2.8 Cooling-as-a-Service

Largely thanks to the focused efforts of the Cooling as a Service (CaaS) Initiative, driven by the Swiss- based Basel Agency for Sustainable Energy (BASE), servitization within the cooling sector is becoming an increasingly popular choice to finance natural refrigerant projects without the barrier of upfront investment.

Under CaaS, end users pay for the cooling service instead of investing in the infrastructure that delivers the cooling. The technology provider owns the cooling system, maintains it, and covers all operational costs including electricity.

The periodic payments made by the end-user customer are fixed-cost-per-unit and based on metered usage; thus, the customer does not bear any risk related to the performance of the cooling equipment. Meanwhile, the technology provider has the incentive to install equipment offering the lowest life cycle cost to make the service more cost-effective.54

CaaS passed the US$50 million (€41.62 million) global investment milestone in late 2020 and is gaining momentum fast as the model is mainstreamed in the HVAC&R sector globally.55 With success stories in a myriad of applications and regions, the model has already enabled natural refrigerant systems in countries such as Nigeria and South Africa.

Business models like CaaS can support the “urgent need” for transition to energy-efficient cooling systems that use cleaner, “ideally natural” refrigerants, according to a recent white paper published by BASE.56

In the report, BASE emphasizes how the long-term mindset created by the CaaS business model promotes sustainable choices within the sector, including the selection of refrigerants.

In March 2020, Sphere Solutions, a major South African manufacturer of transcritical CO2 systems, and its partners met with the five commercial banks in South Africa to discuss cooling-as-a-service as the means for implementing transcritical CO2 refrigeration systems in South Africa.57

Alternative financing solutions such as CaaS eliminates multiple known barriers to the uptake of natural refrigerant solutions, including higher CAPEX and lack of technician skills. It removes this burden from the end user, who now only pays for the cooling used and no longer maintains the system. This makes switching to natural refrigerants a much less daunting exercise for an end user, taking away a significant portion of perceived risk.

As the model gains popularity and more successful case studies emerge from all around the world, CaaS has the potential to drive the widespread uptake of natural refrigerants – in both the developing and developed world.