Baridi Baridi Launches CaaS Subscription Offering Air-Conditioning as a Service
The goal of the company’s services is: “Making life and society happy now and in the future”.
The implementation of the innovative service business model originated from an experience in Tanzania where 7 out of 10 purchased ACs are not being used, leading to a high percentage of stranded assets. This is because cheap and poor-quality ACs are available on the market, which often break-down – and as repair techniques are immature, these assets are left unused. Moreover, these cheap models are not only prone to failure, but also have low energy efficiency, resulting in high electricity costs for customers and a negative impact on the environment.
High electricity bills are a serious problem for the people of Tanzania. It is said that the monthly electricity bill for small shops is about $65, which is a heavy burden for people, considering the average monthly income of university graduates is only around $190.
The majority of ACs in Tanzania are non-inverter AC with R22 refrigerant – an ozone-depleting refrigerant with an extremely high GWP. R22 has already been, or is going to be, restricted in most countries. However, Tanzania’s energy conservation regulations are lax, which yields to products with poor environmental performance being distributed without being regulated.
It is due to the classic “one-off sales” business model, which provides cheap-to-purchase systems but with high consumption costs, that the Tanzanian market is full of such AC systems. This classic business model often does not even include proper installation, and lacks any after-sales service network. This also makes it harder for local technicians to improve their skills or receive any technical training.
“Only for the benefit of the present, we are sacrificing the future global environment which puts a heavy burden on people’s lives in the form of high electricity costs,” said said Hiroki Asada, CEO at Baridi Baridi Inc. “For me, a ‘zombie air conditioner’ that is not running, is the embodiment of the belief of ‘As long as it’s okay for now’. So, I decided to drive this out,” he said in a blog post.
Improvements thanks to CaaS
To effectively solve the above challenges, Baridi Baridi Inc. started implementing the Cooling as a Service model, which focuses on four critical points to be improved.
1. High electricity bill
This can be reduced by about 50% by simply switching the non-inverter AC commonly used in Tanzania to an inverter AC technology with higher energy efficiency.
2. High GWP of R22
Avoiding the use of R22 refrigerants: The systems implemented use a Daikin inverter AC with R32 refrigerant, which is more energy efficient but also environmentally friendlier due to the lower GWP of R32. Furthermore, the company is also considering implementing a “refrigerant recovery system” to collect the refrigerant that would otherwise be released into the atmosphere.
3. Poor skilled technicians
The teams will employ local technicians who have learned about refrigeration and air conditioning at vocational schools This will establish their own local service network for installation and repairing of systems – the latter to avoid the risk of stranded assets when these need servicing due to technical flaws.
4. High upfront cost of Energy Efficient systems
The strong market barrier of the higher upfront investment (equipment cost) of energy efficient systems is removed by charging a subscription fee to the end users, who instantaneously benefit from the greater monthly electricity savings. Because of the high durability of the product and regular maintenance, even if the device is free of charge, it will be profitable in a few years through continuous billing. The customers pay for the services using a billing technology via smartphones, while the solution provider keeps ownership of the system and is responsible for the installation, operation, and maintenance. Maintenance includes filter cleaning once a month, AC cleaning with water pressure pump once a year, refrigerant refill, and AC repairs unless the default is the customer’s fault.
Competing against low energy-efficient systems with high GWPs
The goal of the Air conditioning Cooling as a Service model applied in Tanzania is for people to gain access to better and more sustainable solutions on the market. The business model makes the latest technologies competitive against energy inefficient systems using high GWP refrigerants. Even though the technology provider needs to be more patient for their return on investment, CaaS results in a strong recurrent revenue business model, with opportunities to build excellent customer relationship ties, and a quicker market expansion for better technologies. This makes the business model meaningful for a startup company that is aiming to long-term benefit their business, the people, society and environment.
Baridi Baridi Inc and CaaS today and going forward
Baridi Baridi started the demonstration tests in Tanzania in November 2019. 20 AC units were installed in Dar Es Salaam, the biggest city of the country. Baridi Baridi feels that they have been able to accurately grasp people’s needs.
Since the demo tests started, customers have highly appreciated the higher quality of customer service and lower electric bills:
- On average, end-users saw their daily electricity charge drop by 50%.
- When defaults occur, systems are repaired or if needed, replaced – always leaving the customer satisfied with a functioning solution. Whereas in the past, when systems were irreparable, devices were just left abandoned.
Baridi Baridi is planning a full-scale operation in 2021. Through the expansion of their project, the company will also work for development of the Tanzanian HVAC industry through technology transfer and employment expansion.
More about Baridi Baridi: Baridi Baridi Inc. | EN