Cooling as a service: unlocking demand for clean and efficient cooling

Panel: 5. Business models, finance and investment

Authors:
Thomas Motmans, BASE - Basel Agency for sustainable Energy, Switzerland
Daniel Magallón, BASE - Basel Agency for Sustainable Energy, Switzerland
Carla Della Maggiora, BASE - Basel Agency for Sustainable Energy, Switzerland
Dimitris Karamitsos, BASE - Basel Agency for Sustainable Energy, Switzerland

Abstract

According to the IEA's future of Cooling report, the demand for air-conditioning is set to triple by 2050, consuming the equivalent of one third of the global electricity demand today, and corresponding to an opportunity of 6.9 USD trillion over the next 30 years. However, despite the clear economic benefits of energy efficiency for building and business owners, investments in clean and efficient cooling are not happening at the scale expected. The key barriers are the higher upfront cost of more efficient equipment, a lack of trust in the promised savings, and a preference of businesses to invest in their core business.

Together with the Kigali Cooling Efficiency Program, the Basel Agency for Sustainable Energy (BASE) is leading the Cooling as a Service Initiative to mainstream the adoption of the innovative business model Cooling as a Service (CaaS).

This model overcomes these key barriers through a servitisation strategy, where instead of investing in the equipment, the building owner only pays the cooling service for every unit of cooling consumed. The technology provider owns the cooling system, maintains it, and covers all operational costs including electricity and water. Since the fixed price per unit of cooling includes the running costs, it is in the provider’s own interest to install the equipment with highest efficiency as well as to offer excellent preventive maintenance to reduce the cost to deliver the service.

Through the initiative, BASE is supporting, inter alia, the development of tools to enable the model (e.g. CaaS contracts, pricing tools, financial structures); the implementation of pilot projects in Latin America, Africa and Asia; the setting up of the Cooling as a Service Alliance; the organisation of matchmaking events between providers, clients and investors. BASE is also organising the Cooling as a Service Global E-Summit planned for the 1st of December 2020.

This year, BASE is also starting a project to scale up "Energy-Efficient Equipment as a Service" funded through the European Commission's H2020 Research and Innovation Programme. The project will be implemented in Spain (partner: ANESE), Belgium (partner: AGORIA) and the Netherlands (partner: Innoenergy) with the objective to develop and deploy the servitisation model and a financial structure accelerating the market adoption of energy-efficient equipment (beyond cooling).

We believe that CaaS and servitisation in general is a true game-changer, and we are keen to spread the word about this business model innovation opportunity and share our lessons learned.

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