{"id":955,"date":"2020-03-13T15:29:54","date_gmt":"2020-03-13T15:29:36","guid":{"rendered":"https:\/\/www.caas-initiative.org\/?page_id=955"},"modified":"2020-09-11T10:11:36","modified_gmt":"2020-09-11T10:11:36","slug":"faq","status":"publish","type":"page","link":"https:\/\/www.caas-initiative.org\/faq\/","title":{"rendered":"FAQ"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":[],"acf":{"default_page_content":[{"acf_fc_layout":"text_block","headline":"Frequently Asked Questions","text":"<p>We understand that several characteristics of the Cooling as a Service model might raise questions despite the documentation, which is why we decided to prepare this Frequently Asked Questions page. These questions were collected from questions we received from participants in events, webinars, and workshops. Should you have additional questions, please do not hesitate to reach out to us and we might also publish your question on this page.<\/p>\n","indent":false},{"acf_fc_layout":"accordion_block","title":"","accordion":[{"title":"How does CaaS encourage the use of more efficient cooling equipment?","value":"<p>Operation and maintenance account for about 90 per cent of a cooling system\u2019s life cycle cost. The initial investment is only a small fraction. For this reason, the overall cost for the technology provider to deliver the cooling service will be lower for those technologies that have lower operating costs, which are the most efficient ones.<\/p>\n","links":false},{"title":"Who is the owner of equipment in the CaaS model?","value":"<p>The owner of the equipment is either the technology provider, or the finance provider, depending on the financial structure.<\/p>\n","links":false},{"title":"What is the difference between an EPC (Energy Performance Contract) and CaaS? ","value":"<p>Both models offer common benefits to the user, namely, no up-front investment for the end-user and the systems are optimised to maximise efficiency. However, some of their features are fundamentally different; the major of which is how energy savings are treated.<\/p>\n<p> <\/p>\n<p>CaaS, as developed by BASE, does not tie payments to energy savings. Payments are agreed in advance as a function of actual usage, including operating cost such as electricity. The customer thus has a clear guarantee that he will not be paying more per unit of cooling than agreed, even if the consumption of electricity is higher than expected.<\/p>\n<p> <\/p>\n<p>Energy Performance Contracts (EPC) payments on the other hand are dependent on energy savings. There are two major forms of EPC models: 1) the shared savings model in which the customer does not invest but instead pays a share of the energy cost savings to the project developer; 2) The guaranteed savings model in which the customer invests but is guaranteed that a certain amount of energy savings will be met.<\/p>\n<p> <\/p>\n<p>EPCs, in particular shared savings EPCs, can make it hard to create long-term strategic partnerships between the Energy Savings Companies (ESCOs) and their customers because a periodical negotiation is required to determine the payment based on savings measurements. In this sense, the pricing structure of CaaS is highly transparent and enables such strategic partnerships.<\/p>\n","links":false},{"title":"How long are CaaS contracts typically?","value":"<p>Typical contract durations are between 5 and 12 years. Based on discussions with technology providers, potential customers and investors, this timeframe seems to balance out best the interests of all actors and an accessible price. Too short timeframes would significantly increase the price per unit of cooling, while longer timeframes tend to be perceived as riskier.<\/p>\n","links":false},{"title":"Who is responsible to pay for the electricity costs?","value":"<p>The way we define CaaS within the CaaS Initiative, we consider that the technology provider must bear the costs of electricity. Indeed, including electricity in the fixed rate per unit means that the provider is fully responsible for the costs of operating the system, and the customer is not exposed to the performance risk of the equipment. Therefore, it is in the interest of the provider in installing the equipment with the highest efficiency, as well as offering excellent preventive maintenance to optimise the efficiency of the system and thus reduce the cost of providing the service.<\/p>\n","links":false},{"title":"How do you protect the provider from fluctuations in electricity price?","value":"<p>A portion of the price per unit of cooling charged to the client should be indexed to the electricity price, based on a pre-agreed electricity tier. While technology providers are responsible for the performance of the system, they should not bear the risk of increase in electricity prices, nor benefit from decrease in electricity prices.<\/p>\n","links":false},{"title":"How do you meter cooling consumption for billing?","value":"<p>Measurements are done by several different instruments combined and connected to a monitoring system but typically are done using energy valves, flow and pressure meters, thermostats among others that allow flow, pressure and temperature (\u25b3T) measurements.<\/p>\n","links":false},{"title":"What part of the equipment is included under CaaS: is it only the chiller or also components such as piping and air handling units?","value":"<p>What is included in the service depends on the specific arrangement between the technology provider and the customer. It can be the full cooling plant up to the air handling units, including piping and other smaller components, or it can be limited for example to the chiller system. The delivery point of the service (i.e. up to which point is the technology provider responsible) must be well-defined in the contract.<\/p>\n","links":false},{"title":"Is it possible to integrate passive cooling in a CaaS solution, as well as other additions such as thermal storage or the use of residual heat to provide hot water?","value":"<p>Absolutely. The advantage of Cooling as a Service is that it enables system thinking, in which a solution provider can include passive cooling or other components such as thermal storage in the cooling solution offered to the cooling user. The technology provider has the incentive to install such components in case this reduces the lifetime cost of the plant, because it will make the service more cost-effective. It might even be that agreements with the utilities combined with thermal storage provide for additional revenue generation, resulting potentials in a reduction of the cooling price to the user.<\/p>\n","links":false},{"title":"What if the load remains lower than expected for extended periods? Is the billing purely on cost per TRH or is there also a fixed component?","value":"<p>There are several ways to minimize the risk of low cooling consumption due to exceptionally low occupancy, for instance during the construction period. Various arrangements can be met, including indeed the setting of a minimum fee per month (take or pay arrangement), which should be lower than the expected average demand of the building. In the case study of Colombia presented in the section <a href=\"https:\/\/www.caas-initiative.org\/case-studies\">\u201cCase Studies\u201d,<\/a> MGM Innova Group charges a fixed amount per month for the common areas in Q-Office\u2019s commercial building, while individual offices pay a variable fee per unit of cooling.<\/p>\n","links":false},{"title":"How can the CaaS agreement be off-balance sheet to the cooling user?","value":"<p>In order to ensure that the contract is off-balance sheet for the customer under the International F IFRS16 accounting regulations, the recipient of the CaaS service must be able to characterise the agreement as a service arrangement rather than an embedded lease.<\/p>\n<p>The new IFRS16 have evolved over the years and make it complex for a contract to be considered a service agreement rather than a lease. In the CaaS contract there is no equipment, there is an output from the installation of the equipment, and this is a fundamentally different proposition. The contracts must address country-specific accounting issues and address key aspects such as supervisory control and ownership of the equipment, the net present value of the contract compared to the value of the equipment, and the end of term conditions.<\/p>\n<p> <\/p>\n<p>It is important to clearly separate the equipment delivering the cooling service from the building integrated air distribution systems that may already be owned by the building owner, making it difficult to demonstrate control by the service provider. The standardised CaaS contract allows for this.<\/p>\n","links":false},{"title":"What is the scale we are looking at for implementing CaaS, and is it applicable to the residential sector?","value":"<p>In principle the CaaS model applies to any type of facility. However, transactional costs are higher for smaller projects (residential vs. commercial \/ industrial) so it is required to use financial structures that adapt to that need, such as pooling a series of projects that make it more attractive to the investors. The actual minimum ticket size of an investment will depend on the investors’ criteria, but by bundling projects it is possible to cover a number of smaller investments with a single investment vehicle by reaching a larger total investment.<\/p>\n","links":false},{"title":"What is the CaaS toolkit?","value":"<p>BASE has made the CaaS toolkit publicly available this year. This toolkit includes a standardised CaaS contract, \u00a0a pricing model, as well as explanatory material for implementers and adopters.<\/p>\n","links":[{"link":{"title":"Toolkit","url":"https:\/\/www.caas-initiative.org\/tools","target":""}}]},{"title":"Did you perform a detailed economic analysis of the CaaS model compared to Business as Usual and does the end-user really save on operating costs?","value":"<p>Yes, we have performed an in-depth analysis of the CaaS model compared to BAU together with the Global Innovation Lab for Climate Finance and BASE. You can find it on <a href=\"https:\/\/www.climatefinancelab.org\/project\/cooling-service\/\">The Lab<\/a> website or on the <a href=\"https:\/\/energy-base.org\/app\/uploads\/2020\/03\/10.CaaS_Instrument-Analysis-Paper_FINAL_09.17.19.pdf\">BASE<\/a> website. End-users do save on operating costs because the total cost of ownership of more efficient systems is lower compared to systems that are less expensive to purchase but consume more energy while operating due to technology limitations and improper maintenance. In the CaaS model, the equipment remains under the ownership of the technical provider, and the operation and maintenance of the cooling system is optimised. This leads to lower energy consumption and, avoided corrective maintenance, and slower equipment performance degradation, and hence improved equipment life-cycle cost. It is a win-win for both the equipment provider and the business owner, while reducing the impact on the environment.<\/p>\n","links":false},{"title":"The CaaS model was endorsed by the Global Innovation Lab for Climate Finance in 2019. What does this mean?","value":"<p>The Global Innovation Lab for Climate Finance is a highly reputable group of institutions and investors in government, the private sector, development finance, and philanthropy. The Lab endorsed CaaS as one of the\u00a0most\u00a0innovative actionable and scalable financial instruments of 2019 among more than 250+ financial instruments. The CaaS team was invited at the official endorsement meeting during the New York Climate week (See news item <a href=\"https:\/\/www.caas-initiative.org\/news\/caas-has-been-endorsed-by-the-lab\/\">here<\/a>) and received highly positive feedback. The endorsement brings significant exposure and reputation to the CaaS model, as it was stress-tested and analysed carefully by analysts, experts and senior advisors from the Lab.<\/p>\n","links":false},{"title":"How does CaaS position itself during the COVID-19 situation?","value":"<p>The crisis causes difficulties for investors, technology providers and potential CaaS adopter to advance with discussions and negotiations, because of the uncertainty of the upcoming months and many businesses have closed at least partially and priorities have shifted to address the crisis. However, CaaS stands out as a particularly interesting solution during this health crisis, since many companies are now more than ever cash-constrained, needing to invest elsewhere, while at the same time looking for means to reduce their operating expenses.<\/p>\n","links":false},{"title":"How is the COVID-19 situation impacting the CaaS Initiative?","value":"<p>The key goals of the CaaS Initiative 1 and 2 are:<\/p>\n<ul>\n<li>The creation of a toolkit to enable CaaS, with a standard CaaS contract, pricing model, template financial structures and explanatory material.\u00a0 The development of the toolkit\u00a0is\u00a0not being\u00a0affected by\u00a0the crisis.<\/li>\n<li>The support of companies companies in its implementation across the globe.\u00a0Travels\u00a0to support implementation projects have been postponed\u00a0but significant progress is being made virtually in supporting the companies to tailor the CaaS tools to their needs and to approach customers and investors. Delays in actual contract signatures and project implementations are expected.<\/li>\n<li>Awareness raising and capacity building about the model. All physical awareness raising activities such as presenting the model at recognised events are postponed or cancelled until further notice. To mitigate the impact of the latter as much as possible, we have significantly increased our online presence through webinars and are planning other publications such as podcasts and online interviews. The organisation of match-making events (first of which successfully took place in South Africa just before the crisis unfolded) to stimulate the adoption of the model globally will not be possible in the next months. Despite being a challenging situation, we are seeing this as an opportunity to use new tools in order to create virtual communities. We have started planning the Cooling as a Service Global E-Summit on Cooling as a Service and are working on other creative ways to engage possibly even larger audiences.<\/li>\n<li>The setting up of the \u00abCaaS Alliance\u00bb. The CaaS Alliance is growing despite the crisis. Some contributions\u00a0from alliance members are being\u00a0shifted from physical to virtual, for example\u00a0events from the World GBC that had to be cancelled and replaced by virtual workshops.<\/li>\n<\/ul>\n","links":false}]}],"page_title":"FAQ","page_subheading":"","page_text":"","add_link_button_section":false},"_links":{"self":[{"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/pages\/955"}],"collection":[{"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/comments?post=955"}],"version-history":[{"count":5,"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/pages\/955\/revisions"}],"predecessor-version":[{"id":1437,"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/pages\/955\/revisions\/1437"}],"wp:attachment":[{"href":"https:\/\/www.caas-initiative.org\/wp-json\/wp\/v2\/media?parent=955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}