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The global energy as a service (EaaS) market size was USD 59.17 billion in 2020. The global market size was USD 64.20 billion in 2021 and is projected to reach USD 124.10 billion by 2028, exhibiting a CAGR of 9.9% during the forecast period. The global impact of COVID-19 has been unprecedented and staggering, with the global EaaS market witnessing a negative demand across the all-region. Based on our analysis, the global EaaS exhibited a lower growth of about -7.1% in 2020 than average year-on-year growth during 2017-2019. The growth is attributed to increasing distributed energy resources, decreased cost of renewable power generation and storage solutions, increase in digitalization and smart metering, and availability of state tax benefits for energy efficiency projects are boosting the industry growth.
The EaaS includes the sale of energy, technology, analytics, access to the grid, and personalized services. The increasing adoption of EaaS has been mainly to reduce buildings’ energy costs and reduce carbon emissions to maintain the ecological balance. The problem of carbon emissions has been tackled by the adoption of renewables, which has seen a rise in decentralized energy distribution. Rapid urbanization and industrialization increase the demand for energy and cause the depletion of fossil fuels on a global scale. The rising need to reduce the dependency on fossil fuel and minimize the carbon footprint has boosted the demand for renewable energy sources, which is expected to continue to drive the market’s progress during the forecast period. In addition, the increasing initiative by the government regarding the adoption of renewable sources of energy is another key factor boosting the energy as a service market growth.
Halt on Electronic Component Installation to Impede Market Progress
The outbreak of COVID-19 has negatively affected the energy industry. The market witnessed a decline in the price and demand across the globe. Due to COVID-19 major manufacturing industries are focusing on essential work, due to which the installation of electronics components has been on halt for a long time. The growing energy consumption and changing price of electricity are some of the major factors driving the energy sector. Due to various manufacturing units, there is a steep downfall in this market.
The pandemic majorly impacted the delivery of equipment to power plants. China is most affected by the coronavirus and is the global producer of clean energy technologies such as solar panels and batteries since coronavirus has impacted the global supply chain of renewable sources, which has affected the renewable energy companies that cannot comply with the deadline for equipment installation.
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Increasing Adoption of Distributed Energy Resources to Boost Market Progress
Aging infrastructure for generating and transmitting power has forced utilities to invest and upgrade the policies for distributed energy resources (DER). Distributed energy resources include renewable energy, demand-response capabilities, and other energy-saving technologies to control and reduce energy use and better manage bills. Increasing investment in energy distribution systems would create demand for DER, which will help to propel the market. For instance, the California Public Utilities Commission (CPUC) has planned to invest USD 9 billion over the next three years to upgrade its electric distribution system and enhance its capabilities to operate the system. Hence, the growing need for distribution systems and significant investment to improve grid efficiency is expected to drive the demand for EaaS in the forthcoming years.
Supportive Government Regulations for Energy-Efficiency Projects to Supporting EaaS Market Development
To achieve rapid scale-up and improvement in efficiency, a stable and supportive policy framework is needed to enhance grid stability and uphold energy-saving potential. According to International Energy Agency (IEA) Energy Efficiency 2018 report, energy efficiency investment increased by 3% to USD 236 billion in 2017. Hence, growing investment prospects along with regulatory support are driving the demand for these services. The U.S. framed the National Action Plan for energy efficiency, which establishes a goal of achieving cost-effective energy efficiency by 2025. Hence, supportive government regulations for energy efficiency projects are likely to drive the demand for EaaS during the projected period.
Significant Investment in Renewable Energy Sources and Storage Solutions to Fuel Growth
Increasing focus on integrating renewable energy, distributed generation, energy storage, thermally activated technologies, and demand response into the electricity distribution and transmission system has enabled more investment in renewable energy. Growing investment in renewable energy is driving the EaaS market growth. According to the report on Global Trends in Renewable Energy Investment 2019 published by United Nations Environment Programme, global investment in renewable energy in 2018 increased to USD 272.9 billion, the fifth successive year in which it has exceeded USD 250 billion. Growing investment in storage solutions is also augmenting this market.
For instance, in September 2018, the World Bank Group announced a program to invest USD 1 billion to accelerate investments in battery storage for energy systems in developing countries. This program aims at ramping up the use of renewable energy to improve energy security, increase grid stability, and expand access to electricity. According to Bloomberg New Energy Finance (BNEF), the energy storage market is predicted to grow to a cumulative 942GW by 2040, attracting an investment of USD 620 billion. Hence, increasing investment in renewable energy sources and storage solutions will fuel the market during the projected period.
Growing Energy Demand in Various Applications to Drive Growth
Energy demand is increasing day by day owing to growing industrialization and urbanization. To cater to the increasing energy demand and depletion of fossil fuels, it has become necessary to produce renewable power on a global scale. Solar & wind plants are geographically spread in large areas. Investment in renewable capacity in 2018 was about three times the global investment in coal and gas-fired generation capacity combined.
The Energy Information Administration (EIA) forecasts that renewables will account for almost half—49% of global electricity output by 2050. Increasing population and growing urbanization rates are likely to increase energy demand across the globe. According to the United Nations report, in 2018, 55% of the world’s population lives in urban areas, projected to increase to 68% in 2050. Hence, increasing potential for renewable energy and growing demand across various sectors will support this market during the forecasted period.
High Replacement Cost of Existing Grid Infrastructure to Restrict Market Growth
The transformation of existing grid infrastructure advances the capabilities of the electricity delivery systems, which is driving the market growth. As per the Institute of Energy Economics and Financial Analysis, India needs an investment of USD 60-80 billion over the next five years in grid infrastructure to achieve its tremendous growth in renewable energy capacity. Electric utilities have planned to invest USD 3.2 trillion globally in new and replacement transmission and distribution infrastructure. This infrastructure investment will be necessary due to growing electricity demand, aging assets, and new power generation projects, including intermittent renewable resources straining the grid. Henceforth, the growing need for transforming grid infrastructure, which is primarily driven by significant investment, hampers the market growth during the projected period.
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Energy Supply Services Segment to Dominate the Global Market Owing to Robust Demand for Renewable Energy Sources
Based on service type, this market is segmented into energy supply services, operation & maintenance services, optimization & efficiency services, and others. The energy supply services segment is dominating the market owing to rising demand for renewable sources of energy and decentralized energy distribution across industry verticals. The operation & maintenance segment holds a significant market share due to the increasing need to boost operational efficiency, reduce downtime, mitigate risks, and increase profitability.
The growing demand for energy sustainability, innovative energy solutions, energy resources, and improvement in building efficiency help to reduce costs and maximize efficiency, which drives the optimization & efficiency segment. Hence, increasing renewable power generation and the growing need to enhance efficiency will propel the demand for EaaS during the forecast period.
Commercial Segment to Dominate the Market Attributable to Rising Demand for Efficient Energy Sources
The end-user segment is further segmented into industrial, commercial, and others. The commercial segment is estimated to hold the largest share in the global market, including educational institutions, the healthcare industry, data centers, airports, banks, and others. As per the American Council for Energy-Efficient Economy (ACEEE), the commercial segment accounts for more than 18% of the energy used by various sectors in the U.S. In the commercial sector, the buildings are majorly responsible for more than 30% of overall consumption.
Different commercial buildings have energy applications such as district energy systems and mercantile and service, with higher energy consumption. The industrial segment is anticipated to hold the second-largest market share owing to the growing need for energy efficiency and economic growth. Hence, the commercial segment is anticipated to lead the EaaS market share during the projected period.
North America Energy as a Service Market Size, 2020 (USD Billion)
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Geographically, the market has been analyzed across five major regions: North America, Asia Pacific, Europe, Latin America, and the Middle East & Africa. The market in North America is estimated to be the largest owing to the increasing demand for intelligent buildings and building automation. Increasing demand for services such as providing demand-energy response solutions due to the growing commercial industry and implementing energy efficiency projects is driving the market growth. Additionally, an increasing share of renewable power generation and energy efficiency activities is estimated to drive the market in this region. In North America, the rising standard and initiatives by the government, the growing number of smart cities, smart communities, and electric vehicles are boosting the market.
Europe is expected to hold a significant market share due to increasing renewable power generation and growth in the industrial sector. According to the European Energy Industry Investments report published in 2017, the investment in the power industry is estimated to increase from USD 58.37 billion in 2011-2020 to USD 86.73 billion in 2021-2030. Hence, growing investments in the industrial sector and renewable power generation offer lucrative growth opportunities for the market in Europe.
The market is forecasted to gain momentum in Asia-Pacific owing to increasing investments in large industries and commercial projects. For example, In 2019, India had more than 300 smart city projects worth USD 2 billion are in the pipeline. Moreover, the adoption of green building models, increasing investment in renewable energy, and rising government support are the prominent factors attributed to the market's growth.
The Middle East & African countries are dominated by oil and gas companies and significant commercial sector investments. The advancement of an integrated distributed energy resource (iDER), augmented data analytics, and Artificial Intelligence market is emerging as strong growth opportunities, which will add a positive outlook for the growth of this market during the forecast period.
Technological Upgradation in Energy Industry to Intensify Competition
The competitive landscape of this market is dependent upon technological advancements aimed at reducing operating & maintenance costs and improving operational efficiency. Growing adoption of EaaS by the utilities and commercial sectors for improving efficiency and reliability are the prominent factors responsible for the ABB, Schneider Electric, Siemens in the global market.
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The market report provides detailed information regarding various insights into the market. Some of them are growth drivers, restraints, competitive landscape, regional analysis, and challenges. It further offers an analytical depiction of the market trends and estimations to illustrate the forthcoming investment pockets. The market is quantitatively analyzed from 2017 to 2028 to provide the financial competency of the market. The information gathered in the report has been taken from several primary and secondary sources.
Value (USD Billion)
By Service Type, By End-User, and By Region
By Service Type
Fortune Business Insights says that the global market size was USD 17.82 billion in 2019.
The global market is projected to reach USD 41.85 billion by 2027.
Growing at a CAGR of 12.3%, the market will exhibit steady growth in the forecast period (2020-2027).
The energy supply services segment is expected to be the leading segment in this market during the forecast period.
Significant investment in sponsoring renewable energy sources & storage solutions, the rising potential of renewable energy, and growing energy demand in the various applications are the major factors attributed to the growth of the market. However, high deployment cost to transform the existing grid infrastructure restrains the market growth in the forecasted period.
The market size in the Asia-Pacific region stood at USD 5.62 billion in 2019.
ABB, Schneider Electric, Siemens, Honeywell, General Electric, and ENGIE are top companies in this market.
Energy-as-a-service (EaaS) is a business model where customers pay for an energy service without having to make any upfront capital investment. It provides businesses with a risk-free way to optimize energy systems, increase profits, reduce operating expenses, and dramatically improve working environments without any initial capital investment.
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