Japan has a population of 122 million people, of which about 30 million are 75 or older. Eldercare is big business, but one of the many challenges the industry faces is high energy costs for water heating.
Many existing facilities use gas or oil boilers, and switching to more energy-efficient technology like CO2 (R744) hot water heat pumps can bring initial costs that prove too steep to surmount, according to Hirofumi Moriya, President and CEO of Nihon Itomic.
It’s this challenge Moriya is addressing with his new venture, Hot Water as a Service, or “HaaS,” which offers Itomic commercial CO2 heat pumps on a subscription basis. The heat pumps offered include 15kW (4.2TR), 35kW (10TR) and 65kW (18.4TR) units, as well as electric water heaters. HaaS offers all these units to customers. CO2 hot water heat pumps, sold under the name “EcoCute,” are incredibly popular in Japan, particularly in residential applications. Since being introduced to the market in 2001, more than 10 million EcoCute units have been sold.
“CO2 heat pumps are expensive because they require compressors that can withstand high pressure, and the initial investment is a bottleneck, so fossil fuel-based water heaters are not being replaced,” Moriya, CEO of HaaS, told NaturalRefrigerants.com. “HaaS aims to replace fossil fuels and decarbonize the industry by introducing CO2 heat pumps through subscriptions, making the initial investment unnecessary.”
“In Japan, there are currently no companies offering commercial hot water heat pumps on a subscription basis,” Moriya said. “We are the first and only company to do so.”
HaaS was recently launched and has received funding from investors, including Itomic, and will be developed as part of Itomic’s group of companies. As Moriya embarks on his new venture, NaturalRefrigerants.com spoke with him about the opportunity he’s identified, the current state of the company and its goals.
This interview has been edited for length and clarity.
How did the idea for HaaS develop?
Hirofumi Moriya: The reason I came up with this business model is to change the current situation where heat pumps, which utilize renewable energy and have excellent energy-saving performance, are not being widely used due to the initial investment burden. I have been thinking about this business model on my own for 3–4 years, and the leading case of subscription for commercial air conditioners, “Air as a Service,” was a good reference.
Why is HaaS targeting the eldercare segment of the commercial market?
HM: The target market for this business model is the market for the renovation of existing facilities, specifically medical welfare and nursing care facilities, the number of which is expected to grow in the future.
In Japan, energy costs for water heating in these facilities account for more than 30% of the total energy costs. This project is intended to meet the needs of those who want to reduce energy costs by installing heat pumps but cannot afford the initial investment due to a lack of capital capacity.
“Our long-term goal is to increase the penetration rate of CO2 heat pumps in commercial water heating to 80% or more.”
Hirofumi Moriya
President and CEO of Nihon Itomic and CEO of HaaS
You initially tested the business plan for HaaS before coming to investors with it. What did that consist of?
HM: After creating a rough business plan, we asked potential sales partners for their input. We have received positive responses from potential sales partners and financial institutions that provide back-financing for this business model, and we have felt that the business plan has been well received.
Has HaaS launched yet, and, if so, how many customers does the company have?
HM: Some functions are still under partial development, but as a service, it has already been launched. We have received many inquiries, and we expect to win our first contract soon.
We have signed a cooperation agreement with Air as a Services to mutually refer clients to each other. With the signing of the agreement, Air as a Services became our first sales partner.
What are your short- and long-term goals for HaaS?
HM: In the short term, we would like to increase our number of sales partners. We have begun discussions with operators of senior citizen facilities, leasing companies and consulting firms.
Our long-term goal is to increase the penetration rate of CO2 heat pumps in commercial water heating to 80% or more.
