How to Develop Integrated Energy Services: Ideas, Methods, and Practice

As traditional energy resources become increasingly depleted and environmental conditions continue to deteriorate, integrated energy services are bound to become an important direction for improving energy efficiency and reducing energy costs. Yet while many energy companies are actively deploying integrated energy services, the key question is how to cultivate new market formats and profit growth points, and how to turn integrated energy services into a new engine driving high-quality development. Below are some ideas and methods on how to carry out integrated energy services. In the early stage, the most important approach is to study market patterns through pilot projects.

I. Types of Users

Companies transitioning from the traditional energy sector to integrated energy services can leverage their existing technological and equipment advantages, using current customer equipment operation and maintenance services as a market entry point. Centering on customer needs, they can develop diversified businesses such as energy-use monitoring, energy-saving retrofits, electrification (electricity substitution), and energy stewardship, and actively expand the integrated energy services market. Through early-stage market development and customer research, they can identify customer needs and market patterns. At the initial stage of transformation, the most effective way to enlarge the integrated energy services market is to create a number of reasonably large, model demonstration projects. On the one hand, these projects expand influence and generate demonstration effects; on the other hand, they help explore replicable and scalable standard solutions. At present, representative customer groups and projects mainly include the following categories:

1. Large Public Buildings

Energy stewardship projects for large public buildings are highly representative and demonstrative. Generally speaking, large public buildings are often key government projects and may also be local landmark buildings. During design and construction, such projects typically do not fully consider optimal energy utilization, but are more driven by functional requirements. For these projects, adopting an integrated energy stewardship model—implementing outsourced operation and maintenance of power distribution equipment and energy-efficiency retrofits for central air conditioning—can effectively help users save energy and reduce consumption. Meanwhile, by collecting stewardship fees and investing in and operating photovoltaic carports, charging facilities, combined heat and power (CHP) units, and other equipment, profitability can be ensured.

Large public buildings tend to have relatively stable but rather extensive (inefficiently managed) energy consumption patterns and are in urgent need of professional teams for energy management. Using a bundled energy stewardship model can maximize benefits and offers a certain degree of replicability.

2. Industrial Parks

Representative industrial parks are ideal locations for multi-energy complementary projects. In industrial parks focused on textile and apparel, rubber tires, biopharmaceuticals, data centers, papermaking, and similar sectors, an overall integrated energy service model can be adopted to build regional energy stations. On the one hand, rooftop space in the park can be used to build distributed photovoltaic power stations. On the other hand, intelligent microgrid control platforms can be provided to help enterprises coordinate consumption and integrated management of multiple forms of energy—water, electricity, gas, heat, solar, and storage. In addition, by considering the steam and heating/cooling demands of park enterprises in a holistic manner, energy stations such as biomass power generation and cogeneration (CHP) can be built to ultimately achieve profitability.

In integrated energy service projects for industrial parks, operating an energy management platform and allocating energy among different users can improve equipment efficiency and meet energy-saving and consumption-reduction goals. Because industrial parks are generally large in scale, they also enable rapid market penetration. At the same time, a variety of business models can be implemented by subsystem within industrial parks, allowing effective control of project quality and costs and maximization of benefits. Therefore, the above model has a certain degree of replicability for promoting integrated energy services in industrial parks.

3. Industrial Enterprises

Industrial enterprises such as forging and papermaking companies are traditionally high energy consumers. If the user’s business is performing well, they often have expansion and capacity-increase needs alongside energy-saving requirements. In such cases, on the one hand, it is possible to actively optimize the user’s energy-use scheme and help reduce both project construction costs and the capital burden of the energy system. On the other hand, a BOT (Build-Operate-Transfer) model can be used to build the user’s energy station, while rooftop distributed PV, CHP, and other projects can be implemented under an energy performance contracting (EPC/EMC) model. Power purchase and sales entrustment agreements can then be signed with the user for the later period, allowing profitability to be achieved through a combination of measures.

Practice has shown that adopting a BOT model can effectively ease users’ funding pressure in the construction of power distribution facilities. Traditional energy companies’ extensive engineering experience also ensures effective control over project quality and costs, creating room for profit. At the same time, implementing rooftop PV, CHP, and other projects under an energy performance contracting model, with profit-sharing according to agreement, can secure project returns. The above model provides a useful reference for developing integrated energy services for incremental users.

II. Strengths and Weaknesses

Implementation of pilot projects allows enterprises to gain a deeper understanding of the integrated energy services market. As business progresses, the advantages and challenges of integrated energy services also become clearer:

Strengths: On the one hand, the market outlook is broad. Energy is an indispensable driving force for human development. As operating costs continue to rise, energy consumption has become an increasingly important factor for industrial and commercial users. Many enterprises hope to reduce energy consumption by optimizing their energy use, which provides vast room for the development of integrated energy services. On the other hand, integrated energy service providers possess professional advantages. Individual industrial and commercial users may lack sufficient time and professional talent to transform their energy systems, creating opportunities for integrated energy service companies. These companies may originate from different sectors and often have irreplaceable advantages in talent, technology, and equipment in their respective areas—such as electricity, natural gas, and other energy types—thus providing favorable conditions for differentiated competition.

Weaknesses: On the one hand, mechanisms are not yet fully developed. The business model for integrated energy services is still immature, and mature systems have not yet been formed in areas such as internal organizational coordination, cross-industry cooperation, and technical standards support, which constrains the large-scale and systematic development of integrated energy services. On the other hand, talent structures are relatively homogeneous. As a market-based service for “multi-energy complementarity,” integrated energy services require collaboration among professionals from multiple disciplines. However, each integrated energy service company can only rely on its existing organizational structure and staffing to lead business activities and, inevitably, lacks specialized talent in areas beyond its traditional strengths.

III. Development Approaches

Integrated energy services have broad market prospects and create opportunities for these companies to achieve higher-quality development. They offer a chance to build a holistic service system centered on an energy service platform, helping users break through “energy walls,” establish “bridges” for energy interconnection, and access safer, more efficient, more reliable, and lower-cost energy. The following approaches are worth considering for the development of integrated energy service companies.

1. Integrate Advantageous Resources and Form Multi-Engine Drivers

Faced with broad market prospects, the development of integrated energy services requires proactive initiative and participation. Internally, companies should stimulate team motivation and vitality, strengthen the study and research of the latest concepts and models in integrated energy services, and establish mechanisms for cross-specialty internal collaboration. Integrated energy services should truly be treated as the main business and core competence. For organizations transitioning from traditional energy businesses, it is especially important to break away from dependence on and inertia towards traditional business lines, and to continuously update and advance in terms of mindset, knowledge, and other aspects.

Companies should explore establishing market-oriented incentive and evaluation mechanisms, trying mechanisms such as profit-sharing based on project returns for business development staff, to fully mobilize employee initiative. They can also leverage traditional business marketing channels, incorporating the development of integrated energy service projects (as competitive offerings) into the job scope of key account managers and other traditional business staff, in order to actively expand the market.

Externally, companies should seek win-win cooperation. To address the shortage of professional talent in fields beyond traditional domains, integrated energy service enterprises should, in addition to exploring social recruitment and labor dispatch to bring in multi-disciplinary and multi-level talent, more importantly consider resource integration and external collaboration. For a single enterprise, blindly striving to be large and all-encompassing may be counterproductive, while forming broad, high-quality cooperation with external resources can yield twice the result with half the effort. From a development strategy perspective, selecting certain projects to be carried out in cooperation with third parties—entrusting them to deliver value-added services in specialized energy fields—can help rapidly expand and strengthen the integrated energy services market.

2. Boldly Innovate and Upgrade Services

Innovate business models. By researching and analyzing the characteristics of different customer groups—such as public buildings, industrial parks, and industrial enterprises—companies should accurately grasp customer needs for energy services and segment customer categories. They should flexibly adopt business models such as energy stewardship and multi-energy complementarity based on local conditions, and boldly practice a variety of engineering models such as EMC (energy management contracting), EPC (engineering, procurement, construction), and BOT. Promotion and application of technologies such as the Internet of Things (IoT), big data, and energy storage should be strengthened to provide customized integrated energy solutions for customers. Companies should conduct in-depth research into profit points at key links and key technologies across the entire integrated energy services industry chain, create optimal profit models, and maximize benefits.

Implement “Internet+” energy services. Companies should leverage their resource advantages and widely deploy digital platforms for integrated energy services. In combination with outsourced equipment O&M and energy stewardship services, they should take control of customers’ internal energy-efficiency data resources, carry out multi-dimensional analysis, and deeply mine data value. On this basis, they can provide “Internet+” energy services such as energy-use monitoring and energy-efficiency diagnostics. Companies should establish in-house big data analysis teams, actively learn and master advanced data analysis methods from home and abroad, and use analysis of customer energy-use data to guide the rollout of integrated energy services.

3. Take the Lead in Pilot Efforts and Accelerate Market Development

Carefully build demonstration projects. Companies should accelerate the development of typical demonstration projects, and at the same time keep a close eye on potential customers. Guided by the goals of multi-energy complementary integrated optimization and regional energy internet construction, they should actively apply technologies such as energy storage and IoT to build a number of large-scale, efficient, and technologically advanced integrated energy service demonstration projects. They should proactively distill experience from project implementation, form models that are replicable and scalable, and thus help expand the scale of existing business and improve operating performance.

Actively expand the service market. Companies should seize the opportunities presented by economic recovery and rapid growth in energy demand and accelerate their layout in the integrated energy services market, striving to secure first-mover advantages. They should proactively engage with large energy-consuming enterprises and build a pipeline of potential projects. Communication and cooperation with counties (cities) and districts in various regions should be strengthened. By signing strategic cooperation agreements, companies can clarify cooperation intentions and lay a solid foundation for subsequent market expansion.