Dimitris Karamitsos of BASE sees great potential for the CaaS model to aid in post-COVID-19 recovery.
Dimitris Karamitsos, BASE
The cooling-as-a-service (CaaS) servitization model works by allowing end users to pay only for the cooling they actually use, without the need for a large up-front investment.
One of the primary supporters of the CaaS model is Switzerland-based Basel Agency for Sustainable Energy (BASE), the leader of the Cooling as a Service Initiative along with the Kigali Cooling Efficiency Program (K-CEP). The Initiative aims to decrease energy consumption and GHG emissions from cooling by promoting a pay-per-service mode to finance efficient cooling systems like those using natural refrigerants.
BASE has organized a Cooling-as-a-Service Global E-Summit, a free online event that will take place Tuesday, December 1. It will feature business leaders employing the pay-for-service cooling servitization model, including case-study panels from Latin America, Asia, and Africa – many of which include natural refrigerant installations.
Registration is mandatory; to find out more and book your spot, click here.
To get a sense of where the CaaS model is going next year, Accelerate spoke with Dimitris Karamitsos, Senior Energy Efficiency Business Developer for BASE.
//Accelerate: How will the CaaS servitization model influence the number of natural refrigerant installations in 2021?
Dimitris Karamitsos: We expect servitization to accelerate the adoption of natural refrigerant installations in 2021, as these cooling systems are typically characterized by higher upfront costs but lower operating costs thanks to improved energy efficiency, and maintenance and operation cost savings. The model is a market mechanism that naturally promotes the most efficient systems, simply because the life cycle cost of more efficient systems is lower. As long as the total cost of ownership of natural refrigerant installations are indeed lower than conventional technologies, taking into account the operation and disposal phase, the market will move to those solutions. Indeed, providers have no incentive to offer CaaS with a cheaper and less-efficient system for which they then need to cover all the operating costs.
//Accelerate: What is the CaaS Initiative planning in 2021?
DM: The CaaS Initiative started in 2018 with the purpose of mainstreaming the adoption of the business model by building the required tools (pricing model and standardized contracts) and creating the market momentum for the market players to adopt the model into their operations. To support in accelerating the latter, BASE created the CaaS Alliance, which today has more than 50 members on board supporting the model. BASE has also raised market awareness through articles, webinars, videos, case studies, and more. The CaaS Initiative has also been supporting the implementation and promotion of pilot projects across various industries and sectors, from commercial and industrial air-conditioning and refrigeration to agricultural and medical cold chains.
Through 2021, the CaaS Initiative will finalize preparing the ground to ensure the CaaS model grows sustainably throughout actors on the market: solution providers, investors and end users.
BASE, the not-for-profit organization behind the initiative, is pursuing several other projects and opportunities to mainstream the servitization business model in – and beyond – the cooling sector.
BASE also sees an important opportunity to tailor the CaaS model further to address issues like vaccine distribution, and to integrate the business model with digitalization and data solutions to strengthen agricultural supply chains.
//Accelerate: What is the opportunity for servitization in 2021 in relation to COVID-19 recovery?
DM: Servitization with CaaS and beyond represents an effective way to accelerate the investments in energy efficiency needed for achieving a low-carbon economy, while also helping the economy to recover faster from the COVID-19 pandemic.
Indeed, CaaS stands out as a particularly interesting solution during this health crisis, since many companies are now more than ever cash-constrained, needing to invest elsewhere, while at the same time looking for means to reduce their operating expenses.
At BASE, we have seen a massive uptake of interest and demand for energy efficiency through the pandemic. The servitization model is a key enabler of bringing clean and sustainable technologies faster to the market, while increasing savings of end users due to better efficiency and utilization rates, hence enabling them to re-accelerate their growth post-COVID-19.
//Accelerate: What cooling servitization trends can be expected in 2021?
DM: In 2021, we expect a growth in servitization within the cooling, lighting, heating, and solar photovoltaics (PV) sectors – but also in e-mobility.
Within the cooling sector, we trust CaaS will positively impact the market by drastically increasing the update of cleaner and more energy efficient solutions. We believe the model will create a strong market barrier towards “dirtier,” less energy-efficient systems.
Within cooling, we are currently aware of approximately US$50 million worth of HVAC&R assets already under management of the CaaS model (excluding district cooling plants). We expect this to grow rapidly with large amounts of new players working on the implementation of CaaS.
Within the next three years, we expect approximately US$300 million of operating assets under management under the CaaS model (cumulative); within the next five years, US$1.5 billion; and within the next 10 years, US$8 billion.
“The model is a market mechanism that naturally promotes the most efficient systems."
– Dimitris Karamitsos, BASE