“In the EaaS scenario, an outside company pledges to meet a customer’s energy needs at a discount, say 5%, below what they currently pay. By then strategically seeking to lower the customer’s energy costs by more than 5%, the EaaS company uses the extra margin to pay its own costs and to attain a profit. For example, if a customer’s energy costs can be lowered by 30%, the EaaS company retains 25% every month for the term of the agreement, typically 10 years. Any costs associated with providing the service come out of the 25%.
Specifically, working to lower energy costs by that much involves an upfront investment in infrastructure, such as heat pumps and HVAC technologies, to lessen energy consumption. The idea is that the profitability of lowering energy costs will offset even a substantial investment over time.
Briefly stated, that is the business model of Budderfly, which assumes management of a company’s energy infrastructure and becomes the “account holder” with the utility. Once an EaaS contract is signed, Budderfly then invests to upgrade the customer’s energy-related infrastructure, including LED lighting, refrigeration, etc., in addition to HVAC. The goal is to decrease energy usage by 30% or more.”
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