Innovative Data-Driven Energy Services and Business Models in the Domestic Building Sector

Juan Aranda (), Tasos Tsitsanis, Giannis Georgopoulos and Jose Manuel Longares
Additional contact information
Juan Aranda: Fundación CIRCE, 50018 Zaragoza, Spain
Tasos Tsitsanis: Suite5 Data Intelligence Solutions Limited, Limassol 3013, Cyprus
Giannis Georgopoulos: Elin VERD SA, 145 61 Kifisia, Greece
Jose Manuel Longares: Fundación CIRCE, 50018 Zaragoza, Spain

Sustainability, 2023, vol. 15, issue 4, 1-18

Abstract: The market of energy services for the residential sector in Europe is very limited at present. Various reasons can be argued such as the high transaction costs in a highly fragmented market and the low energy consumption per dwelling. The rather long payback time for investments render Energy Services Companies’ (ESCOs) services financially unattractive for many ESCOs and building residents, thus hindering a large potential of energy savings in a sector that is responsible of almost half of Europe’s energy consumption. If the ambitious 2030 and 2050’s decarbonisation targets are to be met, the EU’s residential sector must be part of the solution. This paper offers insights about novel ESCO business models based on intensive data-driven Artificial Intelligence algorithms and analytics that enable the deployment of smart energy services in the domestic sector under a Pay-for-Performance (P4P) approach. The combination of different sources of energy efficiency services and the optimal participation of domestic consumers in aggregated demand response (DR) schemes open the door to new revenue streams for energy service providers and building residents and reduce the hitherto long payback periods of ESCOs services in the sector. Innovative business models for ESCOs and demand flexibility Aggregators are thoroughly described. Especially customised Performance Measurement and Verification protocols enable fair and transparent P4P ESCO contracts. The new human-centric energy and non-energy services increase the energy consumption awareness of building users and deploy behavioural and automated responses to both environmental and market signals to maximise the economic benefit for both energy service providers and consumers, always respecting data protection rules and the consumers’ comfort preferences. The new hybrid business models of P4P energy services make traditional EPC more attractive to energy service providers, with low cost data collection and treatment systems to bring payback periods below 10 years in the residential building sector.

Keywords: ESCO business models; aggregator business models; energy services for buildings; energy performance contract; Pay-for-Performance contract; energy efficiency in buildings; demand response; demand side flexibility; residential sector (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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