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energy as a service revenue ?What is Energy as a Service (EaaS)?
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Energy as a Service(EaaS) is an innovative pay-for-performance model that allows businesses to enjoy the benefits of on-site energy efficiency and renewable systems without the responsibility of owning, maintaining, or paying for the equipment upfront. A third-party Energy as a Service provider assumes the risk, overseeing and financing the energy project from start to finish. Some also offer ongoing monitoring services using smart meters, providing valuable insights into additional energy-saving opportunities and simplifying sustainability reporting for ESG and climate disclosure compliance.
The EaaS provider is then reimbursed through shared savings in the form of a monthly service fee, similar to a utility bill, paid by the building owner during the length of the EaaS contract. These practical, risk-mitigated service contracts are highly flexible, typically lasting 5 to 20 years, and customized to your unique business requirements.
Unlike an Energy Service Company (ESCO), EaaS allows you to upgrade your building infrastructure (such as HVAC, lighting, solar, and EV chargers) in a way that can be treated as off-balance sheet, enabling rapid scalability across entire portfolios. EaaS companies are also not tied down to a specific technology or supplier so you have the freedom to choose the optimal solution that best fits your needs. By leaving the energy projects to the experts, you can free up valuable resources to focus on your core business while enjoying the added benefits of building resiliency, energy security, and sustainability.
Ready to learn more? Keep reading to find out if EaaS is the right solution for your business’ evolving energy needs.
Typical challenges solved by EaaS
EaaS’ unique financing model allows companies to quickly implement and scale energy efficiency and renewable energy systems across their entire portfolio. By outsourcing the management, ownership, and maintenance of these assets to an energy management company, organizations can tackle outstanding challenges, such as:
What does the innovative EaaS process look like ?
Redaptive’s cutting-edge Energy as a Service business model follows a simple 7-step process.
- STEP 1: Strategic collaboration
Start by initiating discussions to determine priorities, assess energy assets, and identify potential energy efficiency and renewable energy solutions for your building, campus, or entire real estate portfolio.
- STEP 2: Indicative analysis
We’ll conduct an energy audit to maximize your savings potential and establish a baseline energy consumption to compare against the actual savings.
- STEP 3: Site selection
Next, engineers design energy upgrades and retrofit programs for you to review and approve before moving forward.
- STEP 4: Contracting
Secure your EaaS agreement by signing a simple and flexible 5 to 20-year contract that transfers ownership of the energy assets to the EaaS provider. The EaaS company then fully funds 100% of the project without any upfront capital or debt required.
- STEP 5: Implementation
We work directly with vendors to install the efficiency and sustainability upgrades. Internet of Things (IoT) smart meters are installed to monitor performance, advanced analytics, and conduct Measurement and Verification (M&V) for the mutually-shared savings.
- STEP 6: Operation
Throughout the contract, the EaaS provider is responsible for the energy equipment’s ongoing maintenance, energy management, and 24/7 monitoring.
- STEP 7: Reporting
Our Redaptive ONE data platform incorporates machine learning (ML) and artificial intelligence (AI) to automatically compile information for Environmental, Social, and Governance (ESG) reporting, offer valuable insights, and uncover additional energy-saving opportunities.
EaaS for achieving corporate sustainability goals
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Here’s how EaaS can help your company reach its sustainability goals faster, all without taking on any upfront expenses or unnecessary risk:
- 1 Speed to scale
- 2 Cut GHG emissions
- 3 Off-balance sheet financing
- 4 Gain access to asset-level data
- 5 Sustainability reporting
Advantages of Energy as a Service
EaaS offers many benefits for customers seeking to upgrade their buildings with the latest energy efficiency and renewable energy systems, such as:
- Save Money
- Save Time & Resources
- Increase Sustainability Impact & Reporting
Save Time & Resources
Increase Sustainability Impact & Reporting
What are some examples of Energy as a Service projects?
EaaS is a comprehensive solution that can be used in many different situations. While each application has its own impact, the real benefit comes from combining multiple energy-saving actions into a single, focused strategy. Energy as a Service includes various projects, including, but not limited to:
What types of businesses are using EaaS?
EaaS caters to a wide variety of industries, from those managing a single building, campus, or an extensive real estate portfolio. Here are some examples of sectors that can make the most out of EaaS:
- Oil & Gas
- Real Estate Owners (REOs) & Investment Trusts (REITs)
- Agriculture, Food, & Beverage
- Technology & Services
- Transportation & Logistics
- Wholesale Trade
- Retail Trade
- Industrial & Manufacturing
Oil & Gas
Oil and gas distribution centers and warehouses can optimize their buildings with EaaS and digital tools, reducing lead times, minimizing waste, and streamlining workflows.
Real Estate Owners (REOs) & Investment Trusts (REITs)
(REOs) & (REITs)
REOs and REITs oversee diverse income-generating properties and are now integrating ESG and GRESB scores into investment criteria. To streamline data collection, they’re exploring “shadow meters” for tenant energy insights.
The financial sector plays a crucial role in the energy transition, not only through sustainable financing, but also by showcasing their commitment to decarbonization by upgrading their facilities to the latest low-carbon technology.
Agriculture, Food, & Beverage
Over a quarter of global energy consumption is linked to food production and supply, highlighting its substantial potential for reducing carbon emissions.
Technology & Services
Tech & Services
Data centers currently consume 1% of the world’s electricity, a number expected to rise to 8% by 2030 if energy efficiency measures are not put into place – making data centers an excellent candidate for EaaS.
Transportation & Logistics
The logistics sector has traditionally faced sustainability challenges, potentially leading to higher costs for consumers who seek environmentally responsible practices.
Healthcare facilities and hospitals can’t risk their facilities degrading or losing power. Energy as a Service solutions offer resiliency and patient safety through an affordable program.
Wholesalers operate within narrow profit margins, leaving little room for error. Energy as a Service presents a low-risk opportunity to boost profit margins and secure stable energy prices for the next two decades, without any need for upfront capital or debt.
Energy ranks as the fourth largest expense for in-store retailers, meaning that a 20% energy consumption reduction is equivalent to a 5% increase in sales. Retailers can achieve immediate savings with specific EaaS energy efficiency and renewable energy measures, reducing their long-term utility and maintenance costs to enhance profitability.
Industrial & Manufacturing
I & M
The Industrial and Manufacturing sector, known for its long operating hours (often 24/7) and expansive facilities with high ceilings, faces unique energy efficiency challenges that EaaS can effectively address.
To reach ambitious net-zero GHG emission commitments by 2035, 2040, and 2050, telecom companies are using Energy as a Service to scale efficiency and renewable impacts across their wide portfolio of retail locations and data centers.
How to choose an Energy as a Service company
Energy as a Service companies, like Redaptive, cover the initial costs associated with building energy improvements and use sensors and data to showcase the long-term benefits. When selecting an EaaS provider, it’s best to consider the following factors:
- Proven track record and expertise
- Technology and vendor-agnostic
- Capacity to handle large portfolios
- AI-enabled IoT smart meters and digital platforms
Ready to get started with EaaS?
Redaptive enables enterprise customers to conduct sustainability and energy projects faster, easier, and at a greater scale than they could on their own. Individualized programs help customers build resiliency, save money, and meet their carbon reduction goals. We provide the expertise, resources, and management needed to install energy and renewable upgrades, including HVAC, lighting, solar, and geothermal, across multiple sites simultaneously. Once the energy efficiency retrofits and sustainability upgrades are finalized, our insight platform (Redaptive ONE) tracks the equipment-level energy usage within your building or portfolio and shares valuable insights and savings data through our online data platform that can be used for ESG reporting and programmatic improvements.Redaptive’s end-to-end Energy as a Service solution simplifies, accelerates, and scales enterprise sustainability efforts while eliminating risks and administrative burdens.
Frequently Asked Questions (FAQ)
What’s the difference between an EaaS and ESCO?
Unlike Energy Service Companies (ESCOs), EaaS is quickly scalable for portfolio-wide implementation. EaaS is more flexible, offering shorter contract terms, and is vendor and technology-agnostic. In contrast, ESCOs often have vendor commitments and are typically on-balance sheet, while EaaS is off-balance sheet thus alleviating customers from risk.
With EaaS, do I own the energy assets?
No, Redaptive will own and manage the energy assets for the lifetime of the service agreement.
Who is responsible for the operations and maintenance of the energy assets?
Redaptive, the EaaS provider, is accountable for the operations and maintenance throughout the contract’s duration.
Do we have to take on any debt?
No, Redaptive fully funds the energy audits, materials, labor, maintenance, and all other expenses associated with the retrofit.
What is an EaaS contract?
An EaaS contract is an agreement with the EaaS company for a customized period of 5 to 20 years. The service agreement requires no upfront capital or debt and is fully off-balance sheet, ensuring performance-based savings while upgrading infrastructure to high-efficiency technology.
What does the EaaS process look like?
Redaptive conducts a complimentary energy audit to design a comprehensive package of energy efficiency and sustainability retrofits, ensuring that the performance-based savings exceed the service fee. The customer then transfers ownership of the energy assets to Redaptive, who project manages, installs, maintains, and monitors the equipment for the contract’s duration.
What occurs at the end of the EaaS contract?
Once the contract ends, the customer can either renew the contract or purchase the fully depreciated equipment at an agreed-upon market value, transferring ownership back to the customer.
Is there a minimum annual energy spend to qualify for an EaaS?
No, there is no requirement for a minimum annual energy spend.
Does an EaaS work for leased sites?
Yes, leased facilities are eligible for Redaptive’s EaaS program. The service term can be aligned with your lease term, and flexible termination options are available in the event of early vacating or an unexpected sale.
What does it mean that the savings are “performance-based”?
Redaptive creates a savings model based on the initial energy audit, engineering analysis, and anticipated usage reductions resulting from the energy efficiency services.
How are the energy savings measured?
Annual performance-based savings are assessed using the International Performance Measurement and Verification Protocol (IPMVP), a recognized standard for United States government contracts.
What happens if a project provides less savings than promised?
Since the savings are performance-based, Redaptive will compensate the customer for the shortfall.