Long-term effects and transformations due to further increasing greenhouse gas emissions will trigger irreversible and severe consequences for humans, their habitat and the nature. Governments will fail to reach the agreed emission reduction goals with their current measures and are consequently dependent on private sector involvement.
This study aims to provide a detailed overview of new business models that reduce the CO2 footprint in heavy-emissions sectors: Power Purchase Agreements, Energy Performance Contracting and Energy-as-a-Service. Various papers, market analysis and companies from multiple industries have been examined. Furthermore, a calculation of the future emissions savings potential for the German and global market is presented for each business model.
The findings demonstrate that each analyzed business model is suitable for companies from multiple sectors with particular characteristics. All instruments are providing improved carbon footprints, while the Energy-as-a-Service approach is predicted to reach the most extensive long-term impact. Based on these results, it is highly recommendable for suitable companies to apply at least one of the presented models to achieve emissions savings. For interested corporations, this thesis can serve as a starting point to critically analyze the suitability of the respective business solutions while understanding their future trends and development potentials.
Table of Contents
1 Introduction
1.1 Problem Presentation and Thesis Relevance
2 State of Research
2.1 Frequently Used Methods
3 New Business Solutions
3.1 Power Purchase Agreements
3.1.1 Description of the Business Model
3.1.1.1 Comparison of Different PPA Deal Structures
3.1.2 Contributions and Limitations of the Model
3.1.3 Potential Solutions to the Limitations
3.1.4 Current State of Research, Regularities and Examples
3.1.5 Scalability Potential
3.1.6 Holistic Consideration Including Future Profitability
3.2 Energy Performance Contracting
3.2.1 Description of the Business Model
3.2.2 Typical Process
3.2.3 Contributions and Limitations of the Model
3.2.4 Potential Solutions to the Limitations
3.2.5 Current State of Research, Regularities and Examples
3.2.6 Scalability Potential
3.2.7 Holistic Consideration Including Future Profitability
3.3 Energy-as-a-Service
3.3.1 Description of the Business Solution as Holistic Approach
3.3.2 Contributions, Limitations and Potential Solutions of the Model
3.3.3 Current State of Research, Regularities and Examples
3.3.4 Scalability Potential
3.3.5 Holistic Consideration Including Future Profitability
4 Discussion
4.1 Future Outlook: Most Promising Approach
Objectives and Research Scope
This thesis investigates and evaluates three distinct business models—Power Purchase Agreements (PPAs), Energy Performance Contracting (EPC), and Energy-as-a-Service (EaaS)—aiming to determine their effectiveness in reducing the carbon footprint within heavy-emissions sectors. The research seeks to provide companies with a comprehensive framework for selecting the most suitable business solution based on their specific operational needs, financial constraints, and strategic goals.
- Analysis of PPA structures, benefits, and market scalability.
- Evaluation of EPC mechanisms and their application in energy-intensive industries.
- Exploration of EaaS as a holistic, single-point business model for energy management.
- Calculation of future emissions savings potential for global and German markets.
- Identification of barriers and drivers for widespread adoption in heavy-emissions industries.
Excerpt from the Book
3.1.1 Description of the Business Model
A Power Purchase Agreement (PPA) is a long-term electricity contract between the purchaser (offtaker) and the seller (independent power producer or developer of an electricity project) that ensures the sale of a predetermined amount of energy. The contract thereby specifies the amount of energy, its price, the delivery date as well as the contractual length (World Business Council for Sustainable Development, 2019).
PPAs vary significantly based on personal preferences or deal structures and have a contractual length from less than a year up to more than twenty years (Huneke, Göß, Österreicher, & Dahroug, 2018; World Business Council for Sustainable Development, 2019). By entering a PPA, the purchaser reduces his dependence on heavy fluctuating energy prices and can plan the company’s future cash flows better. The seller reduces his risk, improves the predictability of his sales and thus can invest more successfully into new projects and improvements (Huneke, Göß, Österreicher, & Dahroug, 2018). Simultaneously, the seller is responsible for the whole installation, financing and operation of the energy-generating facility (Leung & Bailey, 2018).
PPAs currently have the character of a buzzword: Many people are using it in several different contexts with various meanings (Meulemeester, 2018). Historically, PPAs have been used by large companies or municipalities to ensure stable electricity prices and supply (PWC, 2012). In 2008, PPAs were introduced as a business model to sell renewable energy to companies. Nowadays, the contracts are almost exclusively used as a financial procurement tool within the renewable energy sector (PWC, 2012).
This occurs especially in countries, in which renewable energy, as part of the total energy consumption, is legally binding or very appealing due to tax reliefs (Next Kraftwerke, 2019). Customers that want to satisfy their supply of clean energy are entering into contracts with companies that install and operate solar and wind farms, rather than relying on utilities that cannot ensure 100% clean energy (The Economist, 2017).
Summary of Chapters
1 Introduction: Provides the motivation for the study, highlighting the urgent need for private sector engagement in mitigating climate change through new business models.
2 State of Research: Examines current global government policies, market-based mechanisms like emissions trading, and the voluntary approaches driving energy efficiency.
3 New Business Solutions: Details the operational frameworks, contributions, limitations, and scalability of Power Purchase Agreements, Energy Performance Contracting, and Energy-as-a-Service.
4 Discussion: Synthesizes the findings to classify which business model best fits various company profiles in the heavy-emissions sector and provides a future outlook on the most promising approaches.
Keywords
Power Purchase Agreements, PPA, Energy Performance Contracting, EPC, Energy-as-a-Service, EaaS, Carbon Footprint, Renewable Energy, Energy Efficiency, Heavy-emissions Sectors, Sustainability, Climate Change Mitigation, Business Models, Energy Management, Emissions Trading
Frequently Asked Questions
What is the primary focus of this thesis?
This thesis focuses on analyzing three innovative business models—PPAs, EPC, and EaaS—to help companies, particularly in heavy-emissions sectors, reduce their carbon footprint and improve energy efficiency.
What are the central themes of the work?
The central themes include renewable energy procurement, energy efficiency financing, risk management in energy projects, and the role of the private sector in achieving global climate targets.
What is the core research objective?
The objective is to provide a detailed overview and comparative analysis of these business models to enable corporations to choose the most suitable strategy for their specific needs.
Which scientific methodology is applied?
The study employs a comprehensive review of academic papers, market analyses, and industry-specific case studies, supplemented by independent mathematical calculations of future emissions savings potential.
What is addressed in the main body of the text?
The main body systematically evaluates the description, contributions, limitations, and future scalability of PPAs, EPC, and EaaS, including data-driven projections for the German and global markets.
Which keywords characterize this work?
Key terms include Power Purchase Agreements, Energy Performance Contracting, Energy-as-a-Service, carbon footprint reduction, and energy efficiency, among others.
How do PPAs contribute to a company's carbon reduction strategy?
PPAs allow companies to secure long-term renewable energy supply at stable prices, reducing reliance on fossil-fuel-based utilities and helping meet sustainability goals.
What distinguishes EaaS from traditional EPC?
While EPC focuses on energy efficiency savings with guaranteed performance, EaaS offers a more holistic "single-point" solution that includes energy procurement, management, and long-term asset responsibility.
What is the significance of the "Off-balance sheet" concept in EaaS?
It allows companies to record energy project financing as an operational expense rather than a capital expense, avoiding additional debt on their balance sheet.
- Arbeit zitieren
- Maxine Altenburg (Autor:in), 2019, New Business Solutions to Reduce the CO2 Footprint in Heavy-Emissions Sectors, München, GRIN Verlag, https://www.grin.com/document/540678
