Energy subscription business models have experienced significant growth in recent years, driven by the transformation of the electricity sector and by demand from consumers who are becoming increasingly conscious and demanding about the energy they use in their homes.

The leading countries in the energy subscription market are those that have adopted policies and incentives to encourage consumer participation in the electricity sector. These include the United States, where over 100 companies offer energy subscription services, followed by the UK, Germany, France, and Spain. 

Energy subscription business model – what exactly is it?

Energy subscription business models provide customers with easy access to energy services in return for periodic payments, usually monthly or annually. What this means is that the customers only pay for the energy they consume and not for the infrastructure or maintenance related to it. Here are a few examples: 

Solar self-consumption

Instead of owning a solar installation, customers can benefit by paying a monthly fee based on their consumption.  Companies such as Sunrun, Enpal, and Engel Energy offer solar self-consumption systems for private households, covering all monitoring, operation and maintenance services. 

On-demand air conditioning and hot water

Subscribers make the sustainable choice of paying for using appliances for air conditioning and hot water without the need to purchase them. Although this model is in its infancy, companies like Daikin are pioneering it in the Asian market. 

Battery leasing

This allows access to energy storage systems to optimise self-consumption, demand management, or engaging in ancillary service markets without an initial investment. Companies such as EDF and TESLA offer battery leasing to reduce electricity bills and avoid power outages. 

Electric vehicle leasing

Customers receive electric cars with all expenses included, such as insurance, maintenance, and charging. AGL, Octopus, and EON provide subscription services for electric cars, including the installation of home charging stations. 

The advantage of energy subscription models – It’s a win-win

Energy subscription models offer numerous benefits for both customers and energy suppliers, making it a favourable choice for both parties.

For customers:

These models provide greater convenience, transparency, and cost savings. They avoid surprises in their bills, simplify the contract and payment procedures, and can adjust the service to fit their changing needs. Additionally, customers gain access to higher quality, more efficient, and sustainable energy products and services, which contribute to reducing greenhouse gas emissions and protecting the environment.

For energy suppliers:

The energy subscription models result in increased customer loyalty, differentiation, and profitability. By establishing longer-lasting relationships with customers through personalised value propositions, suppliers can guide consumers through the electrification process. Furthermore, subscription models enable suppliers to capitalise on opportunities in flexibility markets, creating new revenue streams.

Generating value using data and advanced analytics in Energy-as-a-Service

Understanding customer needs

Effective data management, AI, and advanced analytics define the success of energy subscription business models. These technologies empower companies to better understand customer needs and habits, facilitating hyper-personalisation of services. By segmenting customers based on demographic, socio-economic and behavioural characteristics, Energy-as-a-Service (EaaS) models can create more valuable and engaging experiences, resulting in higher net subscriber value.

Enhancing customer experiences

EaaS models can leverage customer data to offer personalised experiences for energy-saving habits and efficiency products, building a strong sense of community among subscribers. Furthermore, by responding to specific customer needs on time, companies have the power and control to offer exclusive products, gamified experiences, and customised energy tips, significantly elevating customer engagement and ensuring repeat subscriptions.

Increasing return on investments

Integrating Home Energy Management Systems (HEMS) with IoT and Big Data helps develop analytical models that predict power generation and equipment health in self-consumption solar systems, minimising maintenance costs. This data-driven approach generates high value in EaaS models, enabling real-time decision-making to participate in energy markets based on subscribers' electricity demand, weather changes, asset health, and price forecasts. 

Unlocking opportunities and creating impact in the energy sector

Energy subscription business models present a promising opportunity for the sector to leverage its transition and digitalisation. These data-driven models offer more innovative, attractive, and sustainable energy services and products for customers as well as a competitive edge for companies to engage, differentiate, and monetise their offering, creating new revenue streams through decentralised asset aggregation in energy markets.

At Metyis, we combine our deep expertise in advanced data & analytics, business innovation, disruptive technology, and growth strategy to guide our partners embark on their end-to-end digital transformation journeys in the energy value chain and sector, helping them make a positive and sustained impact, both for their businesses and the planet.