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How The Energy As A Service (EaaS) Business Model Works

Posted by: IotaComm

Until fairly recently, most business leaders and facility managers considered energy an expense line item that was out of their control. It was widely viewed as a fixed cost—a basic requirement for day-to-day operations that was subject to changing regulations and volatile markets. And while it’s common knowledge that there are numerous sources and types of energy available, no one in-house knew enough about the energy market to explore them, let alone recommend major changes in this area with a high degree of confidence.

Enter the energy as a service business model, which is changing the way companies think about and approach energy spending.

So what is energy as a service (EaaS) and is it right for your building or business? Keep reading to find out.

What is the energy as a service business model?

It’s still true that there are numerous sources and types of energy available, and also true that, for most companies, in-house energy experts are few and far between. But continuous average annual increases in the cost of energy—and the fact that energy makes up a huge portion of most companies’ operating budgets—has made many business leaders start searching for a better way of managing this massive yearly expense.

The essence of the energy as a service business model revolves around companies partnering with outside experts for the purpose of regaining control over energy spending.

Energy experts (sometimes called energy resource consultants) have deep knowledge about all aspects of the industry. When you partner with an energy as a service company, its expertise is applied to your business specifically. Your EaaS partner delves into all aspects of your current energy supply and management practices and, combining that information with their knowledge of the industry, finds ways to save money.

Wondering if your building’s energy use is on par with your industry’s peers? Download this energy benchmarking report to learn more about industry energy profiles.

In general, an EaaS company will make recommendations in two areas:

  • Ways you can save energy, or how to make your daily operations more energy efficient.
  • Alternative ways you can get energy, including how you produce it and store it.

The best part about an EaaS relationship: Your savings are guaranteed. If the changes implemented do not produce the expected savings, the energy as a service company will make up the difference. The energy as a service business model is attractive to many companies because not only do they get valuable expertise in a very complex area, but they are also guaranteed to save money on future utility bills (therefore regaining control over an area of high spend).

[bctt tweet=”The energy as a service business model is attractive to many companies because they are guaranteed to save money on future utility bills (therefore regaining control over an area of high spend).” username=”iotacomm”]

Let’s take a closer look at the two areas where energy as a service companies typically focus their energies.

How The Energy As A Service Business Model Produces Savings

1. EaaS partners determine ways you can save energy.

You probably aren’t aware of the cost of your building’s energy use over the course of a year. Nor is it likely that you know how most of your facility’s energy is being consumed. That would make it very difficult to diagnose areas of waste on your own. An energy consultant learns about your building’s energy profile with the goal of identifying the best opportunities for controlling and optimizing energy efficiency.

They will, for example, monitor your building’s power usage patterns. Measuring the power usage of all your large pieces of equipment, like HVAC units, compressors, elevator motors, air handlers, pumps, and any other specialized machinery you may have, provides valuable data about how your building uses energy. What types of equipment use the most energy, and what times of day are they operating? By comparing that data to utility time of use charges it’s possible to start devising different strategies for running critical (but costly) equipment, or identifying machinery that’s underperforming and needs to be replaced. They may also do things like monitor CO2 levels to see how efficiently you are bringing in outside air, which is ultimately heated or cooled, and investigate your lighting levels and patterns.

To uncover savings opportunities, EaaS companies utilize advanced machine learning applications that can be specifically tailored to your building, thereby producing more accurate recommendations.

Energy As A Service: The Benefits Of High Technology

By partnering with an energy as a service company you often get the benefit of advanced technology at the same time as getting energy expertise.

  • Wireless Internet of Things (IoT) sensors attached to your critical equipment collect real-time information at a granular level.
  • Advanced analytics platforms crunch the numbers to show you what savings would look like.

For example, monitoring and analysis of an HVAC pump could provide the detailed insights needed to understand not only how much energy a pump uses and when, but how environmental factors played into the usage—such as if the outside temperature during a particular period was hotter than normal or the thermostat was set to a lower temperature than normal. So you’ll not only get recommendations for greater efficiency, but you’ll also be able to see the exact dollar amount per hour you’d save as a result of implementing it.

Even after your EaaS partner’s initial changes have been implemented, you can continue to take advantage of the technology it offers over the long term to keep the savings going.

2. Eaas partners assess your current energy purchasing program and recommend different ways to procure, produce and store the energy you use.

You have choices when it comes to your energy supply, some of which may be less expensive than what you’re using now. You just may not be aware of them, or how to get started using them. In addition, some companies do an energy overhaul for reasons other than savings; they may be more interested in sustainability.

Many corporations aiming to go green are increasing their reliance on renewable resources like solar power. (More than 100 of the Fortune 500 companies are already using it, with good results.) Companies like Apple are popularizing both wind and solar power. An energy as a service partner can provide access to solar power by helping you build, finance, and operate a local solar power plant. If the plant is owned by a third party, the power produced can be purchased by entering into a solar power purchase agreement (PPA), or a virtual power purchase agreement (VPPA), where you agree to purchase renewable energy from an offsite solar farm for an agreed-upon price.

Introducing you to various energy production options is a key part of the EaaS relationship. Whether it’s a solar farm, generators, microgrid, combined heat and power, or another production method, your EaaS partner will evaluate alternate means of producing power and recommend one or more that will help you reach your goals for both savings and/or sustainability.

Similarly, you can adopt a method of energy storage either on-site or locally. Having a way to store energy gives your building more flexibility when it comes to reducing your demand charge. Rather than having to draw power from the utility during peak periods (when demand is greater than supply and utilities charge more), you can draw from your own storage system, significantly reducing costs. There are a variety of energy storage technologies emerging that your energy as a service partner can help you explore.

Exploring the possibility of partnering with an energy as a service company?

If you’re looking for help becoming more energy efficient or reaching your sustainability goals, talk to us at Iota.

Our energy as a service business model takes a long-term, consultative approach. We get to know your building by compiling a detailed energy profile using IoT sensors. Using the sensor data and our Bright AI smart building software platform, we’ll analyze the energy conservation measures that would be most beneficial for you, and help you implement them. We’ll also make recommendations around energy production and storage that will reduce costs, and achieve any other goals you’re hoping to reach. We guarantee savings for all our energy as a service customers, and we can do the same for you.

Visit our website to learn more about our energy as a service offering, or reach out with questions.

Download Now: Optimize Building Operations With Energy As A Service & The IoT