Market Overview
Energy as a service is the subscription-based energy service in which the customers pay for an energy service without having to make any upfront capital investment. It consisted of the third-party vendors, utility services companies, and potential business model disruptors deploying niche technical, financing, or procurement solutions. Energy as a Service includes the energy supply, energy use, technology, analytics, access to the grid, and personalized services.
The Global Energy as a service Market was valued at US$ 83,485.63 million in 2019 and is estimated to reach USD 2,23,048.29 million by 2027, with a CAGR of 13.5% during the forecast period (2020-2027).
The market is driven by the increasing demand for energy as a service for reducing the buildings’ energy cost and carbon emissions. Several factors such as increasing distributed energy resources, decreasing cost of renewable power generation and storage solutions are influencing the market growth. The increasing energy consumption shall have a positive impact on the market.
Market Dynamics
Drivers
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Rise in energy demand to from industrial, residential and commercial sectors and to avoid reducing climate change momentum
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Rising demand for distribution systems (Distributed Energy Resources) with surge in the renewable energy sources such as solar energy, wind energy, etc.
Restraints
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High Capital Cost Require for Energy As A Service due to Adoption of Advanced Technology Based Module and Equipments
Energy-as-a-Service is a fast-growing business model within the power industry, refrigeration industry for residential, industrial and commercial buildings which save total annual cost of energy requirement and reduces wastage of sources. For instance IoT sensors used by one of the water-cooled refrigeration units in the United States have saved wasting of more than 10,000 gallons of water daily and saved more than US $115,000 annually on its water electricity bill. Thus energy as a service plays vital role in saving the electricity and avoiding the loss of essential resources.
Market Segmentation
The global energy as a service market is segmented based on the service type as the energy supply services, operational & maintenance services, and energy efficiency & optimization services.
The Energy Supply Services is estimated to grow at a CAGR of 13.5% during the forecast period (2020-2027) to reach a market value of US$ 1,83,241.82 million by 2027. Energy Supply Services is estimated to account for a share of approximately 79.8% of the global Energy as a Service market in 2019 and is anticipated to grow to 82.2% by 2027.
There is a growing focus on various energy supply sources such as renewable, fossil fuels, nuclear, biomass, and biofuels, energy as a service model across the globe. There is increasing demand for the decentralized energy distribution across the various industries. There is increasing focus on renewable energy that lowers the low energy costs, reduces carbon footprint, and provides the high energy efficiency. Energy supply services provide the flexibility of choice on ownership, pricing, and financing. Moreover, it allows the service providers to customize energy generation designs-based requirements as per the consumers. The operational and maintenance services segment is expected to have positive market growth. There is growing demand for energy sustainability, innovative energy and solutions. There is increasing improvement in building efficiency to reduce the cost and maximize the efficiency. The operational and maintenance services reduce the downtime, mitigating risks, and increasing the profitability of the assets.
Further, the market is also classified based on the end-users as the commercial, industrial, and others. The commercial buildings such as the healthcare, educational institution, airports, data centers, leisure centers, warehouses, hotels, and others are consuming the huge amount of the energy. According to the American Council for an Energy-Efficient Economy, the commercial buildings account for the approximately 19% of the energy consumed in the United States. There is growing energy service implementations of the district energy systems and mercantile and service that requires the higher energy consumption in the commercial sector across the globe.
Geographical Analysis
By region, the global energy as a service market is segmented into North America, South America, Europe, Asia-Pacific, Middle-East, and Africa. Among all of the regions, North America dominated the global energy as a service market and expected to grow at the highest CAGR during the forecasted period due to the several utilities implementing the energy efficiency and cutting down the energy generation costs.
In North America, US is expected to hold the largest share of the energy as a service market due to energy efficiency services market in the US has grown significantly in the past decade. The US energy as a service market is expected to grow at a CAGR of 11.2% to reach a market value of USD 47,559.15 million in 2027 from its recorded value of USD 20,906.69 million in 2019.
There is an increase in the power generation from renewable sources. The growing energy efficiency activities shall stimulate the market growth. Government has introduced several approaches for achieving energy efficiency at a larger scale in the commercial and residential sector. There is an increase in the development of intelligent and automated buildings. Several companies are providing the demand-energy response solutions. Several public and private companies are raising the investment and funding in the power industry. The presence of the federal and state tax benefits for energy efficiency projects shall fuel the market growth.
Asia-Pacific is expected to have a positive market growth due to the growing energy consumption due to the rapid urbanization and industrialization. According to the International Renewable Energy Agency (IRENA), Asia-Pacific accounts for more than half of global energy consumption. Around, 85% of energy consumption come from fossil fuels. There is growing demand for distributed energy resources. Several utilities are investing and upgrading the policies for distributed energy resources. There is growing storage solutions for energy. There is increasing presence of the service operators providing the energy services. The advanced approaches are used for providing the energy efficiency.
Competitive Landscape
The global energy as a service market is highly competitive with the presence of several international and local markets. Product diversification, revenue generation, and opportunities intensify the market competition. WGL Energy, Engie, Schneider Electric, Siemens, Johnson Controls, General Electric, EDF Renewable Energy, and Edison are the leading market players with significant market share.
The major players are using service development, service launch, market expansion, and capacity utilization for holding their market position. For instance, in April 2015, E.ON, one of the largest U.S. renewable energy generators had launched the E.ON Energy Services to capture a growing and under-serviced market. The new business would leverage E.ON's global experience, turning that experience to its U.S. customer's advantage by driving more efficient and profitable renewable energy project performance.
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