Schneider Electric’s New Energy-As-A-Service Proposition Highlights The Rise Of Grid-Interactive Buildings
In August 2020, Schneider Electric announced that it is partnering with investor Huck Capital to create a new company called “5D Energy”, which will deliver energy-as-a-service propositions to commercial buildings and industrial facilities. 5D Energy will fund the installation of small microgrids comprised of solar, storage and back-up power, with end-users paying for these via long-term power-purchase agreements (PPAs). Schneider Electric will oversee the commissioning and ongoing operations via its EcoStruxure software monitoring platform. The new proposition is aimed at operators of medium to large commercial buildings and on-site generation systems of up to 5MW.
Schneider Electric and Huck Capital are tapping into the emerging corporate demand for solar projects funded through PPAs. In these agreements, corporates agree to purchase electricity from an energy services firm as a means of funding the project, while hedging themselves against electricity price rises and volatility. End-users also avoid paying upfront capital costs. In the UK the supermarket chain Tesco is installing 5MW of rooftop solar PV using a corporate PPA. In Australia, Blacktown City Council is installing solar panels across 16 of its sites using a PPA.
What does the deal mean for the rest of the energy services market? Schneider Electric and Huck Capital’s proposition confirms building-to-grid interactions will be the next megatrend to shape corporate energy management. With the lowering costs of on-site generation and power storage, a small but rapidly growing number of commercial firms are updating their energy programmes to facilitate more grid interactions. They are making their buildings into ‘virtual power plants’ that participate in the power market through the buying and selling of energy, or by taking part in demand response (DR) programmes. A pioneer of this approach is Sello shopping centre in Finland, which generates €650,000 ($770,000) in annual income by taking part in Fingrid DR schemes, supported by services from Siemens Smart Infrastructure.
Corporate building managers need to broaden the horizons of their energy management programmes from a laser focus on energy efficiency. They need to keep reviewing new opportunities, especially given the lowering costs of on-site generation and power storage. To learn more about the changing opportunities in corporate energy management, read our report: Best Practices For Energy Management In An Era Of Smart Buildings.