Energy as a Service Market Expected to Reach $112.7 Billion by 2030

According to a new report published by Allied Market Research, titled, "Energy as a Service Market by Service and End-use: Global Opportunity Analysis and Industry Forecast, 2021–2030," the  global  energy  as  a  service  market size was  valued  at  $54.4 billion  in  2020,  and  is  projected  to  reach $112.7 billion by 2030, growing at a CAGR of 7.6% from 2021 to 2030.

Energy as a service is the newly developed business model aimed at providing energy optimization solutions for customers across small, medium, and large businesses. This model is driven by increase in transformation across  the  energy  industry  including  digitization,  decarbonization,  distributed  generation,  and  others,  which helps in providing various services including energy advice, energy asset, and energy management. Increase in use  of  energy  as  a  commodity  is  majorly  directed  at  lowering  energy  costs  of  buildings  and  minimizing greenhouse emissions to preserve ecological balance, which creates need for energy as a service model, thereby fueling the market growth in the coming years.

Rise  in  awareness  toward  increased  installation  and  better  management  of  distributed  energy  generation sources is expected to fuel growth  of the energy as a service  market during the forecast period. In addition, rapid transformation of energy industry to digitization, decarbonization, smart energy infrastructure, and others is further anticipated to propel the market growth from 2021 to 2030. However, challenges and installation cost associated with replacement of existing energy infrastructure to smart energy infrastructure is expected to hamper the market growth in the coming years. On the contrary, rise in awareness toward utilization of energy efficient technologies and rapid growth of the renewable energy industry are the key factors expected to create opportunities in the global energy as a service market.

Depending on the service, the energy supply services segment registered highest market share of around 37.4% in 2020, and is expected to maintain its dominance during the forecast period. This is attribute to rise in demand for energy supply services from various end use industries such as manufacturing, processing, and others. In  addition,  rapid  growth  of  distributed  energy  generation  sources  such  as  solar,  wind,  fuel  cell,  and  heat  & power  is  anticipated  to  increase  the  need  for  energy  supply  services,  which  is  projected  to  fuel  the energy as a service market growth in the coming years.

On the basis of end use, the commercial segment holds the largest market share, in terms of revenue, and is expected to maintain its dominance during the forecast period. This growth is attributed to rise in demand for electricity from commercial applications such as restaurants, educational institutes, data centers, commercial complexes, and warehouses.  In  addition,  rise  in  demand  for  optimization  of  energy  consumption  to  reduce energy bills and to support sustainable environmental growth is anticipated to fuel growth of the market during the forecast period.

On the basis of region, the market is analyzed across four major regions, namely, North America, Europe, Asia-Pacific, and LAMEA.  Asia-Pacific  garnered  a  dominant  share  in  2020,  and  is  anticipated  to  maintain  this dominance in during the forecast period. This is attributed to presence of key players and huge consumer base in the region. In addition, rise in investments toward smart energy infrastructure, renewable energy, and rapid industrialization across the region are expected to drive growth of the energy as a service market in the region during the forecast period.

The key players operating and profiled in the energy as a service indystry include Veolia, Honeywell International Inc., EDF Renewables, Enel X, Schneider Electric SE,Engie SA, Johnson Controls  International, WGL  Energy, Alpiq,  and General Electric.

COVID-19 analysis

COVID-19 is an infectious disease that originated in Hubei province of the Wuhan city in China in late December 2020. The highly contagious disease, caused by a virus, severe acute respiratory syndrome coronavirus 2 (SARS-cov-2), is transmitted from human to human. Since the outbreak in December 2020, the disease has spread to almost  213  countries  around  the  globe  with  the  World  Health  Organization  declaring  it  a  public  health emergency on March 11, 2021. 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.

COVID-19 has unleashed a devastating blow to the global economy, disrupting supply chains while choking off demand. Electricity demand is down significantly in many territories and the market for transport fuel has shrunk dramatically as planes are grounded and movement was restricted. Electricity demand dropped to lower levels under lockdown, with dramatic reductions in services and IT industries and partial offset by higher residential use.  When  confinement  was  eased  in  Italy  and  Germany  in  April,  electricity  demand  showed  first  signs  of recovering. This trend was confirmed in May, as more countries (India, France, Spain, and Great Britain) softened lockdown measures.  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. Since 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. Thus, the impact on the EaaS market is high.

For companies in all parts of energy, utilities, and resources sectors, it will be vital to combine effective scenario-planning with an examination of how different developments could affect their business in short, medium, and long term.

Key findings of the study

• In 2020, the energy supply service segment accounted for about 37.4% of the share in the global energy as a service market, and is expected to maintain its dominance till the end of the forecast period.
• In 2020, the commercial segment accounted for 62.9% energy as a service market share in the year 2020, and is anticipated to grow at a rate of 7.3% in terms of revenue, increasing its share in the global energy as a service market.
• Industrial is the fastest-growing end use segment in the global energy as a service market, expected to grow at a CAGR of 8.0% during 2021–2030.
• Asia-Pacific is expected to grow at the fastest rate, registering a CAGR of 8.2%, throughout the forecast period.