As of early 2021, commercial and industrial companies have been benefitting from innovation within the energy-as-a-service (EaaS) market when it comes to microgrids. Though these types of customers have available capital — and often own portfolios of similar-sized building sites — they tend to be averse to risk and do not necessarily want to take on the risk of project performance and the ongoing management of microgrids. These factors have made C&I customers appealing for initial launches of EaaS products, says a new report from Guidehouse Insights.
C&I Organizations Find Financing Comes More Easily
Advances in hardware and software technologies, along with the commoditization of solar PV and battery storage, are making it more cost-effective for C&I companies to deploy microgrids.
Additionally, as portfolios of similar-scale, less intensely customized microgrids become more common, the perceived risks inherent in one-off projects is reduced, making financing easier to come by: “This standardization enables a more attractive value proposition to the financial community looking for scale, albeit in a different form than utility-scale solar or wind farms,” according to the report. “In the case of microgrids, scale often translates into a portfolio of similar projects for a single company or within a single regulatory jurisdiction.”
Remote Microgrids Still Tops
Nevertheless, the leading market for EaaS innovation has been the remote microgrid segment, Guidehouse Insights says. “These pioneering systems can only be viable with some form of EaaS without a full direct government subsidy or traditional rate-basing. Many remote microgrids rely upon grants from NGOs or governments for initial development. To keep operating, they rely upon pay as you go (PAYG) business models that mimic utility-customer relationships or mobile phone cards,” according to the report.
Microgrids are especially gaining significant momentum in North America and Asia Pacific.
Growth of the Market
Advances in hardware and software technologies have been driving the microgrid market. The fact that large vendors such as Schneider Electric and Siemens have created strategic partnerships with financial institutions for EaaS product offerings speaks to the growing mainstreaming of the microgrid market.
The microgrid EaaS market represents a $3.3 billion market in 2021. By 2030, annual spending is expected to reach $25.9 billion annually. Cumulative spending is expected to be an astounding $110.5 billion globally by 2030, with Asia Pacific emerging as the clear market leader.
Ameresco, Enel X, and Engie are leaders in the energy-as-a-service (EaaS) space, Guidehouse Insights said in April. “As organizations in the commercial and industrial space increasingly prioritize sustainability, these three companies are best positioned to address customer needs for technology expertise and advisory services,” the report said.