Energy as a Service (EaaS) is the transformation of energy from a commodity to that of a service. From having to outright own energy assets, to having to pay for the kind of services required and energy consumed. From a centralized model to a more decentralized one. While the model has been in operation in some form for decades, innovations in electrical appliances, changes in how energy is priced, and the rise of renewable energy have seen it gain greater prominence. And EaaS is only set to play an increasingly significant role in how the energy industry works in the future.
There are broadly three areas in which EaaS can be categorized — consultation, provisioning and management. The level of service required depends on the nature of the client, the kind of service needed, the financial position, and the kind of collaboration that they prefer. While the consultative role has been in vogue for decades, the provisioning and management roles have increased in usage, especially with the development of internet-enabled devices and energy management services.
The consultative role is when companies and individual homes that need to reduce their energy consumption seek an energy audit to identify areas where they could reduce usage. It helped them reduce their energy bills cost-effectively without having to go for expensive upgrade programs. However, with the rise in the provisioning offered by companies, the scope of the consultative role has expanded to include a variety of ways to reduce energy consumption.
The provisioning role is in the form of retrofitting energy-efficient devices in the place of less efficient ones, the rollout of renewable generation such as solar in buildings and communities, and battery support services. While energy audits can help in finding areas where savings could be gained, they could not be fully realized as they involved retrofits that involved significant capital outlays.
Renewable energy such as solar has seen a great increase in popularity as a way to offset one’s energy costs, be it for businesses or individuals. Though it has little operational expenses, the upfront capital investment has been a deterrent to the kind of rapid uptake that is possible. Battery backup has also seen rising use for several reasons — combined with solar, it can store excess energy when the grid is unable to absorb it, thereby optimizing usage; energy security in areas with unreliable grid infrastructure; or acting as microgrids in areas where the grid is not present. Combined with energy generation at source through solar or other means, battery technology enables individuals, businesses, and communities to imagine energy provision through a spectrum of new possibilities. But, as with retrofits and solar power, batteries are an expensive proposition. However, innovative financing models have led to these items being provided in the form of a service or having them be paid out over a period through the savings gained through their use. Such a model has numerous benefits across technology, environment, business competitiveness, and so on.
Before delving into the energy management services offered by EaaS, we need to know why there is increasing relevance for it. The nature of the power grid is such that it needs to behave like a flexible hose to maintain grid stability — being able to increase and decrease in size depending upon the amount of water required. In times of high demand, it needs to ramp up production from the generation source and ensure adequate supply. And during lean periods, it needs to bring down the output to match demand. It worked when energy production was centralized and production could be ramped up and down when needed. But with an increasingly decentralized energy system, such a model finds itself challenged. In many areas, the growing penetration of solar has seen solar energy output more than the energy demand during that period, leading to energy being curtailed and wasted. This excess energy can be used if it were stored or put to use at the time of generation.
Energy management services see buildings and other electrical devices as a form of an energy storage system in themselves. With the possibilities that are now available through greater availability of data and the connectivity of devices, the variable nature of the grid can be solved through demand management, as opposed to a wholly supply-side solution. While a battery pack for homes, and storage systems such as those used by utilities, is one approach, it is not the only way to solve the issue. And energy management offers a cheaper solution without any capital investment, making it an attractive proposition.
Energy management services can be in many forms depending upon the needs of the consumer. In places where there is variable power tariff, it can be through providing data to consumers on how to optimize their energy use to particular times of the day, when power bills are lower (such as during night times), instead of using devices during peak demand periods. Energy use such as charging up the battery of the EV, heating solutions such as powering the water heater, and cooling solutions, such as air-conditioning, can be accordingly moved by the customer to a time that doesn’t impact them while also resulting in reduced power bills. All the while resulting in the power grid seeing less demand during peak periods.
In a rapidly changing energy industry, Energy as a Service offers ways for both utilities and consumers to approach problems in innovative ways to achieve the goals of energy efficiency, zero-carbon energy, and cheap and reliable power. While there is no one single answer to the needs of the industry, the variety of solutions that EaaS offers is an invaluable addition. And in the coming posts, we write about the solutions that EaaS provides and their impacts.