Energy as a Service (EaaS) Market Size, Share & Industry Analysis, By Service Type (Energy Supply Service, Operational & Maintenance Service, and Energy Optimization & Efficiency Service), By End-user (Commercial and Industrial), and Regional Forecast, 2024-2032

The global energy as a service (EaaS) market size was valued at USD 77.56 million in 2023 and is projected to grow from USD 85.62 million in 2024 to USD 208.20 million by 2032, exhibiting a CAGR of 11.75% during the forecast period. The energy as a service market in the U.S. is projected to grow significantly, reaching an estimated value of USD 52.52 billion by 2032, driven by the focus on renewable energy integration and grid modernization. North America dominated the energy as a service (EaaS) market with a market share of 43.85% in 2023.

To deduct the total energy footprint, commercial and industrial building sector consumers are largely investing in energy efficiency and procurement of energy from more sustainable sources. The increasing adoption of these services has been mainly to reduce energy costs and decrease carbon emissions to maintain the ecological balance. Innovative business models provide new opportunities for customers to finance energy-efficient building technologies and measures. These include pay-for-performance contracts, energy savings performance contracts, power purchase agreements, and on-bill financing.

Energy as a Service (EaaS) includes the sale of technology, energy, analytics, access to the grid, and personalized services. The challenge of carbon emissions poses a severe threat to the environment. Decentral energy distribution has been witnessed with the increasing adoption of renewable sources to generate power. Rapid industrialization in developing countries increases the energy demand and causes the depletion of fossil fuels globally. The growing requirement to reduce the dependency on fossil fuels and minimize the carbon emission from burning them has augmented the demand for renewable energy sources, which, in turn, has projected to continue to drive the EaaS market’s progress during the analyzed timeframe.

The outbreak of COVID-19 has considerably impaired all industries. Most countries have witnessed a huge expansion in the number of affected cases since 2020. The pandemic's outcome led to unrest in economies of various fast-growing developing countries. The EaaS market has been immediately affected by the outbreak of this global pandemic. Various nations across regions have observed a substantial decline in commercial and industrial activities, reducing numerous vertical energy demands. The steep decrease in energy intake has resulted in limitations in adopting new technologies across the globe.

Energy as a Service (EaaS) Market Trends

EaaS Market Will Grow Rapidly Due to Expansion of Distributed Energy Generation (DEG) Technology

As the energy demand rises and concerns about carbon emissions grow, renewable energy sources are becoming more valuable. As renewables become more common, decentralized energy distribution technologies are also becoming popular. The Distributed Energy Generation (DEG) technology uses all the available energy sources to reduce the strain on power production and incorporate new energy sources into a nation's energy production. Deploying distributed systems offers several benefits, including lower carbon emissions, ability to reach remote areas, enhanced power security, reduced peak energy demand, improved system efficiency, and cost savings for both customers and utilities. Similarly, a virtual power plant is a technology that manages multiple systems using advanced software. This technology is more prevalent in North American and European markets.

Growing Demand for Peak Energy and Favorable Regulatory Frameworks to Aid Industry Outlook

Increasing population and efforts to bring electricity to rural areas have led to higher peak energy demand. Under the EaaS model, the responsibility for financing, installing, owning, and maintaining an energy-producing asset shifts from the consumer to the service provider. Supportive government regulations promoting low-carbon technologies have also helped the market grow. Moreover, the rise of large infrastructure projects and increased urbanization have boosted the demand for power from utility companies.

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Energy as a Service (EaaS) Market Growth Factors

Increasing Adoption of Renewables Owing to their Environmental and Economic Advantages to Favor Overall Market Growth

The aim to reduce greenhouse gas (GHG) emissions and increased energy demand are the primary targets of governing bodies in countries across the globe. Following this, the installation of renewable energy sources is set to grow tremendously over the coming decade, which will lead to the expansion of the market. New energy targets launched by various governments to promote the inclination toward sustainable power have positively affected the market size. For instance, Brazil aims to have 42.5% of its primary energy supply to be renewable by the end of 2023. Similarly, according to the carbon brief analysis, the U.K. government aims to have about half of its electricity renewable in 2025. Germany is on its path to accounting for renewables for 65% of its total energy by 2030. China plans to achieve 16% of its energy renewable by 2030. Following the investment and growth in the country, renewable energy is expected to hold a 26% share and surpass the set target.

Increasing Demand for Energy in Various End-user Sectors to Promote Market Growth

Commercial buildings, residential buildings, and industries require a continuous supply of electricity to meet employees' required production and working hours. In the case of mainline failures, the need for backup power systems in data centers has also increased in these sectors, which has driven investments in the market. Automotive vehicles that currently run on fossil fuels are soon expected to be purely dependent on electricity, which will drive the electricity demand. New charging stations and increased production rates will create opportunities for the EaaS market. Similarly, other industries, such as manufacturing, textile, chemical, pharmaceutical, and others, are expected to grow at a healthy rate. The production and working rate from industries, such as the automotive sectors, are expected to expand during the coming years. Further, the construction of new grids and mass storage systems by utilities to utilize the captured energy from renewables also poses an opportunity for the energy as a service market growth.

RESTRAINING FACTORS

Heavy Capital Investment for Establishment and Switch to Advanced Grids to Impede Market Growth

Renewable energy sources require a good amount of investment to produce energy. For instance, according to Bloomberg, the renewable energy source collectively drew around USD 2.9 trillion in investments from 2010 to 2019. Solar accounts for only 8% of the global energy generation, and wind accounts for 9%. Therefore, most of the projects are needed to be carried out with support from government firms. Governments also provide only a certain percentage of the total investment, and the rest is dependent on the company itself. The grid upgrading work, which requires the installation of smart equipment at both the customer and utility end, is also costly, which may hamper the EaaS market growth.

Energy as a Service (EaaS) Market Segmentation Analysis

By Service Type Analysis

 Global Energy Supply Services Segment to Dominate the Market Due to Rapid Urbanization

Based on service type, the market is fragmented into energy optimization & efficiency service, operational & maintenance service, and energy supply services. The energy supply service segment will dominate the market with a 41.74% market share in 2021. The segment’s growth is attributed to the rising population, resulting in an increased number of customers in each region. Energy optimization & efficiency-as-a-service is a pay-for-performance, off-balance sheet financing solution that allows customers to implement energy and water efficiency projects with no upfront capital expenditure. Implementation of these services is economical in the long run as the customer makes service payments based on actual energy savings or other equipment performance metrics, resulting in immediate reduced operating expenses. These factors are expected to drive the segment’s growth.

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By End-user Analysis

Growth in Commercial Segment is Backed by Growing Demand for energy

Based on end-user, the global energy as a service market is bifurcated into industrial and commercial. With a significant number of commercial spaces available and high consumption of electricity during 2021, it is expected that the commercial segment is likely to dominate the market during the forecast period.

REGIONAL INSIGHTS

The market has been analyzed geographically across four main regions, including Europe, Asia Pacific, North America, and the Rest of the World.

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North America is expected to dominate the energy as a service market share during the forecast period, with most of the demand coming from the U.S. The country is a prominent one to have implemented EaaS in various sectors. Especially in the commercial industry, the region has adopted various projects that are expected to increase energy storage efficiency and would help to cut down its operating expenses. Additionally, the region has witnessed noticeable investment in the refining, production, and exploration sectors, which is anticipated to surge the demand for energy as a service model in the coming years.

Furthermore, Europe's market is favored by encouraging government and organizational policy frameworks to deploy green energy solutions and significant installation of power generation technologies in different areas. Currently, Germany, the U.K., and Italy, among others are the key countries contributing substantially to the EaaS market in the region. Besides, increasing investments and plans to expand and fortify the grid infrastructure networks to support the increasing renewable energy installation are anticipated to further propel the industry.

In Asia Pacific, the increasing awareness of clean energy, government-aided financial support, and need to fulfill demand & supply mismatch will supplement the industry outlook. The setup of new industrial gas facilities and building of new domestic & commercial spaces augmented the adoption of these models in the region.

List of Key Companies in Energy as a Service (EaaS) Market

Siemens is Focusing on Acquiring New Contracts through its Subsidiaries to Fortify its Position across the Industry

Companies majorly dealing in the renewable energy service business are expected to generate significant market share in the coming years owing to the rising adoption of renewable sources. The industry has also witnessed a steady involvement of key global and regional players along with several small & medium-scale system integrators.

Companies, such as EDF Renewables, Centrica, Veolia, and others, investing in upcoming technologies, such as distributed energy generation, virtual power plants, and offshore wind power, are expected to lead the market. The other major players in the market, such as ABB, Siemens, Schneider Electric, and GE, are the leaders in providing various equipment installed and required to maintain smooth operations of the production unit. Therefore, these companies acquire a lower percent of share in the service market than other companies that operate in energy production. The other players mentioned include numerous participants operating in the energy service industry and providing various services, ranging from software to hardware equipment. The fragmented market for the industry has seen numerous new technological advancements coming up to keep pace with the top-performing players.

LIST OF KEY COMPANIES PROFILED:

• Schneider Electric (France)


• Siemens (Germany)


• Veolia (France)


• Honeywell (U.S.)


• Enel X (U.S.)


• EDF Renewables North America (U.S.)


• General Electric Company (U.S.)


• ENGIE (France)


• WGL Energy (U.S.)


• Edison Energy (U.S.)


• SmartWatt, Inc (U.S.)


• Bernhard (U.S.)


• Centrica (U.K.)

KEY INDUSTRY DEVELOPMENTS:

• August 2023– Teva Pharmaceuticals, a leading generic pharmaceutical company, took proactive measures to reduce its environmental impact by partnering with Honeywell, a technology company. The partnership aimed to reduce Teva’s energy consumption and carbon emissions at its manufacturing facility in Debrecen. Through Honeywell’s innovative ‘Energy as a Service’ (EaaS) model, Teva will be able to implement energy improvement upgrades without the need for a significant capital investment.


• October 2023 – Green Genius, a Lithuanian renewables developer, received funds for an Energy-as-a-Service (EaaS) project. The project will involve an installation of 6.5 MW of solar power and 6 MWh of Battery Energy Storage Systems (BESS) for a Carlsberg A/S brewery in Lithuania.


• September 2023 – Sunnova Energy International, Inc., a leading Energy as a Service (EaaS) provider, entered a USD 3 billion partial loan guarantee agreement with the U.S. Department of Energy’s (DOE) Loan Programs Office (LPO) to support solar loans originated by Sunnova under a new solar loan channel named “Project Hestia”. This will enhance the development of Energy as a Service (EaaS) projects.


• March 2023- Honeywell announced that it had invested in an energy-as-a-service company Redaptive to bring the latter’s capabilities to private sector-owned commercial and industrial buildings.


• October 2021–  Infosys, an Information & Technology services company and British Petroleum announced that they will develop a pilot Energy as a Service (EaaS) solution project focused at helping businesses improve the efficiency of energy infrastructures and facilitate to meet their decarbonization goals. The companies intend to co-develop a digital platform data center to collect data from multiple energy assets and use artificial intelligence to optimize the energy supply and demand for power, heat, cooling, and EV charging. The project requires an environment that replicates a small city, where energy is generated, stored, and consumed at multiple points. The companies will pilot the digital platform at the Infosys Pune Development Centre in the Pune city, India. After the successful completion of the pilot project, the companies will aim to implement this model across other Infosys campuses in India to help manage energy and help reduce emissions.

REPORT COVERAGE

The research report offers a qualitative and quantitative in-depth industry analysis of the global market. It further details the adoption of energy as a service across several regions. The report provides a detailed competitive landscape by presenting information on key players and their strategies in the market. Information on trends, drivers, opportunities, threats, and market restraints can further help stakeholders gain valuable insights into the market.

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