Cooling as a service model
Supplied image of the winning enterprise, ColdHubs.

Cooling as a Service initiative has unveiled the winner of its Cooling as a Service (CaaS) Prize, aimed at stimulating new models for sustainable cooling, in what is set to become a $1.5 trillion market over the next 10 years.

The Cooling as a Service initiative is a global effort launched in early 2019 by the Basel Agency for Sustainable Energy (BASE) to scale up investments in clean and efficient cooling by mainstreaming the Cooling as a Service business model.

The BASE is a Swiss not-for-profit foundation and specialised partner of United Nations Environment which is pioneering the CaaS model.

ColdHubs, the winner of the CaaS Prize, is a Nigerian social enterprise that uses a simple CaaS model, which they call pay-as-you-store, to enable farmers to pay for cold storage for food without having to sign a long-term contract.

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Nnaemeka C. Ikegwuonu, CEO at ColdHubs said: “The CaaS model is transforming the ability of African farmers to access essential high-quality cooling without the previously unassailable barrier of upfront costs.

“Not only is this extending the shelf life of produce from two days to more than 21 days – thereby improving farmers’ income – it is also slashing emissions and creating new jobs for women in the service sector – the whole concept is a complete no brainer.”

According to a press release, last year, Coldhubs’ solution saved 20,400 tons of food from spoilage, increased the household income of its customers by 50% by eliminating food loss, created 48 new jobs for women, and saved 462 tons of CO2 emissions.

Mainstreaming Cooling as a Service in this sector can massively contribute to address food spoilage facing 470 million smallholder farmers globally.

“Inexpensive cooling systems are cheap to buy but come with a plethora of hidden financial and environmental costs: high energy use, frequent breakdowns, and the use of harmful synthetic refrigerants,” noted Thomas Motmans, sustainable energy finance specialist at BASE.

Motmans continued: “The climate emergency requires us to rethink our approach to cooling from the bottom up, to tackle emissions, cut waste and improve livelihoods – all while keeping costs low for end users.

“Fortunately, the Cooling as a Service business model is providing a blueprint to do just that, establishing a service-based model for cooling that will transform a massive global market for cooling customers, technology manufacturers and investors.”

Tackling polluting cooling systems

Cooling is a massive challenge in tackling the global climate emergency. Air-conditioning alone is said to account for 10% of global electricity consumption – equivalent to 2.5 times the electricity use of Africa.

As the climate warms, economies grow and global population increases, cheap, inefficient and polluting chilling systems are becoming more prolific, especially in fast-developing economies in Africa, Asia and the Americas.

Growth in the number of these systems could see electricity demand from refrigeration triple by 2050 – equivalent to a third of all electricity use today.

BASE noted that these systems also use synthetic refrigerants, such as hydrochlorofluorocarbons (HFCs) – which have a global warming potential 10,000 times higher than carbon dioxide on average – and have shorter lifecycles, presenting an enormous environmental and sustainability challenge worldwide.

Reducing HFC consumption by 80% by 2047 would avoid 0.5oC of global warming by the end of the century.

The Cooling as a Service model

Cooling as a Service is a game-changing business model that makes efficient and high-tech cooling competitive with cheaper, less efficient systems, through a pay-per-use model.

Users do not purchase equipment, therefore avoiding the upfront costs of expensive modern chilling systems. Instead, users pay a monthly fee, based on the amount of cooling used.

This fee includes maintenance, repairs, and running costs – such as electricity and water – reducing the ‘headache’ of ongoing operation and ensuring guaranteed uptime of the cooling system.

Because manufacturers maintain ownership of the refrigeration technology, it is in their interest to provide state-of-the-art, reliable systems that require minimal operation and maintenance.

It also makes business sense for manufacturers to provide the most efficient technology because utilities, such as electricity and water, make up 80% of lifetime costs.

According to BASE, cutting-edge chilling systems can be up to 45% more energy-efficient than cheaper models and use more sustainable and natural refrigerants with low or no global warming potential – such as ammonia, CO2, propane or water.

As a result, this service model can save users money and dramatically cut emissions, says the organisation.

Kevin Lane, an energy analyst at the International Energy Agency, said: “With rising incomes, air-conditioner ownership will skyrocket, especially in the emerging world. Growing electricity demand for this air conditioning is one of the most critical blind spots in today’s energy debate. We need to deploy innovative new solutions to avoid a ‘cooling crunch’ over the next 30 years.”