The future mission-critical and large-scale energy customer might want to bolster its power resiliency with on-site resources. It might want to fuel that backup or island-able power with low or no-carbon assets.
And it might want to do this at a cost-effective entry point that sustains its energy needs for a long, long time.
Might makes right, in this case, and energy industry firms are taking note. Recently, Siemens and investment firm Macquarie Group teamed up to create Calibrant Energy, a joint venture that will focus on-site Energy as a Service solutions for corporate and municipal clients.
Energy as a Service offers customers a chance to have distributed energy assets built specifically for them, but pay it out over a prolonged installment period, usually 20 years. Calibrant combines with Siemens’ Smart Infrastructure and Financial Services group with Macquarie’s Green Investment group.
“It’s outsourcing that capital investment risk and complexity,” John Kovach, head of energy and performance services for Siemens Smart Infrastructure in the Americas, said in a recent interview with Power Engineering. “Most of our customer’s core business isn’t distributed energy; for a hospital the core business is health care…so outsourcing energy to somebody like Calibrant makes a lot of sense.”
The biggest part, pointed out Macquarie Green Investment Group Americas head Chris Archer, is giving customers the ability to focus on their core competencies whether that’s health care or public safety. Thus, a short-term, massive financing burden up front can be spread out over time and make a lesser impact on the bottom line.
Siemens will offer its global expertise on equipment and project development. The Macquarie wing offers access to ample financing and both will leverage their relationship networks with corporates and other institutions.
More and more commercial and industrial customers are companies with ambitious sustainability goals, but they also crave energy certainty on-site, the partners noted. Both Kovach and Archer see a long-term growth trend in the attractiveness of energy-as-a service projects for hospitals, public safety, industrial manufacturing and supply-chain sites.
“A lot of these trends make distributed generation a natural choice for a lot of corporates,” Archer said.
Most of these projects will have timelines of 20 years or longer. They will include some combination of solar, energy storage, on-site gensets.
These tandems offer flexibility and backup energy resources for C&I corporate entities. The same kind of desire for complementary talents and flexibility drove Macquarie and Siemens together.
“We realized we needed a serious partner who would enable us to deliver multiple projects at scale,” Archer said. “We can get financing lined up, get documentation lined up. Siemens can go out and build the thing and the capital structure is there.”
Some forecasts predict the future EaaS market as a multi-billion dollar potential within the coming decade.