwords. Rapidling the popularity of EAAS does not necessarily mean that it is the next evolution of the energy sector.
On the other hand, given the need for change in the industry, it is important to recognize potential optimizations. Whether it’s just a hype or a true destroyer, EAAS deserves a more meticulous look.
How does energy as a service work?
EAAS replaces traditional models in which brands sell electricity as commodities as commodities, where they sell packages of energy services for subscriptions.
Instead of paying different numbers for the amount of electricity used, customers pay a fixed fee for access to the equipment and ongoing maintenance.
Because the cost of power supply is divided into differentials, a consumption-based pricing model implies volatile speeds to explain these fluctuations. This can irritate end users who may have consistent usage, but still face changes in price.
EAAS offers a more predictable alternative by modifying rates based on a general reflection of what users store or maintain.
In reality, EAAS often starts by installing onsite or close to end users of the energy generation infrastructure. Renewable energies such as wind and solar arrays are common options, but fossil fuel generators or similar equipment may also provide this functionality.
From there, customers pay for access to these systems, while providers manage operations and maintenance, similar to how cloud computing contracts work.
Energy setups as other services may still rely on the power of the grid source as a product, but providers pay this way on behalf of the user. End users will continue to pay a fixed subscription in return for the delivery, maintenance and optimization services they receive.
The EAAS market is experiencing significant growth across all specific setups. Research shows that it will increase from $51.88 billion in 2024, which rose from $203 billion by 2030.
Benefits of the EAAS model
Switching to product models offers several benefits for everyone involved. End-user costs are easiest.
With onsite power and continuous improvement, you can reduce your power consumption, and paying for a subscription makes your finances more predictable than your current volatile setup.
EAAS also benefits by providing providers with close interactions with their customer base. The exact pricing and service of this model requires real-time detailed data via smart metering and other Internet of Things (IoT) technologies.
Many EAAS solutions also rely on mobile apps to provide even more data. This information informs you of more effective marketing efforts and strategic decision-making.
Energy as a service may prove important for a clean power transition. The International Energy Agency emphasizes how EAAS encourages investment in efficiency, as EAAS is central to the model’s core value proposals.
In contrast, selling electricity as a commodity means there is little driving force for the utility to make the system more efficient, as end users are burdened with delivery costs and inefficiencies in generating electricity.
Similarly, EAAS can make renewable energy and microgrids more accessible. Paying a subscription fee for access to Green Power near or on-site will remove that major barrier. When clean energy becomes more affordable, it encourages wider adoption.
The model also has the advantage of reliability. EAAS mandates normal services and modernization than the current economy. As a result, it promotes infrastructure upgrades and aggressive repairs to prevent outages and other disruptions.
This is an important advantage today. Most US power lines are approaching 40 years ago, meaning the end of a useful service life is approaching.
Is EAAS the future of the energy industry?
Given these benefits, EAAS appears to be a natural next step for the sector. Early investments were also bullish, but there are still some challenges that could slow the transition to this new economic structure.
I recently earned many clean energy credits that passed tax laws in stages.
As a result, the sustainability benefits of EAAS may not be as attractive. Both providers and end users may find that they are less likely to change their setup as a result.
The cost and complexity of installing IoT solutions and other data technologies can also slow down the deployment of EAAS. Implementing the systems needed for the model to work is expensive and introduces cybersecurity concerns.
Without a larger economic value statement, these obstacles may seem more open-minded, given recent tax changes.
These challenges do not mean that EAAS cannot become the norm, but they can affect how they grow from here. Heavy industries can first switch to EAAS, as they need to make more profits from the reliability and cost-effectiveness of the setup. Current trends already suggest that this may be the case.
The commercial segment accounted for 52.2% of the EAAS market in 2024, but experts predict that the industrial segment will grow faster over the next five years.
States or countries with more severe environmental targets may similarly see a faster shift to EAAS. In other markets, long-term cost and reliability benefits can still drive the transition, but they may not occur that quickly.
EAAS is a promising trend, but it needs development
Overall, energy as a service offers many benefits and could become the industry standard in the coming decades.
But earlier obstacles are too important to say that they will disrupt the sector within a few years. The relatively young concept requires additional development and regulatory changes for those who are sufficient to realize the sufficient benefits of EAAS.
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