GCC's cooling giant aims higher
With over 20 years of successful regional experience, Tabreed has pioneered district cooling in the UAE and across the GCC, successfully delivering a number of iconic projects that have set the standard for the industry. In April, Tabreed appointed Bader Saeed Al Lamki as its new CEO. He speaks to Utilities Middle East about his plans to advance the company to greater heights.
Following your recent announcement of an 11% increase in profit for H1 2019, what would you say are the main factors that led to this success?
These solid results in our first half with underlying net profit of 11% increase, compared to the same period in 2018, certainly highlighs the ongoing financial and operational excellence at Tabreed and its resiliency in the current market. Tabreed continues to perform and grow. For example, we have recently commissioned a new district cooling plant in Oman to serve the Mall of Muscat which takes our total number of operational plants to 75 across the region.
What would you consider to be Tabreed’s key milestones since the establishment of the company more than 20 years ago, and do you think the company is already achieving the main objectives for which it was created?
With over 20 years of successful regional experience, we have pioneered district cooling in the UAE and across the GCC, successfully delivering a number of iconic projects that have set the standard for the industry, including many of the iconic landmark developments across the region.
To name only a few: RTA’s Dubai Metro, Sheikh Zayed Grand Mosque, Yas Island (including Ferrari World, Warner Brothers World and Yas Mall), Al Maryah Island, World Trade Centre, Emirates Towers, Bahrain Financial Harbour and the Jebel Omar development in the Holy City of Makkah.
We have recently entered into a 30 year concession for a contracted cooling capacity of 20,000 refrigeration tons (RTs) with Andhra Pradesh Capital Region Development Authority (APCRDA) to build, own, operate and transfer India’s first district cooling system in Amaravati – the new capital of Andhra Pradesh. This will be Tabreed’s first plant outside its GCC market and the first in India, where we see a major potential for the development of district cooling.
Tabreed also recently successfully raised a $500mn (AED 1.8 billion) with a fixed rate senior unsecured US dollar denominated 7-year sukuk. The new sukuk, listed on the London Stock Exchange, had strong institutional demand both locally and in Asia and Europe. Tabreed was also able to obtain an Investment Grade rating from both Moody’s and Fitch, a testament to the company’s financial strength, robust business model, and strong position in the market.
These milestones, among many others, are a demonstration of the company’s stellar track record and performance.
With over 1.1 million refrigeration tons of cooling and 75 plants under your portfolio today, how much energy savings do you achieve annually?
Across our regional operations, Tabreed contributed to saving more than 1.9 billion kWh. This is enough energy for up to 112,000 homes. It also led to the elimination of more than 980,000 tons for CO2, the equivalent of removing 214,000 cars from our streets every year.
With cooling representing up to 70% of peak energy consumption, Tabreed and the district cooling industry as a whole have a significant role to play in reaching the energy efficiency targets of the UAE and the region.
Indeed, the greatest benefit of District Cooling is being more energy efficient, using at least 50% less energy than average conventional cooling systems, while remaining more cost-effective for customers. Moreover, this greater energy efficiency helps optimize the electricity generation infrastructure (peak shaving) and allows power companies to reduce the amount of investment in power infrastructure.
What initiatives are you taking to reduce water consumption, a scarce resource in the Middle East?
Use of TSE (Treated Sewage Effluent) in district cooling plants enhances the sustainability of resources by recycling sewage water to replace potable water. Tabreed currently uses TSE in multiple plants, with plans to expand across its network. We are working closely with authorities to promote the development of TSE in District Cooling in the GCC and develop the required infrastructure.
Another initiative to protect the scarce fresh water resources, is the use of seawater in District Cooling plant. Tabreed is currently using seawater instead of potable water in one of its plants in Bahrain, completely eliminating the use of the latter. This has led to an annual saving of approximately 80 million imperial gallons of fresh water.
Finally, and maybe most importantly, limiting water usage in our plants is a day to day focus and one of the key pillar of our operations strategy. We currently operate at industry leading levels of efficiency with regards to water and have on-going multi-year plans to continue improving.
Following your recent appointment as CEO, what are the priority strategic objectives do you intend to achieve in the short to medium term?
Leveraging on the global expertise of our anchor shareholders Mubadala Investment Company and ENGIE, our vision is to maintain our leading position as an undisputed global leader in the district cooling industry.
To do so, we will continue to grow in our core markets of the UAE and GCC but also have strong growth ambitions internationally, where we are seeking to export a proven model perfected in the GCC, to adjacent markets in MENA, India and beyond.
Operational excellence will remain a key priority for the company. As a pioneer of the district cooling industry in the GCC, with over two decades of experience and an outstanding operational track-record, Tabreed will continue to improve the performance and sustainability of its operations, leveraging the latest industry trends and innovation.
This includes (i) continuing to optimize the design of our plants towards more modularity and by incorporating cutting-edge technologies, (ii) leveraging the potential of digitization and industry 4.0 by putting data at the centre of our operational excellence initiatives, and (iii) continuing to pushing innovation in district cooling business models through initiatives such as solar energy integration.
Any future plans to enter the district heating market in Europe and North America?
Tabreed is a regional company with a long-term ambition of expanding, and we are confident that our experience within the region will support our future efforts to continue to grow in new geographies and in adjacent markets.
How is your previous experience in a leading position at Masdar likely to help you in your new role as CEO of Tabreed?
First, in many ways both Masdar and Tabreed are tackling the same challenge of mitigating our environmental impact, and while Masdar was distinctly more focused on sustainable energy production, our work at Tabreed involves putting energy to use more efficiently – addressing the same problem but from a different angle.
Second, during my time at Masdar, I was lucky enough to witness the development of the renewable energy industry in the last decade, and be a part of Masdar’s spectacular growth journey in deploying clean energy and advancing clean tech innovation. My focus was on business development, competitiveness and innovation.
It is with the same spirit of growth, development, and innovation that I am today leading Tabreed, building on its current track record.
Technology has obviously evolved over the past 20 years, how is Tabreed coping with this change?
Tabreed has always been at the forefront of innovation and technology. Our industry leading operational efficiencies are a testament to that.
Among the many technological trends that are transforming industry, digitization has a growing importance in improving operational excellence, and is, as such, a core area of interest for Tabreed.
For example, earlier this year we integrated data-based operational intelligence software across our network of district cooling plants to monitor, analyse, and improve overall plant performance and reliability, making us one of the first district cooling companies to do so. The big data system collects, analyses, visualizes and shares the large amounts of data produced by Tabreed’s network of plants and gives us real-time insight into our systems, which plays a key role in enhancing our efficiencies and the quality of our operations.
Another example of our digitization efforts, is the ‘Optimal Chiller Plant Control’ a joint project with Khalifa University, which aims to develop and operate a digitally smart controller capable of intelligently managing district cooling plants. This improves operational performance by decreasing energy consumption and is a critical project milestone for cost-effective, energy-efficient and environmentally sustainable district cooling plants across the UAE and region.
How has Tabreed been able to skill its workforce and also be able to retain talent in a relatively new sector? How much success have you registered in skilling Emiratis?
At Tabreed, we consider investing in our employees as one of the most important activities we can provide. Through providing training and skills to our employees, we are seeking to build them to being future leaders of the district cooling sector. We are particularly proud of our leadership development program, StarTrain, and our first-of-its-kind knowledge development program Ethra’a, which is designed to develop human capital and prepare the district energy sector’s future leaders.
Ethra’a is built on five engagement pillars, with an overall objective to create opportunities for engineering and graduates, by equipping them with the knowledge, skills and competencies to become successful in highly-skilled roles within the district energy sector.
The Ethra’a initiative, which means ‘enrichment’ in Arabic, aims to build a highly-skilled talent pool and develop human capital by facilitating knowledge sharing and innovation between the industry and academia. This will further drive knowledge-based economic growth in line with the Abu Dhabi Economic Vision 2030, and strategic talent development to support environmental sustainability and green economy ambitions outlined in the UAE’s Green Agenda 2030, an overarching framework to transform the country into a green economy.
In addition, we currently enjoy an Emiratisation rate of 40%. We are committed to furthering this number, in line with the objectives of the Abu Dhabi and UAE government, alongside with supplying opportunities for GCC nationals in Bahrain, Oman and the Kingdom Saudi Arabia.
Finally, we commend Emirati Women for playing a vital role in the journey and success of our nation. At Tabreed we are proud of our female employees who represent 40% of the UAE nationals at our head office. We appreciate the patience and persistence they show every day and we hope to witness continuous success with them.
What are some of the main challenges being faced by your sector at the moment and what are you doing to address them?
The GCC has made strong progress in adopting efficient cooling technologies, with penetration rates reaching up to 20% for District Cooling in the most mature markets. Yet, for lack of knowledge and proper incentive, a number of developments still resort to less efficient cooling solutions, even in areas of high-density where there is a clear economic and environmental case for district cooling.
We believe that the penetration rate of District Cooling can be significantly increased, both in new Greenfield developments and through the retrofitting of existing buildings.
To achieve that, Tabreed is working closely with key stakeholders in the GCC, to strengthen the framework for the industry and promote its use, in particular by highlighting the important role that district cooling can play in improving energy efficiency and tackling the environmental challenges that we collectively face.
The industry also has to do a better job in educating the stakeholders on the numerous benefits that our solutions and business model bring: substantial savings in terms of power infrastructure, lower energy consumption and lower environmental footprint, reliability and availability of the operations and service, ability to free up capex and lower lifecycle cost for developers, ability to free up value real estate on rooftops, noise reduction…
What projections do you have for your company and the entire district cooling sector in the Middle East?
Cooling accounts for 20% of total electricity used in building today across the globe. As the planet warms and as incomes and standards of living improve in emerging countries (mostly hotter countries), this trend will only accelerate. The International Energy Agency (IEA) forecasts that global demand for cooling will more than triple by 2050, equivalent to all of China’s electricity consumption today.
To tackle this often overlooked yet major challenge, a transition towards more energy-efficient cooling solutions is a priority, in particular in emerging markets.
As a global leader in District Cooling, Tabreed wants to be part of the solution and will be strongly positioned to advance the industry across multiple geographies; As highlighted for example by our collaboration with the UN Environment Programme’s District Energy in Cities Initiative, a multi-stakeholder partnership that assists developing countries and cities to accelerate their transition to lower carbon and climate resilient societies through modern district energy systems.