In the face of the existential threat posed by climate change, there is at least one good news: solutions exist to make our world cleaner, more efficient, less wasteful and ultimately more profitable.
At the Solar Impulse Foundation, we have already identified and labelled over 1700 innovations that tick the double box of environmental protection and economic profitability. Despite their effectiveness, however, the pace of deployment remains broadly insufficient.
Several factors contribute to this delay: outdated legislation, entrenched business practices, and a lack of awareness about alternative approaches are slowing progress. The challenge of securing capital further compounds the problem, particularly for small and medium-sized enterprises (SMEs).
Energy efficiency is a business opportunity
SMEs make up over 99% of all businesses in the European Union and employ approximately 100 million Europeans; they also currently generate around 60% of the continent’s industrial emissions. As such, they are central to achieving the EU’s climate goals - and reducing energy demand is at the core of this endeavour. Improvements in energy and resource efficiency could indeed account for more than 40% of the emissions reductions needed to meet global climate goals by 2040. Energy efficiency is also a business opportunity: the market is projected to soar, at a compound annual growth rate of 12.6% from 2024 to 2028.
A major obstacle for SMEs in their journey towards efficiency is the upfront investment associated with the adoption of clean technologies, despite the fact that much lower operating costs will make the overall process cheaper. Therefore, with limited resources, many SMEs renounce to invest in energy efficient equipment, especially when upfront costs are high and the return on investment may take years to materialise. As such, even proven clean technologies often remain out of reach for smaller businesses, despite their clear environmental and financial benefits.
Advantages of servitisation
One promising solution to overcome these financial hurdles is servitisation, a business model that could bridge the gap between SMEs’ financial means and the need to adopt clean technologies. Servitisation, also known as pay-as-a-service, fundamentally shifts the traditional approach to business. Rather than selling a product outright, providers sell the outcome or associated benefit that product provides. For instance, instead of purchasing heating or lighting equipment, the customer pays for an agreed and specified level of warmth or light, while the provider retains ownership of the asset. This realignment shifts the focus from the asset itself to its performance and long-term use, incentivising efficiency and durability. In essence, we’re talking about a business model which can take us past quantitative growth and towards a qualitative economy.
For SMEs, servitisation offers clear advantages. The model eliminates the need for large upfront capital investments, allowing companies to pay only for the outputs they receive from the given technology. By converting large capital expenditures (CAPEX) into smoothed operating expenditures (OPEX), SMEs can significantly reduce their financial strain and increase their profits.
Energy, heating, cooling, kilometers, insulation, lighting, fatal heat recovery… this business model “as a service" has the potential to dramatically reduce energy consumption while accelerating the adoption of renewable energy sources and advanced energy-efficient technologies.
Through this approach, SMEs become empowered to decarbonise their activities while increasing their competitiveness. They access cutting-edge clean technologies without bearing the full cost of ownership, while simultaneously benefiting from long-term servicing, maintenance and upgrades provided by the solution provider.
A partnership to accelerate energy efficiency
This is the reason why the Solar Impulse Foundation has partnered with the European Investment Bank (EIB) to accelerate energy efficiency through servitisation. Together, we are developing a dedicated financial vehicle that will help companies market their efficient solutions using this business model. The goal is to make the adoption of clean technologies seamless for SMEs as well as municipalities, both of which face greater financial risks and challenges compared to large corporations.
This partnership with the EIB also offers a unique diversified business opportunity for leading financial institutions, businesses and key decision makers to align economic incentives with environmental goals. By developing innovative financial schemes, the partnership aims to help solution providers offer their services without requiring substantial upfront investments from offtakers, enabling SMEs to lead the charge in Europe’s decarbonisation journey.
In that sense, servitisation becomes a catalyst for the widespread adoption of the profitable clean technologies needed to address the climate crisis.
This article was originally published by Solar Impulse Foundation.
