Market Research Report
Energy as a Service Market Forecasts to 2028 - Global Analysis By Component (Solutions, Services), End User (Industrial, Government, Residential, Commercial), and By Geography
|Energy as a Service Market Forecasts to 2028 - Global Analysis By Component (Solutions, Services), End User (Industrial, Government, Residential, Commercial), and By Geography|
Published: March 1, 2022
Stratistics Market Research Consulting
Content info: 200+ Pages
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According to Stratistics MRC, the Global Energy as a Service Market is accounted for $58.75 billion in 2021 and is expected to reach $100.69 billion by 2028 growing at a CAGR of 8.0% during the forecast period. Energy as a service is a swiftly growing and newly developed model that offers various energy related services and provides energy optimization solutions across small, medium and large businesses. Energy as a Service (EaaS) can be characterized as at one or more aspects of a customer's energy portfolio including methodology, program the executives, vitality supply, vitality use, and resource the board by applying new items, administrations, financing instruments, and technology solutions. It also increases awareness toward better management and increased installation of distributed generation sources. Energy as a service is used in different service types and detailed overview on these segments is given in the market study.
Rising adoption of distributed energy resources
Increasing investment in energy distribution systems would create demand for distributed energy resources (DER), which will help to propel the market. Aging infrastructure for generating and transmitting power has forced utilities to invest and upgrade the policies for (DER). Distributed energy resources include renewable energy, demand-response capabilities, and other energy saving technologies to control and reduce energy use and better manage bills. For instance, the California Public Utilities Commission (CPUC) has planned to invest USD 9 billion over the next three years to upgrade its electric distribution system and enhance its capabilities to operate the system. Therefore, the rising need for distribution systems and significant investment to improve grid efficiency is expected to drive the demand for Energy as a Service market.
High transformation cost
The replacement of existing grid infrastructure advances the capabilities of the electricity delivery systems, which is driving the market growth. As per the Institute of Energy Economics and Financial Analysis, India needs an investment of USD 60-80 billion over the next five years in grid infrastructure to achieve its tremendous growth in renewable energy capacity. In addition, electric utilities have planned to invest USD 3.2 trillion globally in new and replacement transmission and distribution infrastructure. This infrastructure investment will be necessary due to growing electricity demand, aging assets, and new power generation projects, including intermittent renewable resources straining the grid. Therefore, the rising need for transforming grid infrastructure, which is primarily driven by significant investment, restrain the market growth.
Growing investment in renewable energy sources
Growing investment in renewable energy is driving the EaaS market growth. Rising focus on integrating distributed generation, renewable energy, energy storage, thermally activated technologies, and demand response into the electricity distribution and transmission system has enabled more investment in renewable energy. According to the report on Global Trends in Renewable Energy Investment 2019 published by United Nations Environment Programme, global investment in renewable energy in 2018 increased to USD 272.9 billion, the fifth successive year in which it has exceeded USD 250 billion. In addition, the growing investment in storage solutions is also augmenting this market. For instance, in September 2018, the World Bank Group announced a program to invest USD 1 billion to accelerate investments in battery storage for energy systems in developing countries. This program aims at ramping up the use of renewable energy to improve energy security, increase grid stability, and expand access to electricity. Therefore, increasing investment in renewable energy sources and storage solutions will fuel the market in the forthcoming years.
Disruptions due to COVID-19 pandemic
The outbreak of COVID-19 pandemic had led to partial or complete shutdown of production facilities, which do not come under essential goods, owing to prolonged lockdown in major countries such as the U.S., China, Japan, India, and Germany. Electricity demand dropped to lower levels under lockdown, with dramatic reductions in services and IT industries and partial offset by higher residential use. In June and July, the electricity demands, corrected itself by 10% and 5%, respectively, below the 2019 level of the same month in most countries except India, where the recovery was more pronounced. EaaS projects offer energy efficiency as well as cost saving for long term. However, high capital investments in initial stages have led many companies to reduce such investments. Companies are already struggling to keep up with fixed costs and trying to survive the impact from COVID-19, any commitment to such huge capital investment is either put off, cancelled, or delayed.
The commercial segment is expected to be the largest during the forecast period
The commercial segment is estimated to have a lucrative growth. The commercial segment is expected to hold the largest market share and the fastest growing market with energy service implementations being mandated across global regions in the commercial sector. The commercial segment includes industries such as educational institution, airports, healthcare, data centers, leisure centers, warehouses, hotels, and others. According to the American Council for an Energy-Efficient Economy, these establishments account for about 19% of the energy consumed in the US. Furthermore, commercial consumers will have access to their energy efficiency through energy as a service that will, in turn, help them improve their energy consumption. More than half the energy used by commercial buildings goes toward heating and lighting. This is mainly because of significant structural impacts, namely, economic growth.
The services segment is expected to have the highest CAGR during the forecast period
The services segment is anticipated to witness the fastest CAGR growth during the forecast period. With the increasing prices, the consumers are looking to procure resilient energy supply to ensure that they can operate without the grid. Also, with the growing focus on various energy supply sources such as renewable, fossil fuels, nuclear, biomass, and biofuels, energy as a service model mainly supports renewable energy as it lowers energy costs, reduces carbon footprint, ensures high energy efficiency, and is environment-friendly. It also helps the operators customize energy generation designs based on consumer requirement, which are modern and robust. It enables easy and rapid integration of distributed generation and energy storage assets. It gives the consumers the flexibility of choice on ownership, pricing, and financing.
Region with highest share:
North America is projected to hold the largest market share during the forecast period owing to the increase in the share of renewable power generation and energy efficiency activities in the region. Utilities in countries such as the US, Canada, and Mexico are implementing energy efficiency projects and are looking to cut down energy generation costs. New approaches such as pay-for-performance are being introduced in the US to achieve energy efficiency at a larger scale in the commercial sector. For example, in California, energy efficiency policies have mandated that at least 60% of the savings achieved in obligation schemes need to be delivered by third-party service providers.
Region with highest CAGR:
Asia Pacific is projected to have the highest CAGR over the forecast period owing to the presence of key players and huge consumer base in the region. Furthermore, energy as a service is gaining importance, owing to increase in transformation across the energy industry including digitization, decarbonization, and rapid growth in distribution generation services, which is expected to augment growth of the energy as a service (EAAS) market during the forecast period. Moreover, the adoption of green building models, increasing investment in renewable energy, and rising government support are the prominent factors attributed to the market's growth.
Key players in the market
Some of the key players profiled in the Energy as a Service Market include Bernhard Energy Solutions, Ameresco Inc, Edison, Honeywell, Alpiq, General Electric, Johnson Controls, Noresco, Schneider Electric, Enertika, Engie, Siemens, Smartwatt, Veolia, and WGL Energy.
In June 2021, Honeywell launches Battery Energy storage systems platform to help users forecast and optimize energy costs. This product launch will expand the product portfolio of the company in the battery storage for grid stability and energy resource management.
In July 2021, Ameresco Inc., a leading firm in energy efficiency and renewable energy, signed a contract for a long-term energy-as-a-service agreement with Northwestern University. The company will deliver ongoing energy management and related services and identify and implement energy efficiency upgradation for the campus.
In August 2021, Engie Group has signed an agreement with Google to supply a carbon-free energy agreement in Germany. The agreement will contribute to google 2030 carbon-free energy targets for its data center, cloud region, and offices worldwide.
In August 2020, Schneider Electric, the French multinational corporation is providing energy and digital automation solutions, partnered with Huck Capital, an investment firm, to deliver clean energy as a service to commercial and industrial buildings.
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