Infrastructure as a service (“IaaS”) has its roots in the solar industry. During the last decade, the solar industry developed power purchase agreements (PPAs) that enabled property owners to tap into onsite renewable energy through proven solar energy technologies. Solar project developers rented rooftop spaces from property owners and provided a turnkey solution; they installed solar panels and maintained them and sold the renewable solar power back to the property owner. Building owners only paid for the solar power that was delivered, without the risk of operating the technology.
Solar PPAs helped major commercial retailers like Walmart and Whole Foods to convert from fossil fuel-powered electricity to solar with getting into the solar business. Infrastructure as a Service (IaaS) brings that concept of selling green tech as a turnkey project service to other natural resources from biofuels to energy efficiency technologies. IaaS is particularly important for water technologies because it addresses three obstacles that have been holding back the advanced water tech solutions that have been emerging in the last decade:
-Validation: Finance vehicles enable the companies that know the technology to take on the risk and responsibility of their performance. In some cases, the project developer can sell benefits—like water or energy savings as they deliver.
-Capital budgeting: These projects don’t require the same capital investment, and can bypass capital budget approval processes in municipal government. In many cases, IaaS water solutions can be offered for “no money down,” with payments based on shared savings.
-Risk: Even after water technologies are well-established, utilities and businesses are concerned about health and safety liability. Through IaaS turnkey projects, the water project developer can take on those risks in place of the client.
Two examples from Generate Capital‘s portfolio are Cambrian Innovations Water Energy Purchase Agreements and Grundfos’ Energy Efficient Pump Agreement energy-efficient pump offerings.