Heating as a service: Xylogen points the way

I love a good story about a product becoming a service. Ray Anderson did it with floor covering, ZipCar does it with cars, Amazon and Microsoft are doing it with IT infrastructure. It’s a sweet model. Service providers own equipment and operations, earn recurring revenue, and are motivated to continuously improve efficiency and customer satisfaction.

There’s even been speculation about turning home heating into a service. Here in New England, where the dominant product is heating oil and oil-burning equipment, that would be a wonderful thing. Because now, for the millions of homeowners who burn oil — and for the businesses who support that system — the incentives are all wrong. We’re collectively abetting the nation’s addiction to oil, and customers’ need to using less oil conflicts with suppliers’ need to sell more.

In From oil to wood pellets: New England’s home heating future I documented my first foray into heating with biomass. In Central heating with a wood gasification boiler I presented the solution that’s actually working for us. Biomass is a viable alternative. But I’m still the owner, operator, and maintainer of the equipment, and the manager of the fuel supply (i.e. buying, stacking, loading). What would it be like to outsource those functions?

For single-family homes, biomass heating as a service is still just a dream. But for commercial buildings it’s a reality, and there’s a great example right in my own backyard. Well, almost. The Monadnock Waldorf School, right around the corner from my house, recently converted to a wood pellet boiler installed by Xylogen, a new company whose tagline is:

We do not sell heating systems. We do not sell fuel. We sell secure, local, renewable heat.

Xylogen’s blog tells the story of the project. Here are some of my favorite excerpts.

From What’s happening at MWS?:

We’re pleased to report that the oil boilers have used a total of 7 gallons of oil from day 1, the bulk consumed during initial tune-up and system testing. The remainder of the usage actually occurred during times when the pellet boiler could have kept up with the building’s requirement for heat. In other words, this operation was a mistake that has now been corrected in the control algorithms.

From We see the big picture too:

Today, an opening to an old ventilation shaft was discovered and promptly covered over. Heated air was escaping the buildng through the grating at such a clip that a small student might have gotten sucked in and trapped on it!

Also, there was an assembly today in the assembly room (makes sense!), so we decided to turn down the heat in advance to try to avoid overheating and waste. It turns out the audience itself raised the temperature at least 6F. Good thing we didn’t start out toasty.

Small, very simple steps can have a big impact. We’re looking at the high tech, the low tech, and everything in between to make a difference.

From True service:

The beauty of automatic real-time monitoring is that it’s possible to identify a problem with the equipment and rectify it before the customer even notices. That is service.

Xylogen is a collaboration between Mark Froling and Henry Spindler. I wish them well and look forward to reading more about their work.

PS: Thanks to Andrew Dey (whom I met last night at a talk by Sustainserv’s Matthew Gardner) for pointing out that Xylogen isn’t just about alternative fuel, but more importantly about an alternative business model.