Ellie Gabel investigates how energy-as-a-service (EaaS) could reshape the power sector with subscription-based models if it can overcome key challenges.
As-a-service models have taken over many sectors. These subscription-based frameworks began in software but have since moved to industries like transportation and manufacturing.
Now, energy-as-a-service has started to grow across utility companies, and it could alter the future of the power economy.
At the same time, businesses and policymakers must be careful to separate genuine innovation from buzzwords. EaaS’s surging popularity does not necessarily mean it is the next evolution of the energy sector.
On the other hand, recognising any potential optimisation is important, given this industry’s need for change. Whether mere hype or a true disruptor, EaaS deserves a closer look.
How does energy-as-a-service work?
EaaS replaces the conventional model of selling power as a commodity with one where brands sell a package of energy services for a subscription.
Instead of paying a varying figure for the amount of power they use, customers pay a fixed fee for equipment access and ongoing maintenance.
Electricity supply costs vary minute to minute, so a pricing model based on consumption means volatile rates to account for these fluctuations. This can frustrate end users whose usage may be consistent but still face shifting prices.
EaaS offers a more predictable alternative by fixing rates based on what the user saves or a general reflection of upkeep.
In practice, EaaS often starts with installing energy generation infrastructure on-site or near the end user. Renewables like wind and solar arrays are popular options, but fossil fuel generators or similar equipment may also serve this function.
From there, the customer pays for access to these systems while the provider manages its operation and maintenance, similarly to how a cloud computing agreement works.
Other energy-as-a-service setups may still rely on grid-sourced power as a commodity, but the provider pays for it this way instead of the user. End users still pay a fixed subscription in return for the delivery, maintenance and optimisation services they receive.
Across all specific setups, the EaaS market is on the verge of substantial growth. Research indicates it will be worth $100.34bn by 2030, up from $51.88bn in 2024.
Benefits of the EaaS model
Switching to a service model over a commodity one has several advantages for all involved. End-user cost savings are the most straightforward.
Having on-site power and ongoing improvements helps reduce electricity consumption, and paying a subscription makes finances more predictable than the current volatile setup.
EaaS also benefits the provider by giving them closer interaction with their customer base. Accurate pricing and service in this model requires real-time, in-depth data through smart metering and other Internet of Things (IoT) technologies.
Many EaaS solutions also rely on mobile apps, offering even more data. This information, in turn, informs more effective marketing efforts and strategic decision-making.
Energy-as-a-service may prove important to the clean power transition. The International Energy Agency highlights how EaaS incentivises investments in efficiency because such improvements are central to the model’s core value proposition.
By contrast, selling electricity as a commodity provides little impetus for utilities to make systems more efficient, as end users bear the cost of delivery and generation inefficiencies.
Similarly, EaaS can make renewables and microgrids more accessible. Paying a subscription fee for access to nearby or on-site green power removes its primary barrier — high upfront costs. When clean energy is more affordable, it promotes broader adoption.
There are reliability benefits to the model as well. EaaS mandates more regular servicing and modernisation than the current economy. As a result, it promotes infrastructure upgrades and proactive repairs to prevent outages and other disruptions.
That is a critical advantage today, as most US transmission lines are nearing 40 years old, meaning the end of their useful service lives is fast approaching.
Is EaaS the future of the energy industry?
Given these benefits, it certainly seems like EaaS may be a natural next step for the sector. Early investment has been bullish, too, but there are still some challenges ahead that may slow the shift to this new economic structure.
Recently passed tax legislation phases out many clean energy credits, which may reduce the pressure organisations feel to embrace efficiency.
Consequently, EaaS’s sustainability benefits may become less appealing. Both providers and end users may feel less inclined to change their setup as a result.
The costs and complexity of installing IoT solutions and other data technologies may also slow the EaaS’s rollout. Implementing the systems necessary for the model to work is expensive and introduces cybersecurity concerns.
Without a larger economic value statement — which is lower given recent tax changes — these obstacles may seem more imposing.
Such challenges do not mean EaaS cannot become the norm, but they likely will affect how it grows from here. Heavy industries may switch to EaaS first, as they have more to gain from the reliability and cost-effectiveness of the setup. Current trends already suggest this may be the case.
While the commercial segment accounted for 52.2% of the EaaS market in 2024, experts predict the industrial segment will grow faster over the next five years.
States or countries with stricter environmental targets may likewise see a faster shift to EaaS. In other markets, the long-term cost and reliability benefits may still promote a transition, but it may not happen as quickly.
EaaS is a promising trend, but it needs development
Overall, energy-as-a-service offers many advantages, so much so that it could become the industry norm in the coming decades.
However, the obstacles ahead of it are too significant to say it will disrupt the sector within a few years. The relatively young concept needs additional development and regulatory changes for enough people to realise enough benefits from EaaS.
