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Home » BASE launches the Servitisation for Energy Transition Alliance

BASE launches the Servitisation for Energy Transition Alliance

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As per the 2020 projections of the Oxford Martin School, nearly 73.2 percent of all anthropogenic greenhouse gas (GHG) emissions stem from energy production and use, placing the energy sector at the heart of building global momentum for achieving the objectives of the Paris Agreement and the 2030 Agenda.

The structural changes and systems thinking stirred by servitisation unlock the circular economy potential. Image credit: Caas-Initiative.

The structural changes and systems thinking stirred by servitisation unlock the circular economy potential. Image credit: Caas-Initiative.

More specifically, the seventh of the Sustainable Development Goals (SDG 7) set up by the United Nations, calls upon the international community to work towards universal access to affordable, reliable, sustainable, and modern energy for all, along with urgent action to increase the share of renewable energy substantially and double the rate of improvement in energy efficiency.

While renewables undercutting fossil fuels as the cheapest source of power over the last decade has contributed to a reduction in the energy-related emissions across many countries, the current uptake of renewables, promotion of energy efficiency, and a convergence of the two has reached a state of inertia. In other words, their deployment is not advancing fast enough globally to bend the emissions curve to the extent required to limit global warming to 1.5 degrees Celsius by 2100.

Servitisation is the way forward

The Basel Agency for Sustainable Energy (BASE) and its partners (together, referred to as the steering committee) have launched the global Servitisation for Energy Transition (SET) Alliance, a collective effort to galvanise action on financing a paradigm shift towards low-carbon energy systems, green and circular economies, and ultimately sustainable development.

The SET Alliance stands on the foundation of the work completed by the Cooling as a Service (CaaS) initiative and the Efficiency as a Service (EaaS) projects, both led by BASE since 2019 and 2020, with the support of the Clean Cooling Collaborative and the European Commission, respectively.

The SET Alliance prides itself on an esteemed steering committee, comprising of non-governmental organisations, private sector entities, and academic institutions: (in alphabetical order) Aston Business School, ATMOsphere, Energy Partners Refrigeration, KAER, The Advanced Services Group, and the University of Oxford.

Reaching energy security worldwide through efficient and climate-resilient energy systems can help businesses, governments, and other actors meet their economic objectives without compromising on their sustainability commitments. Despite the proven benefits of clean and efficient technologies, their uptake remains fettered by strong demand-market barriers, from higher upfront costs and performance risks vis-à-vis conventional technologies to limited knowledge of maintenance and customers’ competing investment priorities.

However, servitisation holds the promise to overcome these barriers effectively. Servitisation refers to an innovative business model of making energy-efficient systems more widely affordable and accessible, where customers engage with solutions on a pay-per-use model (focused on OPEX) rather than purchasing the physical asset (traditional CAPEX model).

Since technology providers retain the ownership and maintenance responsibilities, the end-users are spared the costs of acquiring and operating modern, efficient systems and any risks associated with them. Meanwhile, the lure of a model that allows users to benefit from improved performance and reduced emissions without any hassle helps providers of climate-friendly and energy-efficient technologies broaden their consumer base through competitive differentiation.

As a result, servitisation aligns with ‘climate prosperity,’ a vision of how countries can become prosperous as part of their transition to net-zero.

The servitisation model lends itself to applications across diverse sectors and country contexts. BASE and its network have supported and gained first-hand experience implementing it in industries, residentials, hotels, real estate, datacentres, health care facilities, and food production in the past years. These sectors benefit from changing their heating, cooling, lighting, compressed air, and mobility systems to more efficient technologies availed against a fee for every metered unit of service consumed.

The structural changes and systems thinking stirred by servitisation unlock the circular economy potential of energy systems, paving a path for a future that this world urgently needs. As technology providers remain the owners of the equipment, the model incentivises them to design modular products with longer durability, extend product life through state-of-the art maintenance, repurposing according to customers’ needs, and remanufacturing to maximise value recovery at the end-of-life.

Digitalisation acts as a central component in realising servitisation’s circularity potential, with remote monitoring and smart data algorithms enhancing the overall life-cycle performance of the technology.