Kaer Case Study

This air-condition as a service model focuses on lowering the rate of energy consumption.

In Kaer Water's air-conditioning as a service model, building owners purchase chilled water from Kaer at a fixed rate dollar per refrigerant ton hour and pay only for what they use. Kaer then takes over a building’s entire air conditioning system – inclusive of the chillers, cooling towers, pipe work, operations and maintenance. Kaer rebuilds or redesigns the system and takes on all future costs related to its operations and maintenance, including the bills for water, electricity and repairs. Kaer focuses on lowering the rate of energy consumption.

If India, Indonesia and Brazil used as much energy for air conditioning per person as the United States, all the electricity they generate would be insufficient to power their cooling systems, calculates Stan Cox, senior scientist at the Land Institute in Salina, Kansas.1 In fact, they would also need every watt produced by Mexico, Britain and all of Africa.2

It’s a hypothetical to take seriously. Global demand for indoor cooling is surging, driven by rising temperatures and a rapidly expanding middle class. By 2100, climate change alone could push demand up 72%, according to the Netherlands Environmental Assessment Agency.3 In short, the world needs to rethink how we stay cool.

Singapore-based company Kaer, is seeking to “revolutionise” this aspect of building management by combining advanced technology with a breakthrough business model.4 Under its most successful package, Kaer designs, owns and operates a building’s chilled water plant. Building owners are spared upfront costs, instead paying Kaer a fixed dollar per refrigerant ton hour rate5 – a simple metric that helps companies understand their true air conditioning costs.6

Kaer also uses big data and machine learning to optimise its systems, and achieves cost savings of up to 70% through reduced consumption and efficient management.7 When the company took over cooling at INSEAD Business School (Singapore campus) in 2013, it cut campus energy use by 35% in six months by simply optimising the air-conditioning system.8 To make sense of a business model that lowers demand for the product it sells, Kaer uses a price structure where any savings made are split between the client and the company.

For the moment, Kaer only works in Singapore and Malaysia. But its potential market is vast. Already air conditioning accounts for around 40% of Mumbai’s power consumption, for example.9 Even in cooler Britain, almost 20% of total electricity used goes into air conditioning and refrigeration – a number set to rise along with global temperatures.10

References

1 Smith, M. (2015) “As the World Prospers, More People Are Getting Air Conditioning — and That's Really Bad for the Climate”. Vice News, 29 April. https://news.vice.com/article/as-the-world-prospers-more-people-are-getting-air-conditioning-and-thats-really-bad-for-the-climate. 

2 Ibid. 

3 Isaac, M., van Vuuren, D. P. (2009) “Modeling global residential sector energy demand for heating and air conditioning in the context of climate chang.e” Energy Policy, Volume 37, Issue 2, February, Pages 507–521. http://www.sciencedirect.com/science/article/pii/S0301421508005168. 

4 From private company interview

5 Ibid.

6http://www.kaer.com/services 

7 From private company interview

8 Ibid.

9 Henley, J. (2015) “World set to use more energy for cooling than heating”. The Guardian, 26 October. https://www.theguardian.com/environment/2015/oct/26/cold-economy-cop21-global-warming-carbon-emissions.

10 Ibid.