Encouraging Electrification through Energy Service Subscriptions

Energy-as-a-Service (EaaS) is a private business model that enables consumers to subscribe to an energy service (such as lighting), rather than purchasing the equipment necessary to provide that service (such as light fixtures). In the past, EaaS has helped encourage the deployment of low-carbon technologies like energy efficient equipment by eliminating high upfront costs for consumers. In this paper, we assess how the EaaS model can be used to help overcome barriers for electrification of energy end-uses like vehicles and water heaters, which is critical for reducing carbon emissions from transportation and buildings. We explore the potential of two basic hypothetical EaaS business models: a subscription for energy management, which involves optimizing energy usage in order to minimize costs, and a subscription for energy services, which enables consumers to use an energy service such as hot water without purchasing the necessary devices. These business models are possible under two different frameworks, a time-varying pricing variant and a demand-response variant, that allow service companies and customers to benefit from these business models.