Focusing on core competencies allows a business to stay competitive and innovative within its selected space. A dairy farm produces milk products; a retail store sells its inventory; a steel manufacturer creates steel. All of these businesses use energy, yet energy management and efficiency do not fall into their primary business focus. So where can these, and other businesses turn when they want to make energy upgrades and improvements?
When it comes to providing energy services, Energy-as-a-Service (EaaS) companies are primed to design, implement, and manage energy solutions for businesses and industrials. In doing so, the EaaS provider manages industrial efficiency while the business customer maintains focus on its core competency.
Advantages of EaaS
EaaS companies provide end-to-end energy solutions without the customer needing to invest upfront capital or assume liability for underperforming energy efficiency equipment and processes.
By providing an ongoing energy management service, EaaS providers effectively convert a capex project into an off-balance sheet operational expense.
- Pay-for-Performance Arrangement — To assure that the service generates savings, EaaS providers work under an Energy Service Agreement (ESA) that shares the savings between the parties, effectively creating a pay-for-performance based model. Only paying for energy savings shifts underperformance risk from the customer to the EaaS provider.
- Increase in Available Capital — EaaS solutions generate thousands in annual energy cost savings without any upfront investment. This no capex model frees up capital for the business to invest in things that directly relate to its core focus, whether that be hiring more employees, bringing new products to market, or expanding markets.
- Off-Balance-Sheet Financing Solution — The Energy Service Agreement is structured as a services agreement under IRS regulations, so no asset or liability needs to be added to the balance sheet. The combination of savings plus off-balance-sheet accounting improves a variety of the customer’s financial metrics, such as debt coverage ratio, Return on Invested Capital, and Return on Assets.
EaaS Provider Types to Meet Business Energy Needs
The foundational EaaS model provides a company with energy cost savings without assuming risk or taking on capital expenditure. Due to the EaaS appeal, a range of energy companies have adopted the model in order to more effectively meet the needs of industrial customers.
Lighting as a Service (LaaS) — A lighting company can upgrade or retrofit existing fluorescent or incandescent bulbs to longer-lasting, more energy efficient LED lighting. The LaaS company takes on the responsibility of lighting install, maintenance, and monitoring while the business customer benefits from smarter illumination, reduced energy use and cost savings.
Steam as a Service (SaaS) — A company specializing in onsite steam generation — whether from boilers or Combined Heat and Power (CHP) systems — will install, monitor, manage, and maintain systems responsible for steam generation and flow throughout a facility. With steam playing a pivotal role in industrial heating, SaaS offers the security of reliable steam without any of the headache.
Energy Efficiency as a Service (EEaaS) — An expert energy company will take a comprehensive look at an industrial facility to determine areas for optimized energy utilization and cost savings potential. Instead of being narrowly cast on lighting or steam, an EEaaS provider designs, implements, and monitors a diverse range of energy efficiency solutions — such as heat recovery, reverse osmosis, and anaerobic digesters — to save customers money while also improving overall industrial efficiency and lowering carbon emissions.
Energy as a Service is a savvy way for businesses to benefit from energy improvements without investing capital or taking on extra liability.
It’s all improvement without any distraction. Find out more about how Skyven’s Energy-Efficiency-as-a-Service model can work for you!