INDUSTRY NEWS COMMENT


WITH ENERGY PRICES SOARING, HOW CAN ENERGY AS A SERVICE CONTRACTS FOR INDUSTRY HELP? by Matt Watson, sector sales manager for Manufacturing at Aggreko


Energy managers across the country are grappling with volatile energy prices and operations that are increasingly affected by power outages. In addition to making it harder for organisations to remain competitive, this is hitting the bottom line for the majority of sectors. Energy as a Service (EaaS) is a business model that allows customers to pay


for an energy service without having to make an upfront capital investment. Over time this model has become more common across industry in the drive towards decarbonisation and power resilience.


DRIVERS FOR ADOPTION OF ENERGY AS A SERVICE Aggreko recently commissioned research to investigate the impact of the energy crisis on large energy users. Of a survey spanning 251 manufacturers across the UK, 57% said they had or would use an Energy as a Service contract to gain access to a decentralised energy solution. In Aggreko’s latest report, The Power Struggle – Manufacturing, which can be


found on the website, this is all discussed at length. In particular, it shows the growth of companies looking towards these solutions. This can be compared with data from 2019, when 48% of respondents said they were considering generating their own electricity using a distributed solution in Aggreko’s previous report, Bridging the Energy Gap. Today, over 60% have stated this.


THE DIFFERENT OPTIONS AVAILABLE Energy as a Service (EaaS) is a term that has been used across energy markets for a long time, can be interpreted in various ways, and is now adopted more widely. As with any emerging market, this comes with further complications due to the many Energy as a Service models available on the market today. Different suppliers tend to place


emphasis on different benefits of the agreement – should it be the energy savings, the broad nature of the solution, the guarantees, or the flexibility. Naturally, these can end up contradicting one another and confusing the end-user.


THE POTENTIAL RISKS Of those that were surveyed for The Power Struggle – Manufacturing, and said they had an Energy as a Service contract in place, the vast majority had a one- or two-year fixed energy price agreement with their provider, although a small percentage said they had been or were on a three-year deal. This could leave some businesses exposed, as some traditional EaaS providers issue penalties for customers whose demand fluctuates – both up or down. Additionally, the energy market’s recent volatility could also see businesses tied into expensive fixed


pricing arrangements for long periods, irrespective of whether the market begins to settle after they have signed. What Aggreko’s report goes on to find is


that it appears the financial stress of the energy crisis is driving demand for more flexible payment terms, especially as interest in distributed energy has risen significantly since 2019. But is there too much complexity and choice around Energy as a Service?


HIRED ENERGY AS A SERVICE One simpler solution to this challenge perhaps lies in Hired Energy as a Service (HEaaS), which offers all the same benefits as a standard EaaS contract alongside an element of well-needed flexibility. Crucially, HEaaS eliminates the risk of penalties as it does not tie organisations into high fixed energy costs. Instead, should demand fluctuate, users can simply add or takeaway output as required. This approach is vital to navigating the evolving challenges of today’s energy market. In addition, a business’ supplier needs to be just as in tune with the


needs of the sector as the company themselves, in order to effectively work co-operatively to tackle these challenges. This includes knowledge of a wide range of power generation technologies – from gas generators, combined heat and power to battery storage, heat pumps, solar and wind. As the largest hire company in the world, Aggreko has the knowhow to deliver to whatever power requirement, whenever it is needed and to any demand from 1MW to 20MW.


SOLVING VIA CONSULTATION While there are macro commonalities across Energy as a Service contracts in terms of sustainability drivers, preservation of capex and reduced operational time, it is clear there are still variations that need to be considered to protect against the energy crisis. Flexibility is critical for energy managers interested in accessing a decentralised model


without up-front investment. As such, they need capable suppliers that are not just in tune with today’s challenging market but also understand what’s needed on site to manage cost and energy supply more effectively. At Aggreko, we offer free support to those who would like to assess whether


improvements can be made on any existing contracts. aggreko.com


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