Empower CEO tells UME district cooling in the UAE has started to surge
District cooling solutions has got its share of pros and cons. It was labelled to be far too expensive, unsuitable for certain kinds of properties and so on. But by the looks of the deals signed by UAE’s leading district cooling companies such as Empower, the industry appears to be back on track.
The fortunes of the district cooling market are inextricably linked to the real estate industry. Thus Dubai’s property sector, which has been opening up since the beginning of this year, has made way for growth in associated sectors such as district cooling. The emirate’s Business Bay development is a prime example of this.
“Things slowed down in Dubai in last five years because of the financial crisis but the economy has started to improve again,” said Ahmad Bin Shafar, CEO, Empower. “There are a lot of new developments coming up in Dubai which will call for the expansion of district cooling industry.”
The Business Bay district was one of the key areas of focus for developers for new real estate schemes as the market crashed in 2009, and as a result many projects were left half-way or put on hold. In the last few months, demand has picked up and subsequently, work on delayed projects has re-started and new projects have been launched. Recently, Empower announced that it has broken ground on a new district cooling plant in Business Bay, which will provide residential and commercial towers with nearly 50,000 refrigeration tonnes (RT) of cooling, with an output of 10,000 RT through thermal storage, once complete in mid 2014. And to fund these expansion plans, the company has secured a US$142mn loan facility from Doha Bank.
“We are putting up another plant room in Business Bay, the capacity of which will be 250,000 to 300,000 tonnes. So far we have achieved 60 per cent of this,” Bin Shafar said. In addition to Business Bay, Empower currently operates district cooling services at several prominent developments in the city, including Dubai International Finance Centre, Dubai Healthcare City and Jumeirah Beach Residence. “Further, we are revamping plant rooms in TECOM C, Mirdiff and Al Khair Road.”
New real estate projects planned in other areas of the emirate are driving demand for cooling in the country. The cooling industry is set to grow by US$7.4bn in the next five years, analysts believe. “The developers love district cooling as it drastically reduces building maintenance cost. Similarly, the government finds district cooling very favourable because this way they don’t have to spend a lot of money on electricity,” Bin Shafar said.
Along with being an ideal solution for large-scale developments who are looking to cut operating costs, district cooling comes with a brownie point: Helping reduce carbon footprints. Thus in addition to the growing demand, increasing attention to sustainable technology and practices in the cooling sectors is expected to act as a huge catalyst to reduce costs and enable greater profits for developers and cooling providers. As per reports, post-cycle energy consumption can contribute 32 per cent towards total cost of a cooling facility thereby ensuring that the most efficient technology is utilized.
In fact, Empower’s new district cooling plant in Business Bay is the first to implement the Dubai Executive Council’s guidelines on environmental sustainability. “As an ideal environmentally friendly cooling solution, the new plant will only require 0.9 KW to produce one RT of cooling, compared to traditional non-district cooling systems that require up to 1.8 KW of energy every hour,” Bin Shafar said, as he urged other real estate developers to implement green solutions across their project portfolios.
“In a typical residential unit, for instance, district cooling systems can cut energy usage by 40 to 45 per cent, compared to traditional climate control systems,” he said. “Empower seeks to accelerate the pace of replacing traditional systems with new environmentally friendly technologies, which will conserve precious energy and water resources and decrease our carbon footprint.”
District cooling systems can help save up to 50 per cent of total power consumption compared to traditional systems while at the same time supporting the rising power demand in Dubai. In 2012, Empower saved 320MW, enough to power 65 buildings with more than 400,000 RT of installed cooling capacity.
Looking at it from a different perspective, in high density areas such as Sheikh Zayed Road, DIFC, Burj Khalifa area, Business Bay, using a traditional air conditioners will cause very high noise. With district cooling, its quiet, centralised in one place and there is zero noise pollution.
Because of the sheer size of the projects and cumulative benefits, district cooling solutions are being fully utilised by the burgeoning hotel industry in Dubai, according to statistics provided by Empower. The company recently announced that it supplies around 54,000 RT to the hotel industry, which is said to represent 15 per cent of its total portfolio. Bin Shafar expects this number to increase to about 30 - 35 per cent in the next five years.
This figure is expected to rise further given the volume of hotels that are in the pipeline to support Dubai’s plan to welcome 20 million tourists by 2020, which will in turn provide opportunities to adopt district cooling technologies in the hotel industry.
“Dubai is seeing continued growth in real estate development in terms of both hotels and hotel apartments and also in terms of the world-class infrastructure that is already in place, such as Dubai metro and Dubai International airport. Thus demand for district cooling is also increasing simultaneously,” Bin Shafar added. One of latest hotel projects being undertaken by Empower is at Al Habtoor City, where the company will air condition an entire boulevard.
About 16 new hotel establishments have opened in Dubai since 2012, bringing the total number of establishments to 603 hotels.
Rapidly urbanising landscape, increasing population and economic focus on tourism helps Dubai create a symbiotic relationship with district cooling, something that cannot be said to other places in the GCC. Bin Shafar said, “We are talking with other GCC countries as well. But at present, our main focus is Dubai. There is still a lot of scope for expansion and so we want to make the best use of it.”
Saudi Arabia’s ambitious development programme is also beginning to offer increasing opportunities for district cooling services. Large residential and commercial developments in various areas of the kingdom will require significant district cooling services.
According to Bin Shafar, district cooling could be a challenge in the country as it suffers from extreme water shortage. “But it can be successful if they are willing to adopt the close cycle technique. Qatar has been widely adopting district cooling solutions and we are working with them on many of their projects. Kuwait is doing good. They are using district cooling facilities in Sabah University. However, they have not yet taken up mass production,” he added.
Talking about the vastness of Empower’s businesses, Bin Shafar said, “Our capacity is 450,000 tonnes and the entire North American continent’s district cooling capacity is approximately 700,000 tonnes. So its a huge responsibility to sustain the business and to maintain service. I have instructed my team to make sure that quality of the service should never be compromised at any cost. Customer satisfaction and service reliability is our goal. If you have these two things in place, credibility is built automatically.”
The business of district cooling is going through several stages of innovations and Empower is working towards getting all its plant rooms LEED certified. “We have to continuously innovate. I am passionate about this industry and I think if we spend a lot of time in research and development, we will be able pass on a lot of benefits to the society and the environment. It will be a win-win situation for everybody.”