Energy as a Service

12 Pages Posted: 24 Jul 2020

See all articles by Henry Weil

Henry Weil

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: October 2018

Abstract

Energy as a product is a commodity. Differentiation is very difficult, customer loyalty and brand values are low, competition is based primarily on price, and sustainable advantage comes from cost leadership. Energy as a product is subject to the typical commodity dynamics – recurring cycles in investment, capacity utilization, price competition, and profitability. Energy as a service (EaaS) offers opportunities to escape from the commodity game. It creates value by solving important problems for a segment of customers; The experience is key. Examples of EaaS include energy management for data centers, charging infrastructure for electric vehicles, fuel cost optimization for airlines, and energy risk management. EaaS often involves innovative business models that use customer information to create value. Trust plays a central role in the implementation of EaaS. It determines what you can do with information, i.e., observe, capture, analyze, and use to create value. Customer information has become the most valuable asset, especially in commoditized markets. This paper presents examples of EaaS including results from projects undertaken by teams of graduate students at the Massachusetts Institute of Technology. It discusses the implementation of EaaS and describes the way forward with a new generation of EaaS. The next generation of EaaS is redefining the relationship between energy consumers and suppliers in a more fundamental way.

Keywords: energy markets, energy as a service, innovative business models, monetizing customer information

Suggested Citation

Weil, Henry, Energy as a Service (October 2018). MIT Sloan Research Paper No. 6153-18, Available at SSRN: https://ssrn.com/abstract=3656751 or http://dx.doi.org/10.2139/ssrn.3656751

Henry Weil (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
Cambridge, MA 02142
United States

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