One word that usually resonates when humans investigate common phenomena that cause a global shift is “Technology”. Its disruptive nature in every industry is unmatched, yet there is tremendous potential available for further disruption. In this regard, the transportation industry is notable for introducing customer-interfacing digital platforms like Bolt and Uber. These are transport services that move people from one location to another while eliminating car ownership problems. Both mobile applications calculate the quickest route to a destination, know where to pick up and drop off customers, and are easily accessible through smartphones. According to Engie, an energy company, all aspects of the user’s transportation experience is managed. It does bring the question: “is it possible to manage all aspects of a user’s energy experience?”
The Energy industry is no different in experiencing these disruptive changes as the world’s perspective moves towards clean power, energy efficiency and sustainability. The International Renewable Energy Agency (IRENA) tells us that the growing installation of distributed electricity, generation, and storage technologies, along with the widespread availability of smart devices, has created room for new business models to emerge. One such business models being analysed and popular in the energy industry is the Energy-As-A-Service (EaaS) business model.
Energy-As-a-Service
Analysing IRENA’s statement, it is well-known that company business models undergo necessary transformations to match energy industry trends, considered the “new normal”. These transformations can range from incorporating communication and digital technologies to installing energy-efficient hardware and renewable energy technologies.
The possibilities seem endless for businesses, and targeting the right market segment will lead to exponential growth. According to Navigant’s Research on EaaS, the EaaS market is predicted to be worth USD 221 million by 2026, to add more perspective into our term “exponential growth”. The keyword here is reviewing the market, which is the customers of electricity in this case. Difficulty increases for customers when they are faced with multiple options and choices for energy access. According to Engie, there are moments where large Commercial & Industrial customers find it difficult to choose from all energy-related options available. The solution proposed? Energy-As-a-Service.
Energy-As-A-Service is viewed as a merge between the tech and energy industry. Eaas incorporates digital technology and telecommunications into energy to optimise and streamline the industry processes. Deloitte defines EaaS as a delivery model that combines hardware, software, and services that provide value by bundling this combination, usually sold separately, into a single offering. In layman’s terms, hardware, software and services are integrated into an attractive energy package sold to customers.
By creating an integrated model where a consumer’s electricity is managed via a smart network, energy providers give more reliable and sustainable solutions while consumption is monitored optimally. Deloitte further iterates that, solutions should combine demand management and energy efficiency services, facilitate the adoption of renewables and other decentralised supply sources, and optimise the balance between demand and supply. Solutions could also include Operation and Maintenance, Energy Financing, Energy Auditing, Benchmarking etc. The Major benefit to the consumer is the easy-to-grasp options provided from a multidimensional energy package.
In addition to multiple factors such as economics, regulatory policies, consumer needs and environmental issues on which EaaS and its market are dependent, decentralisation and digitalisation are key in making the process work. For business owners examining the consumer market and exploring better analytics and tools, more efficient customer-interfacing services, energy generation technologies, and access to the centralised grid is just as vital. The ever-expanding innovation brought by technology into the energy industry is responsible for restructuring the global energy market. It is also responsible for the growing need to become more efficient, reduce consumer costs, live more sustainably, and reduce carbon dioxide footprint.
Read Also: Nigeria can forget million-dollar oil tax revenues as energy transition nears
What and Who Does Energy as a Service Involve?
EaaS providers are tasked with developing robust multilayered energy packages beneficial to customers. These providers must have a deep understanding of the key services provided by different stakeholders in the market.
IRENA identified relevant EaaS and their respective services offered in the market, including electricity suppliers, energy resource suppliers, smart device suppliers and Information, Communication and Technology (ICT) companies.
Stakeholder Services
Electricity Suppliers Retail electricity services, dynamic pricing
Distributed energy resource suppliers Developing smart grid systems, renewable installations
Smart device suppliers Manufacturing and programming smart devices
Communication and Technology (ICT) companies Data Analytics, real-time monitoring, Consumption data.
For an EaaS company to meet customers’ demands, it is crucial to apply technical, financial, energy, and analytical expertise in strategically developing and proposing wholesome energy solutions. Besides meeting this demand, solutions should provide the necessary foothold for customers to consider future investments, bringing foresight into market trends.
A regular day in the life of an EaaS provider involves pooling together individuals with vast experience profiles and resources to collaborate to execute complicated energy projects. According to Veckta, a company focusing on energy user empowerment and supply chain management through digital means, consultants arrange to assess and reorient how a business conducts its operations after the EaasS provider brings them together. This practice ensures that its energy-related activities are much more efficient and cost-effective. The consultant assessments are largely focused on saving energy and improving efficiency and alternative sources of energy provision while often taking advantage of the new players entering the energy market.
The work required to provide energy as a service is usually voluminous and costly, depending on the customer’s requirements. Services may include Energy Auditing, HVAC maintenance and replacement, Renewable and Sustainable Energy Engineering, Power Generation, Engineering Design and Project Management, Energy Efficient Building and Modeling, Energy Financing, Data Mining and Analytics, etc. In our current economy, An EaaS provider could range from an individual architect/energy engineer partnering with other individuals of versatile experience to large scale energy contractors and partnerships between generation, transmission and distribution companies, in tandem with ICT and smart device suppliers.
Why Consider Energy as a Service?
It is relatively easy to convince customers to adopt EaaS since it has many benefits. Customers benefit from reduced energy costs and make progress towards renewable energy and sustainability goals. Upfront capital may not always be required from the customers because of the availability of energy contracting, so customers have the opportunity to incorporate more energy-efficient strategies with detailed solutions in their facilities. Customers could partner with an experienced team of experts and rely on their expertise in addressing building energy needs while mitigating risks associated with such efforts.
EaaS will be of huge benefit to the economy, considering Nigeria’s current energy infrastructure. However, for EaaS to be implemented, Nigeria will need to improve its existing energy systems while creating regulatory policies to accommodate local companies breaking ground into the energy industry. Another area to be addressed will be enhancing the technology industry to create the environment for tech and energy concepts to merge and provide a larger avenue for business models like EaaS to unfold. All these can be incorporated into Nigeria’s energy and sustainability plan as the government keeps looking into strategies that propel advancements in technology and growth in this industry. The government must work with different DisCos, GenCos and other key players in the utility industry, including energy contractors and national organisations, like the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Nigeria and Association of Energy Engineers (AEE) Nigeria, to develop a robust model beneficial to the country.
