Description

There is a range of innovative solutions in which agreements between two or more parties enable upfront costs to be overcome by taking on the costs and risk associated with specific components such as batteries via leasing models and third-party ownership models while the rest of an item such as a bus, is purchased outright by the project developer.

Instrument category

Leasing and asset finance models

Implementation status

Low - limited evidence available

Enabling conditions and success factors

• Well developed market dynamics such that different parties involved can implement robust contractual arrangements and fall back on legal recourse if necessary.

Instrument benefits

• Overcomes high upfront costs that are often a barrier to progress.
• Transfer of risk of maintaining the asset to the manufacturer.

Challenges and risks to implementation

• Sourcing capable implementation partners may be challenging in environments with lower private sector capacity.
• Changes to traditional cooling business operations may cause capacity challenges.
• Markets with difficult enabling environments (e.g., low capital availability, high customer default rates).

References

Case studies

Cooling-as-a-service in a Colombian commercial building