Utility-as-a-Service & Emerging Models for Sustainable Production

'Utility as a Service' - Understanding the Concept

To better understand the concept, let us take a small step back and talk about what the traditional model is for investing in capital equipment and what the future model could be in our view at least. Going back to the traditional model, organizations prefer buying a capital piece of equipment is usually costly. It has generally depreciated over a long period, and some person in that organization has the responsibility to select a piece of equipment that is supposed to provide or supply demand for a long time. The life of the equipment will predict how the organization's demand will change over a while, which is likely or unlikely impossible. As a result, they end up with a system or with a piece of equipment which is very relevant and perfect on day one and becomes less and less relevant and less and less optimized and less efficient as each year goes by.

It would be better if an organization were to take a more variable solution from another organization that is perfect on day one while flexing, changing, and evolving with the latter accordingly as demand, technology, and the solution change. This would help remain relevant even after many years while bringing tremendous energy savings and efficiency.

Although this ensures the changes happening in technology and the rapid deployment of new concepts are factored in, it also oversees that people don't get locked into something that is history. Given that we are making history very fast while the level and speed of obsolescence are very high, this also acts as a key driver.

Scaling the Model and Staying Ahead of the Curve

Everything, including business cycles, demand, and technology changes, is becoming far more variable. “I think buying expensive assets and having them on the balance sheet become risky. I think the faster things change, the more variable the demand, and the greater the economic variability, the more interesting these kinds of variable and flexible solutions become,” - Tim.

While pioneering such solutions, Atlas Copco is staying ahead of the curve while being on the edge of trying new things. For example, a large organization approached it recently to design the best system. Based in China, the organization had a large, compressed air system for a prolonged time which had come to the end of its natural cycle. Following were the demands put forward by the client organization:

Design the best possible system and keep it efficient for the next 20 years instead of changing it to a new version.

Payment is to be made based on the amount of energy saving generated by Atlas Copco over 20 years, in comparison to the same generated in the previous version, instead of paying what they will bring to the site.

As an organization, Atlas was motivated to continuously make that solution super-efficient because the more efficient the system is, the more it gets paid. It helped consume less energy, become a more sustainable organization and reduce its carbon footprint.