Cooling as a Service Addresses Demand and Grows Efficiency in LMI Countries

During the next 30 years, the world is expected to see an unprecedented growth in demand for cooling. According to the International Energy Agency, energy demand for space cooling is anticipated to more than triple by 2050 as more than 75% of households acquire an air conditioner. Most of the new demand comes from low and middle income (LMI) countries like China, India, and Africa. Cooling as a service has the potential to meet this demand while encouraging energy efficiency and affordability for the consumer.

Cooling as a Service Opens New Markets

The energy as a service market has so far been largely limited to wealthy nations in North America and Europe. However, the model is growing in adoption around the world. Various stakeholders are implementing as a service solutions to open new markets and contribute to efficiency and sustainability. Cooling is no exception, as demand for air conditioning accelerates around the world.

In June, Daikin, a Japanese multinational air conditioning manufacturing company, announced a partnership with Electrical Power Service WASSHA in Tanzania to deliver air conditioning as a service. The goal of the partnership is to commercialize a subscription system to air conditioning, where users pay a fee for using the equipment. The partnership enables lower income groups and small businesses to use air conditioning units while subscribing to it as a service. The companies plan to expand the model around the world.

In another example, Basel Agency for Sustainable Energy and Kigali Cooling Efficiency Program have been running cooling as a service programs in Latin America and Africa for the past couple of years. The program targets commercial buildings. A recent example is an office space in Medellin, Colombia, which saves an estimated 1.2 GWh in energy and 440 tons of CO2e in greenhouse gas emissions annually as a result of the service agreement.

Advantages of as a Service Models in LMI Countries 

Cooling as a service has the potential to help meet the demand for air conditioning in LMI countries while improving efficiency. The cheapest air conditioners on the market tend to be least efficient and most purchased around the world. High performing units are often out of reach for many consumers due to price barriers and a lack of energy efficiency policy at the government level.

Providing cooling as a service eliminates price barriers on more efficient equipment. Consumers no longer pay large sums upfront or take on loans to enjoy cooler spaces, instead paying a service fee commensurate with metered usage. Meanwhile, providers are incentivized to provide higher performing units to reduce life cycle costs.

The customer also does not carry any risk related to equipment performance or maintenance with the technology provider assuming responsibility for proper operation. This is especially important in markets that do not have high technological expertise around the operation and maintenance of air conditioning equipment.