IDEA's 4th District Cooling Conference

Shafiq Khoori says DEWA has been one of the biggest supporters of district cooling.
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Palm District Cooling

Shafiq Khoori, managing director

Can you provide a brief outline of Palm District Cooling’s current operations?

Palm District Cooling currently has 13 plants in operation with a total operating capacity of 260,000 tonnes. Under construction in different phases we have around 160,000 tonnes, so that will get us close to 420,000 tonnes in a year, or just over a year’s time. We have almost 200 kilometres of networks across all our developments. Obviously the pace of development has slowed down at the moment, and our focus has shifted from construction to operational maintenance, billing, customer service etc, as well as improving the general performance.

What’s the position with regard to legislation for the district cooling market here?

The industry is self-regulated at the moment. My personal opinion is that if there is legislation then consumers will be more comfortable with the tariffs that are being charged. They will know that there has been oversight and that a decision has been made that the charges made are reasonable. When there’s no legislation, people think that that it’s a monopoly and that companies are just charging their clients with the intention of making higher profits. That kind of perception stems from a lack of legislation. And rules also protect the district cooling companies as well. If you make investment into assets, you know that regulation ensures that you will eventually recover your investment. So it’s good for everyone.

What steps has the government already taken?

The move started here with Decree 22, which saw Trakhees, one of Dubai World’s licensing divisions, become a sort of regulator for developments that fall under Dubai World’s remit. The next step will be to look into the utility services provided by the developments and to consider how legislation can be drawn up.

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Utility rates play a role in the sense that when you introduce a new service to customers, you have to make them buy into the concept that we’re providing. The tariff model prevalent in the market here has two layers: a capacity charge and a consumption charge. With that combination, people perceive district cooling as being more expensive. They don’t understand that the capacity tariff is designed to recover the initial capital investment in plants and equipment. If they think about the tariff in terms of investing in a plant and amortising over a period of years, it’s exactly the same concept. That concept is still not clear to the market, and that’s why it’s a bit more expensive.

How important has DEWA’s role in this vital sector been?

DEWA has been one of the prominent promoters of district cooling. It has invested in a district cooling company – Empower – and we’re in constant touch with them to find out ways of working together and promoting the industry. Recently, we’ve been discussing how to introduce thermal energy storage, which will help shave the peaks during peak summer, and DEWA is currently working on a preferential tariff to incentivise district cooling players to invest in the industry. In addition, DEWA is now directing district cooling companies to use treated sewage effluent (TSE) as the feedstock for plants.

How do you see IDEA helping the local industry?

For us, and for Middle Eastern district cooling companies in general, IDEA is the ideal organisation to work with. Our industry is relatively new in comparison to the US market – so IDEA already has a wealth of experience. In particular, the organistion knows how to approach and influence policy, so we are planning to benefit from their experience and ideas, which will help us shape better legislation for this sector. As to this particular conference, we’re keen to participate and support such events, because they bring the industry together and promote it.