Energy Services – energy as a service, not a commodity

There is a really great piece written by Elizabeth Shove and Matt Watson (No more meters? Let’s make energy a service, not a commodity.) that neatly summarises the concept of energy as a service, not a commodity published on The Conversation website today. Those of you that have ready previous blogs I have written will know that I have eluded to this in my thoughts on district heating and I find it interesting that the concept appears to be less attractive here in the UK whereas elsewhere, particularly the USA, it has greater traction and a stronger marketplace.

The authors rightly say We all pay energy bills and we understand that energy is delivered through wires and pipes into boilers, TVs, kettles and so forth. However, it is not the energy, as such, that consumers’ value. In paying energy bills, people are really paying for the services that energy makes possible: for thermal comfort, for entertainment or for a cooked meal. In other words, it is the ability to watch a favourite TV soap (while consuming a favourite TV dinner) and the cosiness of the home that really matters.”

It’s not just the home of course. Businesses now recognise the concept of the energy service more readily than energy purchase and the opportunity to spread capital investment costs over 10, or even 20, years is appealing in a resource constrained world. Public sector organisations like NHS Trusts and local authorities are well positioned given their relatively stable property portfolios (even with the purge of unwanted buildings under the Government’s austerity measures) giving them a long term view of investment. But others too, such as colleges, schools and universities share those same characteristics. If you’ve been where you are for 100 years, why not take a punt on being there in 30 or 40 years time and taking a longer term view of your property portfolio?

It’s those organisations with aging building stock that can benefit most from ESCO and energy performance contracting. But there are significant opportunities in investing in energy systems, energy centres and grids that support a whole range of existing and new buildings where the real money and opportunity is. If you can generate and use energy you have generated on site you can build in not just carbon and cost savings, but resilience to failures of grids outside your control. You can start to achieve standards ahead of the Government’s own energy strategies.

As the authors say “We are already seeing the emergence of Energy Service Companies (ESCos) which guarantee a fixed energy bill as long as the company can install efficiency measures in your home or office. Other providers offer multi-utility tariffs, bundling together rent, water and energy into a single bill. At the moment it is unclear whether these novel forms of “energy-plus” provision are forerunners of arrangements that are set to become the norm, of if they will remain niche solutions for a few. Whatever else, these moments of flux remind us that energy and energy services are never set in stone.”

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