Electricity as a service - decentralising grids and generation

Electricity as a Service (EaaS) transforms energy from a commodity into a subscription-based service. Instead of simply selling electricity by the kilowatt-hour, EaaS providers bundle power, installation, financing, consulting, monitoring, and optimisation into a single, integrated offering.

In doing so, EaaS effectively de-commoditises energy by delivering reliability, efficiency, and tailored solutions rather than just raw supply. EaaS turns electricity into a flexible service that adapts to our needs, reshaping how we power homes, businesses, and cities.

Why now?

Growth Drivers on the Demand Side:

• Rising electricity prices & volatility in Europe
The shock in energy markets of the 2022 Ukraine crisis has led to a new normal after 3 years: although lower than at peak, prices today remain high and volatile, and higher than main trading partners. Retail energy prices remain elevated (household gas prices are almost 2x pre‑crisis levels in 2023), and industrial gas and electricity prices are at 2-4 times higher than EU trading partners

Sources: Eurostat

• In all major markets in the EU, the volatilities (measured here as day-ahead electricity) have remained significantly higher than pre-crisis period (see graph)

• This volatility is increasingly passed through to consumers: since 2022, both C&I and retail (to a lesser extent) consumers have increasingly adopted spot-indexed electricity contracts as suppliers move away from fixed pricing, e.g., the electricity Directive (from 2019) requires dynamic pricing offers for all customers with smart meters.

With large-scale blackouts returning, as seen in the 2025 Iberian Peninsula outage, the evolving nature of grid electricity underscores the need for decentralised generation to strengthen energy resilience

• Total demand driven by data centre growth and other electrification needs
European power demand has been flat since 2022, and going forward it is expected to grow, with the pace depending on the speed of electrification in transport, buildings, and industry. Demand growth from data centres, however, appears to be driven by stronger fundamentals (see McKinsey). Heat pumps and EVs are other potential growth drivers for EaaS for the years to come

• European data centres already draw 60 TWh a year, heading toward 145 TWh by 2030. Their operating model makes them natural EaaS adopters - uptime is non-negotiable, and CO₂-free energy is now a competitive edge, not a nice-to-have

• Grid connection limits create an opportunity for flexible solutions
Upgrading grids can be slow and costly due to capacity constraints, queueing, and technical requirements. As of 2024, over 1,700 GW of renewable energy projects were waiting for grid connections across 16 European countries, more than three times the capacity needed to meet the EU’s 2030 climate and energy targets. In 2024 alone, €7.2 billion worth of renewable generation was curtailed in just seven countries due to grid capacity constraints

Grid connection queues for renewable and hybrid projects in different countries (IEEFA, 25)

• Regulation and voluntary actions drive new uses of energy uses
The Energy Performance of Buildings Directive (EPBD), effective since May 2024, is driving a major shift in how energy is supplied and managed. By 2033, the least efficient 26% of non-residential buildings must be renovated, and homes need to cut primary energy use by 16% by 2030. From 2025, fossil fuel boiler incentives end, and solar becomes standard for new construction. Besides, decarbonisation mandates span industrial emission targets, renewable adoption, and corporate net-zero commitments

Growth Drivers on the Supply Side:

• Battery costs have collapsed — unlocking entirely new business models
Over the past decade, lithium-ion batteries have achieved a 90% cost reduction, falling from $1,400/kWh in 2010 to under $140/kWh in 2023, one of the most dramatic declines in any industrial technology in history.

This collapse in cost and surge in performance (energy density, cycle life) has flipped the economics of energy storage from impossible to inevitable. What solar panels were in 2010, batteries are now in 2025

• R&D breakthroughs and scaled manufacturing by global leaders, Tesla Energy, CATL, LG Energy, BYD, Samsung, Sungrow, have created a hardware backbone that European EaaS providers can now build on

Source: Benchmark Mineral Intelligence

• Smart meter penetration has quietly crossed the tipping point, and AI boosts automation
Until recently, distributed energy services were hamstrung by fragmented, low-fidelity data. That bottleneck has broken: 195 million smart meters now cover 63% of Europe’s electricity consumers across the EU27, UK, Norway, and Switzerland. This near-universal digital layer transforms every building into a data node, enabling real-time optimisation, predictive maintenance, dynamic pricing, and automated energy trading, with the latest developments in artificial intelligence. In short, energy data is now liquid, and EaaS firms can finally automate what once required human intervention

Incumbent energy procurement methods fall short of addressing those issues

Traditional utilities and energy majors are both competitors and potential partners in the EaaS space. While they bring capital and grid expertise, their legacy structures often limit flexibility and customer intimacy. Many incumbents (e.g., Enel X, Shell Energy, EDF, Engie) are piloting or acquiring EaaS and distributed energy providers, signalling that decentralised, service-based models are becoming mainstream.

Europe’s electricity-as-a-service market opportunity

In Europe, there are 24M energy-insensitive SMEs that would use EaaS solutions, and they consume roughly 11 MWh per year. There are 200M households with an average consumption of 4 MWh per year. Large enterprises in Europe consumed 815 TWh per year. At an average price of € 150 / MWh per year, the market size would be slightly more than € 282 billion in 2025. [Sources: (1), (2), (3), (4)]

In addition, Europe has around 91 GWh of battery storage capacity, and it is expected to reach 400 GWh by 2030. With energy trading and grid stabilisation operations, each MWh is supposed to bring in €330k per year, putting the total market size (TAM) at €312 billion in 2026.

National energy supply characteristics point towards increasing EaaS adoption across Europe. Germany has the highest electricity prices in the EU, which drives the economics for EaaS and self-consumption. With a large solar deployment in place, building on the consumer acceptance of BESS and sustaining its growth will help mitigate the geographical disadvantages of moderate solar irradiation. Regulatory updates like those in Italy and France further cement the case for higher EaaS adoption:

• Italy’s MACSE (Meccanismo di Approvvigionamento di Capacità di Stoccaggio Elettrico), a national auction-based mechanism, is accelerating large-scale battery energy storage deployment through long-term contracts along with guaranteed fixed annual payments

• Phasing out France’s ARENH mechanism that enabled inexpensive access to 100TWh / year of EDF’s nuclear energy will have a significant impact on the electricity supply, both in terms of price and stability. Finally, extremely high daily spreads in electricity prices in Eastern and Southeastern Europe make EaaS (generation, storage & energy trading) very attractive. Strong arbitrage opportunities provide financial incentives, and improving grid stability provides regulatory incentives for focusing on increasing EaaS adoption

EaaS: The business models we’ve seen

One of the first EaaS models, lighting as a service, emerged in the early 2010s. Since then, EaaS has broadened to include offerings like solar as a service, battery storage as a service, and energy management as a service.

EaaS combines local solar, batteries, and smart controls to produce, store, and shift energy where it’s needed. By shaving peaks, balancing locally, and enabling demand-response, up to aggregation into VPP, it eases congestion, reduces stress on lines, and defers costly grid upgrades.

Is it there space for newcomers? Yes.

Existing key players in the global energy as a service industry are global technology/energy companies Siemens, Engie, Honeywell International. However, significant opportunities exist for nimble, tech-driven newcomers to start from a blank page without any technical debt and address high-growth segments such as data centres, batteries, heat pumps, and EV charging.

Funding instruments

EaaS growth is capital-intensive. Securing the right mix of equity, debt, and project-level financing is essential to de-risk both operations and assets, and avoid unnecessary dilution of founders and early investors.

Corporate / TopCo funding

The TopCo houses intellectual property, contracts, and overall management. Early-stage expansion and team growth are most efficiently funded with venture-like capital because it is quick and flexible. However, once the business requires large capital expenditures, equity funding can become dilutive, making it less attractive.

Venture debt is another option. These are term loans, often secured against TopCo assets, that can extend the runway and bridge the company to project-level financing. While useful, repayments can strain cash flow, access is limited until the company is profitable, and default risk remains.

While venture debt increases operational risk and is less flexible, it is easier to fundraise (with proven traction), has greater access to capital, and is available at a lower cost.

Project / AssetCo funding

For later-stage refinancing needs (≥€100M at bare minimum), even more cost-effective capital can be accessed through public or quasi-public instruments targeting institutional investors, such as green bonds or YieldCo structures.

What fundraising and exits reveal about EaaS Investability

Software-Heavy Models - Operations and grid-focused models resemble B2B SaaS businesses. They offer recurring revenues, scalable deployment, and strong customer lock-in, making them highly attractive to venture capital. The main caution is exposure to electricity price volatility or market-dependent battery revenues, which can increase perceived risk. Examples include Arenko (UK, Series A with HICO Investment Group), Fifty Energy (Sweden, Seed with Fortum Innovation & Venturing), and Enspired (Austria, Series B with Zouk Capital, Push VC, and Vopak Ventures).

Asset-Heavy Models - Models focused on energy supply and servicing have historically attracted early-stage venture funding when paired with innovative financing or outcome-based contracts. Examples include Flower (Sweden, Series A with Northzone and Giant Ventures), Ostrom (Germany, Series B with Eneco Ventures), and Übermorgen and Storio (France, Seed rounds with Lowercarbon Capital and Bpifrance). These models can show strong investability early but often shift to other funding sources as capital requirements grow.

Project-Level Funding - As projects scale, funding generally moves from VC to project finance or debt financing to limit equity dilution and de-risk operations. Notable examples include GeoPura (UK, £22M), Sunprime (Italy, €204M), AMPYR (UK, €229M), and Sunsave (UK, £113M). This approach allows companies to secure capital for hardware and infrastructure without over-relying on equity.

Exit Pathways - Infrastructure companies and investors are the most probable target acquirers for those companies. Asset-intensive companies often target infrastructure funds or strategic buyers, like Enviria (Germany, $200M from BlackRock Infra) and Ecosun Expert (France), Electricité Reiter & Grethen (Luxembourg), and Gevitec (Belgium), all acquired by TSG Group in 2025. Likewise, for asset-light models, the acquisition of Erova Energy (UK) by Macquarie Group in 2025.

Overall, venture capital is best suited for recurring-revenue, software-driven EaaS models. Asset-heavy, capital-intensive models remain investable but primarily through project finance, leasing, or infrastructure funds, with VC usually involved at early stages to fund technology or innovative business models (see below recent raises by descending amounts).

The case against EaaS

EaaS is not for everyone. Small, simple, or predictable energy loads often do not justify the added cost and complexity. In rigid markets or regions with poor digital infrastructure, the potential for savings and flexibility is limited. Even some large organisations may find that outsourcing energy management adds operational complexity without clear financial upside.

Also, EaaS eliminates upfront costs but can become pricey over time, so customers need to assess long-term value carefully. It also means giving up some control over energy operations, which may not suit hands-on users. Lastly, reliance on a single provider can reduce leverage and expose customers to future price hikes.

EaaS delivers the most value where energy needs are complex, variable, and capital-constrained, such as buildings with on-site renewables, storage, or flexible demand. In these cases, providers can unlock multiple revenue streams, reduce costs, and turn energy management into a strategic advantage.

Mapping

We looked at the EaaS space in Europe and categorised startups into 3 major segments. Financing (financing schemes offered by EaaS firms), Asset-Heavy Models (Energy producers and servicing), and Asset Light (smart technologies to adjust energy consumption patterns and perform energy trading).

Conclusion

Electricity‑as‑a‑Service is the quiet revolution in energy. Prices are volatile, grids are strained, and regulation is pushing hard on decarbonisation, and both hardware and software can help address those challenges. EaaS turns that complexity into a predictable, financeable service model built on real assets and measurable outcomes. Basically, it’s infrastructure wrapped in a SaaS mindset. The next generation of energy players will be those who can combine capital, data, and operations into one offer.

This article is also published on Substack. illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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