Even in the midst of a pandemic, the energy as a service agreements (EaaS) market is thriving, with an expected value of over $140 billion by 2027. An EaaS is a third party ownership model in which a customer pays a subscription-based energy service fee to the owner. EaaS agreements are mutually beneficial partnerships between three parties: customer, third party owner and design-build contractor. It is important to note that EaaS are not lease agreements; they are facilitated using either a solar service agreement (SSA) or an energy service agreement (ESA).
The third party owner is typically a bank or investment firm looking to benefit from tax incentives and steady cash flow from the customer. Customers in EaaS agreements can be corporations, nonprofits, government organizations or healthcare institutions looking to install renewable or energy efficiency solutions. These solutions can include demand management, energy storage and power generation. Energy as a service agreements benefit customers by allowing them to save money, increase sustainability and avoid ownership hassles. Keep reading to learn more about each of these benefits.
Benefits of energy as a service agreements
1. Save money
EaaS agreements save customers money. This financing structure requires no up front capital from the customer looking to install renewable or energy efficiency equipment. The third-party owner will cover any upfront payment and assume any risk that comes with the project. In addition, the subscription-based energy service fee that the customer pays to the owner is typically lower than the local utility rate, saving the customer money in the short and long-term.
2. Increase sustainability
Energy as a service agreements increase sustainability at the organizations that use them. This financing structure helps facilitate renewable or energy efficiency installations that will lower carbon emissions, benefiting the customer, their community and the environment as a whole. Demonstrating a strong commitment to sustainability can also have the added benefits of attracting likeminded customers and/or employees to your organization.
3. Avoid ownership hassles
EaaS agreements allow customers to avoid ownership hassles. The third-party owner is responsible for the renewable or energy efficiency system long after it is installed. This leaves them to deal with the system’s operations and maintenance all all costs associated with system upkeep, saving the customer time and money. Operations and maintenance services are usually conducted by the design-build contractor that installed the system.
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EnergyLink is a national certified ESCO that designs, builds and funds projects for a range of commercial and industrial entities. EnergyLink will help facilitate funding for customers from third party owners. Partner with us for turnkey renewable or energy efficiency solutions.