In our previous article, we looked into the origins of Energy-as-a-Service (EaaS) and its evolution into a customer-centric business model, underpinned by data, analytics and complex algorithms. Still in relative infancy, it has been slow to develop but as technology matures and the industry moves faster towards digitalisation, the innovative potential of EaaS is now tangible.
Looking ahead to the coming decade, EaaS surely provides the solution to an industry-wide question which has been sparked by the global focus on climate change and the ever-growing customer expectations of personalised digital service: How can the energy industry provide green power across connected cities to an active consumer at the lowest cost and with the greatest ease?
Lying at the heart of any EaaS service are the operational needs of the customer, be it residential or commercial. Thanks to data and digitalisation, those pioneering companies offering EaaS applications are able to meet those needs by better understanding the demand of their customers and using that knowledge to optimise the system.
EaaS is moving on from the basic model where the energy industry meets customer needs by delivering an all-in service but to do so requires the installation of more technology, a bigger grid connection or indeed the incentivisation of the customer themselves to change their own behaviour. Instead, the future of EaaS is a fundamental shift to a granular understanding of how the customer interacts with the overall system and a world where algorithms are used to integrate and manipulate demand patterns to avoid the peak in the first place without any impact on the customer at all. Let’s now look at how this could manifest in the future.
An EaaS application is a product or service which facilitates the use of electricity in its most sustainable and cost-effective form, without putting the burden of complexity on the consumer. Put simply, at home, people don’t want kilowatts. They want a cold fridge, heating at the right time, a charged phone and kilometres in their electric car.
Earlier this year, UK energy companies Baxi Heating and the now-sold Bristol Energy trialled Heat-as-a-Service, selling a so-called Heat Plan where consumers purchased hours of warmth rather than kWh. Funded by the UK’s Department of Business, Energy and Industrial Strategy (BEIS), the trial offered households a fixed price based on data about the thermal efficiency of their home and basic demand – the number of hours of warmth needed by the customer each week, in the rooms they wanted at the times they wanted.
While only a small-scale trial for research purposes, it does well to illustrate the core benefits of EaaS and the potential for future residential application by forward-thinking utilities. On one hand, it offers a tailored and extraordinarily simple service, based entirely on customer need without any requirement for the customer to actively participate – constantly changing the thermostat, switching to a cheaper energy supplier and the like. For the utility providing the service, it offers the opportunity to optimise their system, delivering the levels of comfort their customers need but by using as little energy and carbon as possible. It’s a win-win for both user and provider, and, going back to our original question, certainly goes far to ticking off those core requirements – green, cheap and convenient.
You can see a similar concept in action with smart electric vehicle (EV) charging, and its integration into home energy management systems (HEMS). Integrating EV data with time-of-use tariffs and smart meter data creates a smart charging opportunity from which the EV company, the grid operator and the vehicle owner all benefit.
By controlling the time and rate at which the EV is charged based on local demand and electricity market prices (while still adhering to the minimum charge levels set by the owner), the smart charging company can open up new revenue streams such as the provision of balancing services to the grid operator as well as wholesale arbitrage opportunities based on the bulk buy of electricity. The network operator is able to balance the local grid with greater flexibility, while the vehicle owner receives low cost charging with barely any input.
The future role of EaaS in decentralisation
Energy-as-a-Service clearly provides successful technology-enabled solutions for balancing demand and consumption and enabling higher penetration of renewables, across both the residential and commercial sectors. It is an area that is ripe for investment. Just this month, Siemens announced a move into the distributed energy market with the creation of a US-focused joint venture which will build, own and operate solar panels, battery plants and microgrids to offer Energy-as-a-Service solutions for the commercial, industrial and not-for-profit sectors.
These local EaaS energy systems, provided at zero capital cost, deliver greater efficiency with far smarter control, particularly in areas where existing antiquated grids struggle. In fact, EaaS has a huge role to play now and in the future in taking pressure off centralized assets. Aligning grid balance at a local level through technology-enabled demand response solutions offers up far greater flexibility to flatten the load curve and integrate volatile sustainable sources.
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