With the energy transition gathering pace, businesses are prioritizing cleaner energy sources and electrification to meet decarbonization goals and reduce energy costs. They are taking a more active role in managing their energy supply with the associated services, for example, through the direct procurement of clean energy via power purchase agreements (PPAs). This is being achieved by generating and managing on-site energy as “prosumers” and optimizing equipment and installations that drive energy consumption. This can create new opportunities for energy supply and energy services companies alike.
In fact, the margin value pools in the energy supply and services market are estimated to double in the next ten years, while supplier-buyer relationships are expected to transform. Recent McKinsey surveys—forming the basis of this article’s analysis—found that 70 percent of businesses are willing to engage in long-term partnerships with utilities to meet their changing energy needs.1
Decarbonization is not the only factor driving businesses to treat energy as a strategic priority. Energy security, reliability, and cost are important motivators, too. In one of our recent surveys, business customers highlighted high energy prices and energy price volatility as their two greatest pain points. At the same time, the cost of clean energy technologies continues to come down.
All of this means that the changing energy landscape is shifting away from the traditional energy procurement strategies that businesses relied on in the past. Today, B2B energy customers—including organizations such as large industrials, manufacturing sites, commercial real estate, public facilities (for example, hospitals), and small and medium size enterprises—are focusing more on end-use management. They are pursuing energy efficiency through equipment upgrades and electrification of industrial processes while also optimizing on-site generation and consumption to cope with more increasingly complex loads.
In this article, we explore the challenges B2B customers face in evaluating and structuring new options for managing both energy demand (for example, energy optimization, equipment upgrades, and efficiency) and supply (including balancing off-site power supply with on-site generation). We discuss how energy suppliers and energy service companies could adapt their offerings to capture additional value in an environment that is increasingly complex and strategic for B2B customers. While we focus on the European market, it is possible that the trends observed could play out across other liberalized energy markets globally.
Energy supply optimization is a growing business priority
According to McKinsey analysis, industry and commercial buildings account for 60 percent of greenhouse gas emissions in the European Union.2 Decarbonization in these areas is essential to comply with the European Climate Law, which establishes a target of reducing greenhouse gas emissions by 55 percent by 2030 (compared to 1990 levels) and achieving net zero by 2050.3 Implementation of this law was set out in the “Fit for 55” legislative package, now being translated into national legislation by EU member states. An example is the Energy Efficiency Directive, which requires countries to achieve an average energy savings rate of 1.49 percent from 2024 to 2030.4
With companies moving beyond Scope 1 and 2 emission reduction targets to reduce their Scope 3 emissions, a cross-industry domino effect is being triggered as businesses seek to decarbonize the entire value chain. This includes on the supply side (through lower-carbon electricity and gas) and on the demand side (by improving energy efficiency and flexibility).5
The success of a business’s decarbonization journey largely depends on optimizing its energy sources, including sustainable fuels (such as biomethane), and its power supply, as well as demand-side consumption—for example, through upgrading equipment to reduce consumption or modifying processes and operations to run when electricity costs less. A primary challenge regarding power supply is balancing off-site power supply with on-site generation (see sidebar “The difference between off-site and on-site solutions”).
A favorable market environment emerges for on-site solutions
Our survey findings reveal that the primary concern for B2B customers is cost-effectiveness, closely followed by the long-term stability of power prices. Deploying new energy technologies and solutions on-site is becoming an increasingly attractive option to address these concerns.
In 2022, the European energy crisis resulted in higher gas and wholesale electricity prices, which are anticipated to remain volatile while geopolitical risks continue to impact energy supply.6 The build-out of renewable energy is also expected to sustain higher electricity price volatility, with McKinsey analysis showing that the annual standard deviation could increase by 60 to 170 percent by 2050 in European countries with high renewables penetration.7
The deployment of distributed energy technologies continues to accelerate as they mature and become more cost-effective, allowing businesses to reduce exposure to wholesale energy prices. For example, capital expenditure costs for a lithium-ion battery energy storage system (BESS) have dropped approximately 95 percent in the past 14 years with turnkey BESS systems dropping below $150 per kilowatt-hour (kWh) in some regions, according to recent McKinsey benchmarking.8
Furthermore, installing new equipment is increasingly cost-effective as businesses seek to reduce energy consumption through the electrification of industrial processes. This push is further accelerated by the growing number of energy efficiency policies and regulations that countries are introducing. According to the International Energy Agency, countries representing more than 70 percent of global energy demand implemented new or updated efficiency policies in 2024.9
The B2B energy supply and services market is at an inflection point
For existing energy companies and new market entrants, there is major potential value to be captured in energy supply and services, including energy efficiency and on-site generation. A deep dive into the European market provides evidence for this opportunity, and we expect that these value pools will increase globally, too.
According to our analysis, the B2B energy supply and services value pools in Europe could grow by 6 percent CAGR per year by 2035, doubling from €4.1 billion today to €8.3 billion. Most of the growth is expected to come from the services market, including energy efficiency and on-site solutions, rather than from traditional power supply (Exhibit 1).
The European B2B energy efficiency value pool, meanwhile, is expected to double from €1.9 billion in 2024 to €3.8 billion by 2035. This would represent approximately 45 percent of the future value pools in 2035 and the bulk of the on-site value pools.
Energy efficiency services traditionally encompass auditing, financing, installation, operation, and maintenance of new, more efficient equipment (for example, the financing and installation of heat pumps). Within energy efficiency, our research shows that the fastest growing value pool could be in the replacement and operation of refrigeration and industrial heating equipment, growing by 11 percent and 9 percent CAGR, respectively, between 2024 and 2035 (Exhibit 2). This growth is expected to be driven by new product entry and specific policies such as the European F-gas regulations.10
The remaining growth potential of on-site solutions could come from the build-out of solar photovoltaic (PV) technologies, electric vehicle (EV) charging, increased battery adoption, and energy software, as seen in Exhibit 1. The proportion of on-site solutions in value pools is expected to increase from 75 percent today to 79 percent in 2035.
For off-site solutions, PPAs are expected to make up an increasing share of the value pool, growing by 21 percent CAGR and reaching €668 million in 2035. As a result, the share of traditional standard supply in overall energy-related B2B value pools is forecast to drop from 23 percent in 2024 to 13 percent by 2035 due to the rapid growth of adjacent products and a modest 1 percent CAGR in standard supply.
While these trends are consistent across EU countries, there are some differences within the region, driven by market structure and the regulatory environment (see sidebar “Regional differences in the B2B energy market”).
Four emerging trends in B2B customer needs
To help customers navigate this changing environment, utilities and energy services companies could focus on four emerging customer trends to improve their service offerings and become trusted advisors, managing a mixed portfolio of assets.
Our survey results show that B2B customers’ demands are changing in the following ways:
- They are increasingly interested in on-site assets as part of their energy supplier strategy.
- They have new expectations for cross-product portfolio solutions.
- They are looking for technical expertise.
- They are seeking financing alternatives (Exhibit 3).
This highlights the need for energy solutions providers to optimize their off- and on-site configuration.
Arbitration for off-site to on-site solutions
Customers are interested in optimizing their energy usage in an increasingly complex and volatile market. They have a strong interest in balancing on-site and off-site services as they acquire more on-site services. This would allow them to reduce their grid network charges, reduce exposure to price volatility, and improve transparency in Scope 2 emissions reductions.
As a result, distributed solar, on-site batteries, EV charging stations (including vehicle-to-grid), and demand-side-response (DSR) are expected to become increasingly important versus traditional supply. Nearly two-thirds (64 percent) of respondents said they were interested in investing in solar in the coming years, 47 percent in EV charging stations, and 25 percent in on-site batteries.
As customers seek out optimal timing and pricing for purchasing, arbitration of consumption patterns is becoming more important, leading to increased interest in software for energy monitoring and optimization to support greater visibility and control.
New expectations for integrated cross-product solutions
Some B2B customers are seeking comprehensive services beyond standard supply, such as energy-as-a-service solutions, integrated offerings, or customizable options. Our survey findings showed that 38 percent of respondents would like energy-as-a-service offerings, and 36 percent want integrated offers.
B2B customers also place importance on the clarity and simplicity of an offer. Among the top three purchasing criteria, the primary reason for purchasing an energy efficiency project financed by an energy services company is the simplification of project management processes (Exhibit 4). A recent example is French grocery retailer Carrefour’s partnership with GreenYellow to deploy solar PV at over 350 sites. This is done via a third-party financing and “as-a-service” model.11
Emphasis on technical expertise
In addition to price, customers look to suppliers’ technical expertise and experience in executing energy projects. Nearly half (49 percent) of industrial players place technical expertise in their top three purchasing criteria, while 38 percent also look at the track record and experience of suppliers as a demonstration of their technical capabilities. The fact that only 17 percent of customers would go to their energy audit provider for an energy efficiency project, even in instances where the auditor provides these services, highlights the need for project execution experience.
Customers also place value on existing trusted relationships: More than 70 percent of customers would rather go to their existing energy supplier first to establish an energy service contract than look elsewhere (Exhibit 5). In general, customers tend to favor their existing relationships when launching an energy efficiency project (49 percent of customers would also reach out to their existing maintenance provider and 47 percent to their existing facility manager).
Demand for new business models and financing alternatives
Finally, customers want to minimize the up-front capital expenditures required for energy infrastructure or equipment. According to our survey findings, 50 percent of respondents would opt in for an energy efficiency service without up-front capital expenditures and show a willingness to engage in long-term partnerships. This has led to an increase in as-a-service offerings with performance-related fee structures (see sections “Shifting to an as-a-service approach” and “Sharing risks and benefits” below).
How to capture additional value in the B2B energy services market
How customers can think holistically about their energy transition strategy: Shifting from a cost to value approach
There is significant value in integrated, cross-product energy services for end customers, as demonstrated by our analysis of the economics of an energy efficiency project contracted as an integrated solution offering versus different stand-alone projects.
The net present value (NPV) for the integrated offering was 25 to 30 percent higher due to the improved energy savings from continual monitoring and optimization across multiple assets, lower equipment capital expenditures due to bulk-purchasing agreements accessible to an energy services company, and lower project structure costs (exhibit).
Customers could benefit from access to the latest technologies and expertise provided by energy services companies, not just at the procurement phase but throughout the lifetime of the assets. To capture this value, end customers could consider adapting the way they purchase energy services and the way they operate. Such approaches might include:
- Adopting a total cost of ownership (TCO) and NPV approach. This moves beyond simple up-front cost considerations to evaluate the long-term benefits and efficiencies of a project.
- Restructuring the procurement department for energy services at the cross-product or decision-making level to help shorten the sale cycle. Looking at the cross-product level specifically, different energy services may be purchased by different procurement teams (for example, distributed solar PV can be categorized as energy supply, while energy efficiency services are considered indirect procurement). At the decision-making level, end customers may not have defined the end decision makers for purchasing energy services (for example, corporate versus business units or sites).
- Establishing a flexible approach to asset ownership. This allows companies to consider models, such as leasing or shared ownership, for energy infrastructure to enhance agility, reduce risk, and optimize their resources or utilization.
To emerge as a leader in this new energy paradigm, energy suppliers and service providers could improve their value propositions, helping customers navigate their new needs (see sidebar “How customers can think holistically about their energy transition strategy: Shifting from a cost to value approach”).
Developing integrated offerings
Energy suppliers could provide integrated offerings that help B2B customers manage the complexity of energy optimization.
Several original equipment manufacturers (OEMs), such as Schneider Electric, have already decided to develop advanced energy management services for their largest clients.12 This includes the creation of energy service company branches and investments in advisory and professional services related to energy supply, procurement, and PPAs. Others, such as France’s ENGIE and Germany’s GETEC, have made strategic acquisitions over the past decade to broaden their offerings and deepen their footprints in key geographies.
Shifting to an as-a-service approach
Given that 50 percent of survey respondents said they would opt in for an energy efficiency service without up-front capital expenditures, energy providers could look to integrate financing and service offerings to reduce the up-front capital expenditures burden on customers and the need to manage additional assets.
Energy providers may consider offering contractual structures that meet customer needs and further align incentives by linking payments to outcomes. An example commonly used today is Energy Performance Contracts, where energy efficiency investments are paid for in relation to a contractually agreed level of energy efficiency improvement, and the efficiency providers are only paid if efficiency gains materialize.
Our research shows that utility-as-a-service and decarb-as-a-service contracts are already being used. In these, the scope of assets managed may be larger, and payments can be tied to the provision of energy and the achievement of operational and financial outcomes, such as bill savings and decarbonization.
For example, an energy supplier signed a 15-year utility-as-a-service contract with a manufacturer, which involved the deployment and operation of more than 1,000 kilowatt (kW) peak of solar PV, more than 10 megawatt-hours (MWh) of BESS assets across multiple manufacturing plants, as well as an Energy Performance Contract to reduce energy consumption by 10 percent at the plant level.
Many such services already exist, including Spanish utility Iberdrola’s “energy transition as-a-service,” Italy’s Enel X’s “energy as-a-service” solution, and France’s GreenYellow’s “utility as-a-service” offering.13
Sharing risks and benefits
Integrating multiple assets and services—potentially owned or operated by different parties with different interests—can result in complex socio-technical-financial arrangements. Furthermore, unequal contributions to the cash flows across the full system of solutions can make the management of financial risks more difficult.
Financial risk transfer is quoted as the second main reason that customers would seek to partner with energy service providers. Special purpose vehicles (SPVs) can serve as an effective structure to finance and scale projects.14 They enable the tax-efficient deployment of assets, pooling financing from different capital providers and reducing risk. SPVs are more common in mature technologies but are starting to be used for heat pumps and insulation as well.
Building strategic partnerships along the value chain
Offering integrated solutions at scale requires a strategic approach to partnerships to access key capabilities in a cost-effective manner. For example, there is an increasing appetite for distributed energy assets’ financing and software provider partnerships (see section “Leverage AI-enabled automation” below).
One energy supplier, for instance, has developed a strategic partnership with a local installer that sources equipment from the supplier’s network of vetted OEMs. The supplier partners with a bank to finance the project and set up and structure SPVs for the client. Ongoing asset optimization, operations, and maintenance are handled via a separate joint venture with an engineering, procurement, and construction contractor. Such partnership networks are key to achieving scale.
Another example is the emergence of industry consortiums, such as Decarb Fast Track, which aims to facilitate access to energy management and optimization digital solutions for industrial facilities.15
Adjusting the approach to customer relationships
As energy suppliers transition from offering a simple product to providing complex solutions and services, they could consider establishing a technical and expert sales team. This transformation involves structural changes, including but not limited to:
- Assigning dedicated account managers to provide personalized support and ensure consistent communication with customers. This approach helps maintain long-term relationships by offering advice on new services or products. Our survey results showed that 81 percent of customers would like to have a dedicated key account manager who can support them across their multiple energy management needs.
- Communicating a clear and compelling value proposition. As the market fragments between numerous players with slightly different value propositions, energy suppliers would need to spell out their specific value proposition to end customers and demonstrate the savings opportunities of contracting various products.
Leveraging AI-enabled automation across the delivery value chain
Energy service providers face challenges relating to the diverse nature of their customer base. The resulting semi-bespoke nature of projects can lead to protracted energy audit and project proposal phases. Depending on the contracts, solution providers may also bear more of the asset operational risk, thus requiring active asset management. AI and digital twins could help providers navigate such challenges.
In our work with clients, we have observed that leading energy efficiency providers are able to shorten the initial audit process from several months to several days through the use of digital twins. The digital twins can then be used to identify potential energy savings quickly and test various energy efficiency measures without disrupting existing operations. The technology allows for more efficient and cost-effective portfolio-wide energy optimization compared to traditional on-site energy audits.16
Achieving target efficiency savings and project returns is highly dependent on optimally operating on-premises assets. Best-in-class businesses integrate multiple sources of data, from weather forecasts and market pricing to real-time operational indicators, to better predict and operate their portfolio of assets. These are embedded into performance monitoring platforms that enhance visibility for end customers while enabling energy suppliers to centralize operations and achieve scale of operations.
The B2B energy market is at an inflection point, with high prices and decarbonization goals causing B2B customers to treat energy as a strategic priority. Combined with the increasing availability and cost-competitiveness of new technologies, more companies are now looking to deploy these technologies on their own premises.
By offering integrated, risk-sharing solutions through as-a-service models, energy suppliers will not just manage complexity—they could redefine it. This may be the future of B2B energy partnerships: not merely selling power but powering transformation together.
