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How Does Energy as a Service work?

How Does Energy as a Service work?

By Vanessa Peng

Facility decision makers used to view energy purchases as expense line items, but that’s recently changed with the Energy as a Service (EaaS) model. Now, business managers and leaders don’t have to worry about keeping their energy purchases within strict budgetary guidelines and can instead reap the benefits of increased energy efficiency and improved equipment and facilities without stress. The EaaS financing option allows you to update your facility, start saving money, improve worker safety, and meet your sustainability goals without the traditional financial hurdles and headaches.

 

How Energy as a Service works

Energy as a Service gives you the opportunity to move forward with an energy efficiency project with no upfront costs. In fact, through your cost savings, your project will actually end up paying you with positive cash flow. Instead of a traditional financing option, which adds an expense to your balance sheet, choosing to go through an EaaS model will result in an off-balance line item. You won’t have to go through a normal procurement process for a large capital expense because the Energy as a Service subscription is an operating expense. Since your EaaS provider owns the energy equipment and maintains it, the IRS looks at the contract as a service contract and allows for a monthly expense. It is likely the most efficient, highest-return method to financing your energy projects. 

 

Energy as a Service is not complicated.

Any business can participate in an Energy as a Service model agreement. It is a service contract, like your trash service or cable agreement. Like the cable company with your cable box, an Energy as a Service company owns and operates your energy equipment and services them if they stop working. You don’t have to worry about maintenance or replacement costs.

The energy savings you generate from a more energy efficient system installed in your building will be greater than your normal electricity bill to your utility company. You do not need any new capital to cover the payments and you are able to expense the monthly payments as you pay them. For example: Let’s say you are currently spending $100 a month on the lighting portion of your electricity bill to your utility provider. After you invest in a LED lighting retrofit project, your total electricity bill drops to $6,000 a month and your Energy as a Service subscription payment is $3,800 a month. This not only allows your new energy savings to cover the EaaS amount, but also provides an additional $2,200 a month in positive cash flow back to your bottom line. 

 

Choosing the right Energy as a Service partner.

There are dozens of companies that provide Energy as a Service financing models for energy products, but the one you choose should have in-depth knowledge of the products and services they are offering instead of acting as a middle man. If you choose to partner with an EaaS provider that knows nothing about the products and services they are providing, you will definitely run into issues down the road. A true EaaS provider will be able to learn about your facility’s entire energy profile and find the best products and services that are tailored to your building. They should find the best opportunities to optimize your energy efficiency through extensive research of your building, not what is the cheapest and easiest for them. 

The energy efficiency experts at U.S. Energy Recovery want to help you build a safer and more energy independent facility without having to worry about upfront costs. Some of the energy saving solutions we can help you with include lighting, energy storage, solar energy paired with battery storage, high-volume, low speed (HVLS) fans, power monitoring, chargers for electric vehicles, among other solutions. We are brand agnostic – we don’t stick to a single product line because it is cheaper for us. Your facility has unique concerns – we know a cookie cutter approach won’t fully optimize your energy savings. Don’t spend another day hoping to become a safer and more sustainable facility…let us help you start the process today with no upfront costs!

Reach out to us to find out if you’re eligible for Energy as a Service and how it can fit in your facility’s plans, (800) 834-8737.

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