Cooling solutions as a service hots up as Tata, Adani make the switch

India’s two big conglomerates – Tata and Adani – are looking to extend their competition from power distribution to offering cooling solutions now.

 

The energy arms of the duo, Adani Energy Solutions and Tata Power, are offering cooling as a service, and will bear the capital expenditure (capex) upfront.

 

Cooling solutions involve setting up a single large-scale central unit that uses chilled water to meet the cooling needs of multiple establishments. 

Under cooling as a service, companies make the needed upfront investments to set up the required infrastructure, while consumers pay for its usage, similar to an electricity connection. 

 

In FY24, erstwhile Adani Transmission changed its name to Adani Energy Solutions (AESL) to reflect its focus on selling cooling solutions.

 

In a more recent announcement, Tata Power had in October said it will offer cooling solutions as a service in partnership with Keppel.

 

An Adani Energy spokesperson told Business Standard, “AESL’s district cooling solutions (DCS) are offered as a cooling-as-a-service, where the entire capex is borne by it, with the user only paying according to his usage.”

 

The Adani spokesperson added, “This makes AESL’s proposition highly attractive for the developer as it frees up a significant portion of his heating, cooling, ventilation, and air conditioning (HVAC) investments and also costly commercial space for sale.”

 

Tata Power also mentioned a similar approach in its press statement. 

 

The company said it will “enable businesses and building owners to subscribe to long-term, energy-efficient space cooling solutions without having to invest heavily in infrastructure. This will allow them to enjoy significant energy and cost savings.”

 

According to a World Bank report, the market potential and investment opportunity in the cold chain and refrigeration sector will be $29 billion by 2038.

 

India Cooling Action Plan (ICAP) 2019 & District Cooling Guidelines 2023 say that the cooling requirements of India are estimated to grow four times from 130 million tonnes of refrigeration (MTR) in 2022-23 to 720 MTR by 2037-38.

 

The ICAP suggests there is a significant use of cooling in different sectors such as residential and commercial buildings, cold chain, refrigeration, transport and industries.

 

Tata Power said its Keppel collaboration will focus on high-demand environments, such as airports, IT parks, special economic zones, data centres, and other industrial and commercial properties.

 

The Adani Energy Solutions’ spokesperson said, “With significant development happening in realty & urban housing development projects, the addressable market for DCS in India is expected to grow by almost 20 per cent compound annual growth rate (CAGR) from a meagre 9 MTR in 2023 to around 132 MTR by 2037-38.”

 

Both Adani Energy Solutions and Tata Power are competitors in the power distribution space, including in the Mumbai distribution circle.

 

The Adani Energy spokesperson added that presence in the city power distribution space “can ensure blending of renewable energy power with grid power, making DCS solutions more affordable and sustainable.”

 

He added, “It’s a large addressable market. Since there are limited players with capabilities to execute large and complex projects nationally, it is an attractive market for us.” 

POWER PLAY 

  > Adani Energy sees potential demand from realty & housing infrastructure segment

> Tata Power aims for airports, IT parks, Special Economic Zones, data centres, and other industrial and commercial properties  > Under cooling as a service, firms make the needed upfront investments to set up infra, while consumers pay for its usage