Energy Efficiency - Renewables as a Service (EaaS-RaaS)
The energy revolution has been fueled by business model innovations that provide services to end users, rather than selling them equipment. Two familiar examples are: • Software as a Service (SaaS), in which clients purchase a subscription from a central software host for licensed use, and • Solar Power Purchase Agreements (solar PPAs), in which clients purchase solar power at a set price from a solar power provider.
The Efficiency as a Service (EaaS) and Renewables as a Service (RaaS) business models are an evolution of the SaaS and PPA models. The EaaS business model delivers commercial building owners and property managers an immediate net operating income (NOI) and cash flow boost enabled by calculated future energy savings and reduced operating expenses. In addition, owners and managers gain access to the latest advanced energy technologies and optimized performance that service providers both monitor and manage. This model reduces the risk of ownership because service providers own and monitor equipment to deliver optimized performance. The risks of owning equipment shift from commercial building customers to service providers. The RaaS Model Combines EaaS & Renewable Energy The RaaS model includes solar PV, battery storage, thermal solar, and wind turbines. RaaS enables customers to combine their typical energy efficiency improvements with renewables in order to maximize energy savings and energy production. We now do not necessarily require a 20-year commitment as was formerly standard among PPAs. We can often shorten that period to 10 years.
From the RaaS perspective, a “saved” kWh is identical to a “produced” kWh. Energy Advisors has developed an innovative deal structure in which to combine “saved” and “produced” kWhs in one project. The customer now can maximize their savings and production of kWh, while still taking full advantage of available investment tax credits and current aggressive depreciation allowances. In addition, we incorporate cost segregation on equipment to be replaced to further increase depreciation allowances.
Benefits to the Planet 1. Reduced carbon footprint 2. Deeper energy retrofits are financially viable as EaaS-RaaS utilizes the low-hanging fruit such as solar, lighting and technology bundled with historically more capital-intensive retrofits such as mechanical systems and building envelope to achieve deeper, longer term efficiencies. 3. Sustainable long-term kWh savings are achieved due to the multi-year service agreement. kWh savings are actively managed and tracked beyond the first year. Incentives can be tailored to better fit the sustainable kWh savings over time.
Benefits to Building Owners 1. Zero upfront capital is required to make deep energy retrofits; the projects are fully funded through the service agreement. 2. Net operating income (NOI) immediately increases as energy and maintenance savings reduce operating expenses. 3. Technology advances such as wireless technology and digital controls that may not normally be implemented due to capital constraints are now adopted due to their ability to optimize building performance and increase energy savings, which also drives repayment of the cost. 4. Reduced risk of ownership; the improvements are maintained by the service provider during the term. 5. Years of deferred maintenance can be addressed economically. 6. In the case of commercial real estate (CRE) energy efficiency penetration, Hawaii is predominately triple-net. The owner often doesn’t fully benefit from the energy efficiency improvements because the savings are almost entirely realized by tenants who pay their own utilities or by required common area maintenance (CAM) savings pass-throughs. The EaaS-RaaS business model delivers commercial building owners and property managers an immediate boost to NOI through a separate payment to the building owner for the right to extract energy savings from that building space.
Benefits to Standard Utility Incentive Programs 1. More kWh savings with less incentives/rebates required, the structure of the service agreement depends less on upfront incentives and more on building optimization during the term of the agreement. Excess incentives can be redirected toward marketing and technical assistance, for example. 2. Sustainable kWh savings can be monitored and reported long after implementation due to the multi-year service agreement. kWh savings can be “banked” by utilities against future power needs. 3. A “saved” kWh is much more economical than a “produced” kWh, thereby reducing the overall demand and cost of energy. 4. Deeper, more comprehensive energy retrofits are implemented when using EaaS through the power of economically bundling the years of deferred maintenance that exist in commercial building stock and thereby address the high inefficiencies. 5. Greater penetration in the CRE market can be achieved through payments to building owners.
Anthony Amendola CFO Energy Advisors, LLC
Anthony J. Amendola is Chief Financial Officer of Energy Advisors, LLC. As CFO at Energy Advisors, he is driving an innovative approach to turn-key building improvement solutions through the development and funding of energy efficiency and capital improvements in Hawai’i and the mainland. Energy Advisors is implementing “Efficiency as a Service” (EaaS) utilizing our own funding, in a zero upfront capital approach. They have also established a “Hawai’ian Kama'aina Fund” for our Hawai’i based projects. In addition, we are an experienced Property Assessed Clean Energy (PACE) developer.
Anthony has over 30 years of expertise in real estate and energy efficiency industries in the U.S and Canada and earned his MBA in finance from Carnegie-Mellon University’s Tepper School of Business.
Please see my LinkedIn for additional detail: https://www.linkedin.com/in/anthony-j-amendola-903a9b14