South African cooling industry sees potential in CaaS

The CaaS Matchmaking event in Cape Town was the first of its kind, exceeding expectations with stakeholders from all over the country gathering to discuss opportunities.

The first-ever Cooling-as-a-Service (CaaS) workshop in Cape Town, South Africa, was a great success, drawing local providers, end users and funders of HVAC&R technology to discuss the opportunities and challenges with this game-changing servitisation business model.

CaaS is an initiative lead by Switzerland-based Basel Agency for Sustainable Energy (BASE) along with the Kigali Cooling Efficiency Program (K-CEP) and endorsed by the Global Innovation Lab for Climate Finance. The model overcomes key market and financial barriers to increase and accelerate the adoption of energy-efficient cooling technologies and the use of climate-friendly refrigerant gases.

To accelerate the uptake of this technology globally, the BASE team headed to Cape Town on March 9 to help relevant South African stakeholders learn more about CaaS and how to implement it. The event was so well attended that extra chairs had to be brought in to accommodate all the parties interested in learning more about the model.

“We are highly satisfied with this first CaaS matchmaking event, which attracted more than 75 participants and resulted in insightful discussions,” said Thomas Motmans, Sustainable Energy Finance Specialist at BASE. “South Africa has a strong cooling sector, and the inputs received during the workshop will enable us to better support companies in adopting the business model.”

After a fun networking game to break the ice, Motmans officially kicked the event off with a presentation on how CaaS works, speaking more about servitisation as a global trend. He discussed the benefits of such a model in HVAC&R, not only for funders and technology providers, but also for end users.

The floor was then given to a panel of experts to discuss opportunities and challenges related to the implementation of the model. The panel comprised Marcel Steinberg, CEO Sphere Solutions; Johnathan First, Lead Specialist Innovation Group, Development Bank of South Africa (DBSA); and Marius la Grange, President of the South African Institute of Refrigeration and Air Conditioning (SAIRAC).

Sphere Solutions is a local provider already implementing CaaS in South Africa and Steinberg shared some experiences on how this works. DBSA’s First looked more at the finance side of things, discussing the potential of the CaaS model for South African investors. He highlighted that there is global funding available for sustainable solutions, stating that funders will no longer fund climate “un-friendly” technology. SAIRAC’s La Grange then looked at the potential of the model for the industry.

The workshop part of the event commenced after a networking break, engaging the audience in a discussion about the key opportunities and challenges related to CaaS, as well as whether they perceive South Africa to be ready for the model.

Attendees broke into smaller groups to discuss the questions posed by the BASE team, giving feedback that was then collated and summarised as valuable take-homes. The session was very interactive and stakeholders openly shared concerns and suggestions to help better adopt the model specifically in the South African market.

The audience identified that CaaS offers important opportunities for providers, clients and investors alike. The attendees concluded that for providers, CaaS unlocks the deployment of technology of which the upfront cost could otherwise be prohibitive, locks in revenue streams from maintenance, and enables the leverage of Internet of Things (IoT). For investors, CaaS offers the opportunity to deploy green funding. For clients, the model enables the implementation of a more expensive and better performing system and simplifies compliance with indoor air quality related requirements.

Some key challenges were also raised by the discussion groups. Building trust between providers and clients was pointed out as the backbone of the success of the model. For clients to enter into such long-term commitments in South Africa, the reliability of contractors will be key. Sometimes customers might be reluctant to give away control of their cooling systems, especially when the value of potential product loss in case of cooling disruption is large. More generally, this requires a shift in mindset. The need to reach consensus on a unit of charge was raised by potential service buyers present in the room, as well as the need to make the service highly customer centric.

“Overall the attendees were positive in trusting that South Africa is ready for Cooling as a Service,” said Dimitris Karamitsos, Senior Business Developer at BASE, who was moderating the session. “Indeed, the country has a world-leading refrigeration sector, and high electricity prices make the CaaS model more attractive to cooling users.”

This was the first of various global CaaS matchmaking events that will be scheduled this year, pending the current global health situation. Make sure to subscribe to the CaaS newsletter to get all the latest updates as they become available.