Commercial real estate owners and operators are grappling with the high upfront cost of power connections, wiring, equipment upgrades and ongoing maintenance, even as they face pressure to improve energy efficiency and reduce carbon emissions. Against that backdrop, an Energy-as-a-Service (EaaS) model is emerging as an alternative to traditional self-funded infrastructure, shifting both capital needs and operating risk to a third-party provider.
Under an EaaS structure, a specialist provider installs, finances, operates and maintains a building’s energy assets while the owner or operator purchases a defined service. According to JLL’s Jon Lemmond, this can allow clients to modernize systems and maintain performance without initial capital outlays, typically paying based on realized savings or through a subscription-style arrangement tied to installation and ongoing service.
Optimum Energy’s Michael Durham characterizes EaaS as more than a power procurement strategy, describing it as an infrastructure monetization transaction with energy assets at the core. In many cases, third-party capital funds the modernization of building energy infrastructure, while the provider designs, installs, operates and maintains those systems for the term of the agreement and assumes performance and lifecycle replacement risk. The client, in turn, pays a recurring service fee that is treated as an operating expense instead of a capital investment.
Legal structures for these arrangements typically combine elements of power purchase agreements, energy service agreements and concession-style operating contracts, said Greenberg Traurig real estate shareholder Paul M. Williams. Rob Thornton of the International District Energy Association added that many EaaS agreements embed a roadmap to lower-carbon energy sources over time, either to meet an owner’s objectives or to comply with evolving local requirements.
Although the name is relatively new, several experts noted that the underlying concepts have been around for decades in the form of energy service companies and long-term power purchase agreements, particularly in the public sector. Commercial real estate owners began adopting similar models in the 2000s, driven by volatile energy prices, environmental and social governance priorities, net-zero commitments and tightening building performance standards, according to Troutman Pepper Locke counsel Andrew Thurmond. Lemmond said mounting expectations from corporate boards to cut both energy costs and carbon footprints have made EaaS increasingly attractive across industries.
The benefits highlighted by practitioners center on capital avoidance, risk transfer and operational resilience. Providers finance and own the equipment, and they are responsible for repairs and replacements if systems fail. Lemmond pointed to the convenience of having structured energy management delivered as a service, while Durham noted that shifting energy assets off balance sheet can support financial flexibility. Participants also emphasized that EaaS can give owners access to upgrades as technology advances, often without incremental upfront cost.
There is also a potential competitive angle. Thurmond said some owners use EaaS-backed infrastructure to offer tenants marketed packages such as green or all-in energy, with predictable operating costs, while Thornton observed that occupants frequently respond favorably to improved comfort, reliability and credible sustainability performance. Durham argued that, when properly structured, EaaS can align financial accretion, liquidity creation, risk mitigation and operational resilience within a single contract.
The model is not without drawbacks. Thornton stressed the importance of understanding contract length, pricing mechanics, escalation clauses, service-level obligations and pathways for buyout or transfer. Williams noted that terms can extend up to 30 years, meaning future owners and lenders may inherit agreements that do not fit their strategies, potentially narrowing the pool of buyers. Durham cautioned that provider quality is critical, as limited balance sheet strength, track record or relevant performance history can pose significant risk in long-duration infrastructure contracts.
EaaS contracts may also constrain flexibility. Lemmond said that owners tied to long-term agreements cannot readily switch providers or adopt alternative technologies that emerge later. While the model shifts administration, staffing and technical responsibilities to the provider, he added that total cost of ownership over the life of the contract can exceed the cost of directly owned systems, even if there is no initial capital outlay.
Looking ahead, the experts expect EaaS to play a larger role in CRE energy strategies. Durham observed that only a limited group of providers currently has the capability to structure, finance and operate large, long-term EaaS portfolios at scale, but he anticipates more capital and more operators entering as the model gains institutional acceptance. Thurmond expects EaaS structures to expand and standardize, with particular focus on electric vehicle charging and mobility solutions.
Thornton pointed to external drivers such as building performance mandates, local energy and water-use guidelines, electrification trends, resilience planning and evolving tenant expectations as factors that could support broader adoption. Lemmond also sees potential for tighter integration between EaaS and energy storage or backup systems, including Storage-as-a-Service using batteries to enable demand response, deeper utility engagement and monetization of distributed generation assets.
