Heating as a Service: Japan ahead of its time

heating as a service

Heating as a Service is now a thing, especially in Japan where renting heaters has become commonplace. The business of renting out heaters was introduced by a Japanese company in 2001. Since then, the company has continued the approach of selling a service, aside from just selling heating appliances. This business practice is now called “product as a service” or PaaS.

Product as a service is a business model that defines a new way of how an organization creates, delivers, and characterizes the core aspects of a business. These include redefining the purpose, target market, products, strategies, infrastructure, sourcing, trading practices, operational procedures and policies in the modern business culture of a circular economy.

A number of progressive companies such as IKEA and Tesla have adopted the PaaS model which benefits both the environment and customers’ wallets. The concept involves providing a product as a service – removing the need for customers to make expensive outright purchases for goods. The goods may include furniture, vehicles, clothing, and even heaters to keep people warm during winter.

The move to PaaS was driven by the need of traditional manufacturing companies to cope with the changing market, new environment-friendly lifestyles, and resource depletion. Due to climate change, there is now an increased need to recycle, decrease waste and cut CO2 emissions. The circular economy also promotes repurposing unwanted things to extend the usefulness of materials and resources.

Forward thinking companies now recognize that offering a product as a service could bring in higher profits than just selling goods alone. Although proceeds from direct sales would shrink, revenue from leasing or renting out products formed a new road towards profit and growth. Today’s consumers are also favoring companies that follow environment-friendly practices.

A traditional Japanese company, Nihonkai Gas, recognized the potential of providing heating as a service before “circular economy,” “product as a service,” or “PaaS” were invented or conceptualized. Nihonkai Gas, founded in 1942, has been producing, retailing and selling liquefied natural gas, liquefied petroleum gas, and other gas-related products to homeowners and businesses.

The company also provides plumbing works and sells gas-powered appliances and equipment for residential use, industrial kitchens and commercial businesses. They sell, repair, and now offer cooling and heating as a service. With its PaaS approach, it successfully diversifying its business, and reduced negative environmental impacts. It also reduced the cost of heating for its customers.

Nihonkai Gas’ heating as a service program lets homeowners rent fan heaters – gas appliances with a fan that blows warm air to heat a room. These small heaters are energy efficient unlike electric heaters or furnaces. Most American and Canadian homeowners depend on centralized furnace systems to provide warmth – something Japanese households can do without due to smaller living areas.

Japanese homeowners now have the option to rent or lease heaters in the winter months so they don’t have to buy appliances that are useless in the summer. A small rented appliance will also lower the cost of heating for homeowners because centralized heating can be expensive to use and can’t be transferred to another home.

Rented fan heaters can be moved to a new residence or a vacation home out of town. It is perfect for people who rent apartments and do not want to install a more permanent heating system. It’s also not necessary for Japanese to heat a small home with a centralized heater. The cost of heating can be further minimized by using a small fan heater where it is only needed – just in the bedroom for example.

Heating as a service also prevents the accumulation of too much waste in landfills. Typical homeowners do not bother with repairing broken heaters and just throw them away; neither would they dispose of heaters for proper recycling. Companies that offer a product as a service take care of maintenance and repairs, and recycle or repurpose parts before properly disposing of appliances.

Nihonkai Gas has rented out over 22,000 fan heaters in Japan since the company launched its PaaS service in 2001. The company enjoys a high ratio of repeat customers who like fast delivery, the lack of maintenance headaches, cleaning, and collection of the heaters. Japanese homeowners who live in small spaces also don’t have to worry about storage space for heaters during the summer.