The global energy as a service market size was valued at USD 74.25 billion in 2021. It is expected to reach USD 192.6 billion by 2030, growing at a CAGR of 12.65% during the forecast period (2022–2030). Energy is employed in many industries, including producing electricity, transportation, and meeting various demands in residential and commercial facilities. The majority of current energy methods release carbon dioxide while burning fossil fuels. Low and zero-carbon technologies must replace current energy production and consumption practices to achieve the emissions reductions necessary to avert the most severe effects of climate change. Energy-as-a-service is a business concept in which clients pay for an energy service upfront without making a capital commitment. EaaS models typically take the form of a subscription for electrical devices held by a service business or management of energy usage to provide the necessary energy service. An energy service provider monetizes the value produced by the digitalization of the energy sector as the transition to a CO2-free system drives enterprises, organizations, public administrations, and consumers to explore new methods to use and control their electricity use.
The notion of energy as a service is still in its infancy, particularly in emerging economies. Most energy providers use joint ventures and business alliances to attract new customers. Developed nations like the US and Canada have established regulations and policies to encourage using EaaS. The market for energy as a service is expanding due to several factors, including an increase in building owners' efforts to lower energy costs, an increase in renewable energy production, an increase in energy efficiency initiatives, an increase in the adoption of renewable energy sources, and an increase in smart grid installations. On the other hand, it is projected that the top companies' switch from the old energy model to the EaaS model would create attractive growth prospects and maintain their position in the market throughout the forecast period.
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Increased Need for Clean and Efficient Energy
The growth of the EaaS market is boosted by improvements in grid infrastructures and the growing demand for a clean, highly efficient energy supply. The industry is also growing due to significant expenditures to offer sustainable energy services to the residential, business, and public sectors. The market value rises with the rising demand for energy-efficient management of various portfolios. Additionally, the growing emphasis on developing government regulations and rules to fulfill the need for energy solutions supports the size of the EaaS industry. Market shares are boosted by the increasing use of distributed energy resources (DER) and the decarburization of the world economy. Additionally, the booming global transportation industries, the spread of electric vehicles (EVs), and a greater emphasis on sustainable energy all impact market expansion.
Adoption of Distributed Energy Generation in Commercial and Industrial Sectors
Distributed energy generation, sometimes called C&I power consumers, uses electricity produced by equipment and renewable technologies around the end users. The energy-using businesses or surrounding industrial facilities can have the power-producing equipment on their rooftops. The surplus energy generated can also be sold to electric utilities. Distributing energy generation has been increasing quickly in recent years, particularly from green energy sources like solar. Commercial (large and SMEs) and industrial consumers worldwide have been increasing the installation of rooftop and ground-mounted solar PV systems for delivering energy requirements, encouraged by government legislation and increased awareness of its utilization for electricity generation.
The amount of distributed energy consumed by solar in the US increased from 79 trillion Btu in 2010 to around 436 trillion Btu in 2020. In Mexico, solar PV constituted more than 99% of the distributed power generation in 2020, totaling more than 1.5 GW of installed distributed power generation. Therefore, an increase in the use of distributed energy generation, particularly by C&I consumers, is anticipated to fuel the demand for energy management, energy efficiency, demand response, and associated solutions from EaaS businesses in the years to come.
Lack of Awareness
Energy as a Service (EaaS) is a cutting-edge business model that offers clients cost-effective energy solutions, but it is still in its infancy in developing nations. EaaS enables energy consumers with restricted capital access to realize more incredible energy and O&M savings. Even with these advantages, obtaining energy as a service is difficult due to the energy consumer's inaction, building restrictions, utility program design, and a lack of stakeholder awareness. It is projected that the market will be limited by the EaaS's ongoing financial needs for some consumers, informational barriers, and performance-related uncertainty. Consumers continue to have a severe lack of awareness. Since traditional energy networks are already quite familiar to most developing economies, most customers still do not comprehend why EaaS is essential and should be prioritized. During the forecast period, this is anticipated to restrict and impede the growth of the EaaS market.
Growing Agreements Among Companies to Improve Service Portfolio
Prominent market players get into agreements to expand their service offerings and open up lucrative chances. For instance, Rolls-Royce collaborated with Sustainable Development Capital (SDCL) to deliver Energy-as-a-Service (EaaS) solutions that can hasten the adoption of sustainable electricity in November 2021. At the "Conference of the Parties"' 26th annual submittal, the agreement between the two businesses was signed (COP26). The company will be able to expand its product line and boost the perception of its brand due to this development. Businesses also plan mergers, expansions, collaborations, and acquisitions to improve their entire market position. Such market advancements will enhance prospects.
The global energy as a service market is segregated into end-user, service type, and region.
By end-user, the global energy as a service market is segmented into Commercial and Industrial.
The Commercial section is projected to advance significantly and hold the largest market share over the forecast period. Due to rising per capita income, an expanding global population, and an increase in the number of electrical equipment, the consumption of electricity in the commercial construction sector is increasing rapidly. Campaigns to preserve energy must consider how energy is used in the home and business sectors. The commercial section of the energy as a service (EaaS) market consists of organizations, including schools, businesses, data centers, hospitals, airports, banks, and other commercial end users. The International Energy Agency (IEA) estimated that in 2020, the business sector consumed about 22% of all electricity worldwide. Various commercial premises have energy applications with increased energy usage, such as district energy systems, mercantile, and services.
The Industrial sector will hold the second-largest market share. Over the last few decades, industrialization and urbanization have increased energy consumption. The industrial consumer's energy requirements are evolving throughout time. Due to the world's changing climatic conditions, industries are responsible for acting sustainably and supporting a carbon-neutral economy. Consequently, governing authorities are placing pressure on sectors to modify their business models, build strong digital technology capabilities, adopt cleaner and greener energy sources, and collaborate with various partners to create and execute successful client propositions. These fresh models can call for adaptable and creative methods.
By service type, the global energy as a service market is segmented into Energy Supply Services, Operational & Maintenance Services, and Energy Efficiency & Optimization Services.
The Energy Supply Services section is projected to advance significantly and hold the largest market share over the forecast period. Due to the rising costs, consumers are searching for a reliable energy source to continue using even if the grid goes down. Energy as a service model primarily supports renewable energy because it lowers energy costs, reduces carbon footprint, ensures high energy efficiency, and is environmentally friendly. This is due to the growing focus on various energy supply sources such as renewable, fossil fuels, nuclear, biomass, and biofuels. It offers consumers a range of options for ownership, cost, and financing. Additionally, it enables operators to adapt cutting-edge, reliable energy generation systems to changing consumer demands. It allows distributed generation and energy storage assets to be quickly integrated.
Predominance of North America in the Global Market
By region, the global energy as a service market is analyzed across North America, Europe, Asia-Pacific, South America, and the Middle East and Africa.
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North America will command the largest market share over the forecast period. The region's demand is predicted to come from the United States, which will result in significant growth. Due to the demand from the nation's commercial and industrial sectors, the United States is the largest EaaS market in North America, with Canada coming in second. EaaS is offered by several well-known companies in the area, including Johnson Control International Plc, Schneider Electric SE, and Honeywell International Inc. In terms of electricity use, the industrial sector in the United States had the highest consumption in 2020, followed by the commercial sector.
According to the Energy Information Administration (EIA), the industrial sector utilized an average of 80,543 kWh power per month in 2020. Due to rising industrialization and technical improvements, it is predicted that the sector's energy consumption will climb even more. The region's EaaS industry is primarily driven by legislation governing building energy efficiency and growing consumer knowledge of the benefits of lowering their capital expenditures for energy production.
Asia-Pacific will witness an exceptional growth rate during the forecast period. With the majority of demand coming from nations like China, Japan, India, and others, the market is expected to experience significant expansion. Due to demand from the business and industrial sectors, China is the largest EaaS market in Asia-Pacific, followed by India. A few well EaaS providers in the region are Johnson Control International Plc, Schneider Electric SE, Engie SA, and Honeywell International Inc. China utilizes the most electricity in the world. According to China Electronics Corporation, the country's electricity consumption in 2020 increased by 78.5% compared to 2010.
Furthermore, the industrial sector consumed an average of 5029.7 billion kWh of power in 2020. It is anticipated that the sector's power usage will rise even more due to increased industrialization and technological advancements. The region's EaaS industry is primarily driven by legislation governing building energy efficiency and growing consumer knowledge of the benefits of lowering their capital expenditures for energy production.