Could energy-as-a-service be the answer to reduce emissions?

Verdia

Wednesday, 25 May, 2022


Could energy-as-a-service be the answer to reduce emissions?

Now more than ever, businesses are making the commitment to reduce their emissions and meet sustainability targets to achieve net zero. Reports by the United Nations IPCC show that the world is not on track to limit global warming to 1.5°C, and the pressure is mounting on organisations to electrify their energy systems fast. Verdia explains how energy-as-a-service (EaaS) could be the answer companies are looking for to reduce their emissions in the long term and on a large scale, without having to incur upfront capital expenditure.

Renewable energy-as-a-service and power purchase agreements

EaaS shifts the perspective of renewable energy and storage at a customer’s site from an upfront capital investment to instead a fully managed and ‘pay-as-you-go’ offering, including end-to-end management of onsite energy assets and services.

Also referred to as a power purchase agreement (PPA), an EaaS agreement provides a corporation access to renewable onsite electricity without upfront capital expenditure. An energy services provider, such as Verdia, develops, delivers, owns, operates and maintains a range of these distributed energy assets for clients at their sites and makes the upfront capital investment.

EaaS aims to satisfy client needs by identifying the solutions that better suit their specific energy requirements and generate long-term value, as opposed to traditional grid-supplied electricity.

The service itself includes the deployment of a range of renewable energy generation assets such as: solar PV, microgrids, energy storage or sustainable transport infrastructure.  The EaaS agreement then shifts the responsibility of development, delivery, financing, ownership and operation from an organisation to an asset owner such as Verdia, through a long-term agreement. For clients who do not wish to invest CapEx upfront or take on long-term operational risks, EaaS can be a game changer.

What are the benefits?

EaaS agreements offer the benefits of renewable energy without requiring companies to invest in a new system themselves. Choosing EaaS can mean:

  • lower grid energy consumption and reduce energy cost
  • transferring operational and performance risks
  • transferring ongoing maintenance costs
  • ensuring long-term price certainty for a portion of site electricity (ie, energy price hedge)
  • enjoying future flexibility for storage and other distributed assets to be incorporated at no capital cost.

Why are companies choosing EaaS?

Achieving net zero: The economy is rapidly becoming decarbonised. Onsite renewable energy creates no emissions compared to fossil fuel-driven grid electricity. This has led to an increased demand from large companies looking to reach their net zero targets. Access to more sustainable energy sources is driving growth in the electrification of energy systems.

Seeking energy savings without spending capital: The cost of grid energy is increasingly volatile. Onsite renewables are in many cases the cheapest form of electricity available to a business. The benefit of EaaS is that it can deliver energy savings and reduce costs by stabilising energy prices at a fixed, predictable price, independent of market fluctuations. Under the EaaS model, companies can achieve these benefits without spending/allocating capital to non-core business assets.

Increasing operations resilience in the digital age: Digitalisation has become a crucial aspect of business. It has led to a fourth industrial revolution, based on machine-to-machine interconnection, with the objective of optimising systems rather than single points. EaaS is a prime example of energy turned digital. EaaS can help upgrade critical infrastructure to enhance competitiveness, and optimise assets through energy storage, EV chargers and any other flexible assets.

Verdia’s EaaS solutions are designed to help users achieve their sustainability targets, reduce emissions and provide long-term cost savings.

Image credit: ©stock.adobe.com/au/metamorworks

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