Smart Joules Pushes CaaS in India with BASE
BASE provided Smart Joules with financial and technical support to develop a strong business model, a contractual framework, and a pricing model to help bring CaaS to the Indian market.
The challenge
India’s demand for cooling is increasing rapidly and is consuming significant amounts of electricity. In 2016, space cooling in Indian buildings consumed 91 TWh. If India’s energy consumption for space cooling represented a country on its own, it would be the 34st most energy-demanding nation on the planet. This consumption is set to triple by 2050.
India has more than 3,000 cooling degree days, a measure representing the number of degrees that a day’s average temperature is above the threshold above which buildings need to be cooled (18°C). This is among the highest in the world. Air conditioning currently accounts for about around 40–60 per cent of peak power demand in summers in the major Indian cities of Mumbai and New Delhi.
The solution
“There is a clear need for innovative financial solutions for Indian business and building owners to access clean and efficient cooling,” explained Thomas Motmans, Sustainable Energy Finance Specialist at BASE. “This can enable these businesses to reduce their operating costs while minimising the impact on climate change of the much-needed cooling solutions.” In this context, BASE offered support to Smart Joules, an Energy Service Company based in New Delhi, to develop the Cooling as a Service (CaaS) model for India.
Smart Joules has previous experience in the hospital sector with a different model based on shared energy savings. Over their five-year operating history, Smart Joules built capabilities and expertise to produce the most efficient and lowest cost central air conditioning through a combination of optimum system design, equipment selection, and continuous operational optimisation with the help of their IoT platform technology.
Smart Joules then turned to K-CEP and BASE in 2019 to receive support for the development of the pay-per-use business model CaaS, as it better reflects the needs of the market. According to Arjun Gupta, CEO at Smart Joules, the CaaS model will allow Smart Joules to multiply their impact beyond the hospital sector, and fuel their future growth.
“Cooling as a Service aligns the incentives between ourselves and our customers, setting strong foundations for long-term strategic partnerships,” said Gupta “We operate the cooling system and take all performance risks. The customers pay for the service per unit of cooling in a transparent price structure, and don’t need to worry about owning, maintaining and operating an asset anymore.”
BASE provided Smart Joules with financial and technical support to develop a strong CaaS business model, a contractual framework and a pricing model to bring CaaS to the Indian market. Since then, Smart Joules has approached several sectors with the CaaS business model (under the name ‘JouleCOOL’), including hospitals, IT parks, pharmaceutical companies, owner-occupied office buildings, and cinema theatre chains. Gupta said: “We have received overwhelming interest in the model from senior management in companies with very large air conditioning footprints across the country.”
Smart Joules is currently developing the first CaaS projects across sectors. “We believe this model will become our dominant engine for growth once success is proven through these initial projects,” said Gupta. Target clients have noted reduced operating costs and capital conservation as the main reasons for their interest in the CaaS model, with enhanced levels of reliability, predictability, simplicity and sustainability as additional benefits.
Smart Joules has not only been able to generate interest for this model among large end users, but also among the investment community. They have recently closed their first round of equity investment and are expecting to close an additional round from recognised venture funds. “We are thankful to BASE for their support at a critical juncture and their continued advisory support and other efforts to help make our CaaS model successful,” concluded Gupta.