Energy Transitions, Regulations Driving Energy as a Service Market Growth

Published on: 30 September 2022
by KnowESG
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Increased distributed energy resources, tax benefits for energy efficiency projects, and decreasing costs of renewable power generation and energy storage platforms are increasing the demand for the energy as a service market, according to a report from Markets and Markets.

The market is expected to be valued at $105.6 billion by 2027 and grow at a CAGR of 10.3% per year, according to the report. A range of renewable energy sources, such as solar, fuel cells, and grid-based energy storage, as well as technological and manufacturing advances, have helped grow the market.

The commercial segment of the energy as a service market (EaaS) is expected to grow the fastest, according to the report. That includes institutions such as healthcare, data centres, warehouses, and hotels. Markets and Markets says this shows that businesses are looking to use efficient and reliable energy services.

Governmental regulations, policies, and incentives are also creating a shift away from traditional energy generation and driving growth and investment in the EaaS market, the report says. The United States, for example, recently passed the Inflation Reduction Act, which includes multiple incentives to increase renewable energy use and production.

The energy supply services segment is expected to be the dominant piece of the market, the report finds. Energy supply services include situations where a building’s energy needs and management are taken care of by an outside company.

Those services can also protect users from grid blackouts that might threaten the operations of traditional grid-connected commercial and industrial units. Energy supply services are increasingly delivered through energy services agreements where a provider will finance, develop, deploy, and maintain renewable energy projects.

According to the report, North America will likely become the largest EaaS market. That’s because of an increased focus on significant energy transitions driven by decarbonisation, decentralisation, and digitalisation.

The region is also more likely to move to distributed energy resources to ensure grid reliability and help businesses reach decarbonisation targets. Those tools are also in response to increased energy regulations in North America.

EaaS, which the report says is valued at $64.7 billion in 2022, is where users pay for energy platforms without upfront investments. It is usually provided by outside sources and management programmes to provide specific energy services and is often used for energy efficiency platforms and renewable generation.

Guidehouse Insights published a report last year saying the services are an important piece of energy transitions and are becoming a bigger piece of energy service company markets. That is in part because they can save energy, reduce costs, and decrease maintenance for a user’s facility.

Key players in the EaaS market include ENGIE, Enel X, Schneider Electric, Ameresco, Siemens, General Electric, Veolia, Honeywell, Centrica, Alpiq, WGL Energy, Orsted, and Bernhard Energy Solutions.

Source: Environmental Leader

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