The energy-as-a-service market is estimated to be valued at USD 77.34 Bn in 2024 and is expected to reach USD 145.15 Bn by 2031, growing at a compound annual growth rate (CAGR) of 9.4% from 2024 to 2031. The energy-as-a-service market is expected to witness considerable growth due to increasing shift towards distributed and renewable energy resources among consumers and organizations seeking to lower energy costs and carbon footprint.

Market Driver - Governments Worldwide Focusing on Reducing Greenhouse Gas Emissions

With growing concerns about global warming and climate change, governments worldwide have been actively working towards reduction of greenhouse gas emissions. To curb emissions from energy sector, many countries have implemented stringent regulations and incentives for deployment of clean and renewable energy. This focus on lowering carbon footprint has created a strong driver for the growth of energy-as-a-service market.

Energy-as-a-service providers offer innovative solutions along with long term service level agreements covering maintenance and optimization. This allows customers to reduce upfront investment costs, achieve greater energy efficiency through performance-based contracts and meet their sustainability objectives to reduce greenhouse gas footprint.

Governments have also been supporting such emerging clean energy service models through various incentives. Overall, the strong regulatory emphasis on decarbonization of energy systems worldwide has been a key driver propelling the demand for cost effective and customizable energy-as-a-service offerings helping customers lower emissions.

Market Driver - Increasing Demand for Backup Power Solutions and Energy Optimization

With growing reliance on digital technologies and internet across various industry verticals, the need for reliable power supply and optimized energy usage has increased manifold. At the same time, rising energy costs have been pressurizing commercial and industrial facilities to better manage consumption. This has driven huge demand for flexible and scalable backup power solutions along with energy optimization services.

Energy-as-a-service providers now offer standby power through mobile generator fleets, micro-grids, fuel cell installations etc. as per customer needs during outages along with 24/7 monitoring. Their long-term service contracts take care of regular maintenance, testing, fuel management and ensure uninterrupted backup support as required.

By outsourcing backup power and energy management requirements, organizations can focus on their core business without worrying about associated Capex or resource allocation challenges. The pay-per-use service models have become hugely attractive as they provide 100% assured continuity of power supply at a predictable operational expenditure. Overall, the critical needs of backup power provisioning and optimization has become an important driver propelling the growth of energy-as-a-service market.

Market Challenge - Lack of Investments in Implementing Renewable Energy Infrastructure and Smart Grid Technologies

One of the key challenges faced by the energy-as-a-service market is the lack of sizable investments in implementing renewable energy infrastructure and smart grid technologies. The upfront capital costs required for setting up large-scale renewable energy-as-a-service projects and upgrading aging power grids have remained prohibitively high for many utilities and energy companies.

The high perception of technology risk associated with newer solutions has further deterred investments. Several projects looking to deploy smart meters, distributed energy resources, electric vehicle charging infrastructure, and energy storage solutions have faced delays or cuts in funding.

Investments in modernizing energy-as-a-service systems have to be increased substantially through productive public-private partnerships and innovative financing models. Otherwise, the energy-as-a-service market may find it difficult to accelerate the clean energy transition and realize its full growth potential.

Market Opportunity - Increasing Number of Electric Vehicles

One significant opportunity for the energy-as-a-service market is presented by the increasing adoption of electric vehicles globally. Major automakers have announced aggressive targets and timelines for phasing out internal combustion engines over the next decade and increasingly offering electric models. Several governments are also providing purchase incentives and setting regulations to mandate a certain percentage of new vehicle sales be electric.

As more electric vehicles hit the roads, it will drive the need for a vast network of public EV charging stations to be established, especially for those without private parking. This creates opportunities for energy-as-a-service companies to deploy and manage these charging assets.

The electricity used for charging EVs can further be combined with technologies like vehicle-to-grid to help balance the intermittency of renewable power sources on the grid. This transforms electric vehicles into distributed energy storage resources and accelerates the energy transition.

A major strategy adopted by leading energy-as-a-service providers like Schneider Electric, Engie, Johnson Controls, Siemens etc. has been offering innovative contracting and pricing models.

Another strategy seen is providing holistic energy-as-a-service solutions through strategic partnerships and acquisitions. In 2016, Engie acquired Energy Technologies to expand its energy management and IoT capabilities. This helped Engie offer a one-stop solution covering areas like energy procurement, infrastructure upgrade, real-time usage monitoring etc.

Data analytics has also emerged as a big differentiator. Siemens' Energy-as-a-Services Business Unit saw 15-20% higher customer retention and 20-30% more core product attachments by offering customized reports and saving recommendations based on large energy usage data.

Geographical expansion into newer markets has also proved effective. After succeeding in Europe and North America, Schneider Electric entered India's energy-as-a-service market in 2019 through acquisitions and local partnerships. Within 2 years, it claims to have captured over 15% market share and doubled its customer base in India through a localized strategy focusing on sustainability goals.

Insights, By Type: Utilities Shifting to Cleaner Energy Supply Services

The energy-as-a-service market segment for energy supply services accounts for 42.4% share in 2024. This is primarily due to the ongoing transition within the utilities sector towards cleaner and more sustainable energy solutions. Energy supply services involve utilities outsourcing the generation and delivery of electricity and thermal energy to specialized third-party providers.

Energy-as-a-service providers employ advanced analytics and energy management systems to ensure seamless balancing of renewable supply with demand. They also provide value-added services like renewable energy credit trading that help utilities meet their carbon reduction commitments.

Outsourcing renewable energy supply chain management to experienced energy-as-a-service providers is proving an effective strategy for utilities to decarbonize their power portfolio. It allows them to capitalize on renewable energy opportunities without having to make capital investments or develop specialized operational competencies in-house. The need to address sustainability goals through smarter utilization of clean resources continues to drive substantial demand in this segment.

Insights, By End User: Commercial Segment Increases Focus on Energy Efficiency

The commercial end user segment accounts for 64% share of the energy-as-a-service market in 2024, mainly due to growing focus on energy management from the business sector. Commercial buildings such as offices, retail outlets, and hospitals consume around 40% of total energy used worldwide and offer substantial potential for efficiency improvements.

Adopting an energy-as-a-service model allows commercial clients to access comprehensive solutions for optimizing their energy footprint without upfront capital investments. Energy-as-a-service market players offer bundled services covering energy audits, infrastructure retrofits, installations of smart metering and controls, and ongoing energy monitoring. This enables organizations to systematically reduce utility costs through targeted energy conservation initiatives.

The combination of economic benefits, brand value from environmental stewardship, and supportive policy frameworks continue fueling commercial sector demand in the energy-as-a-service market. Outsourcing non-core energy management functions to specialized providers has emerged as a popular strategy for companies seeking higher building efficiencies.

• Rising Demand for Energy Services in the U.S.: The U.S. energy-as-a-service market is projected to grow from USD 21.37 billion in 2023 to USD 55.69 billion by 2033, driven by energy efficiency projects and renewable energy investments.
• Europe’s Growth in the Energy-as-a-Service Markett: Europe's growing focus on green energy solutions and investments in grid infrastructure are expected to significantly boost its Energy as a Service market during the forecast period.
• North America accounted for 43.14% of the global energy-as-a-service market share in 2023.
• Commercial Sector: Dominated the energy-as-a-service market in 2023 with a 64% share.
• Industrial Sector: Held a 36.6% share of the energy-as-a-service market in 2023.

The major players operating in the energy-as-a-service market include Schneider Electric, Honeywell International Inc., Siemens AG, Engie, General Electric, NORESCO, LLC, Entegrity, Vivendi Environnement, Centrica plc, Bernhard, and Wendel Group.

• In October 2021, Bernhard LLC, the largest privately-owned provider from energy-as-a-service market in the US, was acquired by DIF Capital Partners, a global independent infrastructure investment fund manager. This acquisition is expected to enhance Bernhard’s service offerings and extend its market reach.

• By Type
  • Energy Supply Services
  • Operational and Maintenance Services
  • Energy Efficiency and Optimization Services
• By End User
  • Commercial
  • Industrial