District developments

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This district cooling plant will supply the Burj Dubai.

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District cooling removes the need to have chillers on the roofs of buildings.

Ask the average Dubai resident for their views on district cooling and you will probably still get blank looks. But the reality is that most people in the UAE will be familiar with the concept, which generates chilled water at central plants and distributes it to buildings for cooling through a network of underground pipes, in the near future, especially if they will be living or working in one of the many mega-projects under construction in the country.

Indeed, those involved in real estate are already well informed about the advantages of district cooling over its conventional predecessor, air conditioning. Though this new utility makes sense for everyone involved, right down to the individual tenant of an apartment, it is those in charge of developments on a mass level, i.e. the master developers, who are the first to see why they should opt for district cooling.

Cooling masterplan

"The master developers like Nakheel are aware that district cooling is benefiting them," says B.S. Prashanth, business development coordinator at Palm District Cooling. "Emaar, Dubailand, Reem Island, ALDAR - all these big developers definitely know that district cooling is the answer for their developments.

"For the master developer, when we come into the picture, we are basically part of the infrastructure for them so they will not have a headache and can concentrate on their core activity. At the same time, it helps them reduce the infrastructure cost for power - we cut down the power by nearly half."

Prashanth makes a good point. District cooling consumes something in the region of 40% less electricity than air conditioning (though it should of course be noted that district cooling does use large amounts of water) - and this in turn means than less power infrastructure is required for a development, in terms of installing substations and so on. Operational and maintenance costs are considerably reduced.

One of the larger developers, Abu Dhabi-based ALDAR Properties, has demonstrated its faith in district cooling by setting up a 50:50 joint venture with cooling provider Tabreed. When asked why ALDAR had decided to go in for district cooling, marketing and communications director Ousama Ghannoum makes the reasons quite clear.

"Energy efficiency. It is an environmentally-friendly technology and you can control it. When you say 17 degrees, it is 17 degrees," says Ghannoum. "It is always financially viable when you have large-scale developments like ALDAR because it is not like a villa - we are creating communities, so I think it works very well for us. The foundation prices would probably be lower also because you do not need to install chillers and so on."

ALDAR recently signed a further agreement with Tabreed for the supply of its projects at Al Raha Beach and Yas Island with 400 000 and 600 000 tonnes of refrigeration respectively.

"Al Raha Beach is a typical example," says Ghannoum. "120 000 people will live there. It is a stretch of 10 km - district cooling will work very well for us."

Another example is Downtown Jebel Ali, a development being carried out by Limitless, the real estate development arm of Dubai World. The Jebel Ali development will stretch for 11 km on Sheikh Zayed Road and will consist of 326 buildings, 237 of which will be residential.

Downtown Jebel Ali is divided up into four zones, each of which will be district cooled. René Stelder, project manager for infrastructure at the development, cites less spatial requirements and better building aesthetics as further advantages of the concept, in addition to energy efficiency.

Market potential

The staggering size of these projects shows just how lucrative the district cooling market is going to be in this region. Palm District Cooling's Prashanth, who recently returned from the EuroHeat conference in Copenhagen, reported that the technology being used in the Middle East was no surprise to the Scandinavian delegates, who use the same concept for both cooling and heating depending on the season, but declared themselves "amazed" by the size of the market here.

But ALDAR's strategic tie-up with Tabreed is no isolated example of how property companies are trying to secure their cooling infrastructure for the hot climate. Palm District Cooling's major shareholder is Istithmar, an investment company with a considerable focus on real estate in the UAE and overseas. Since Istithmar is part of Dubai World, Palm District Cooling has good connections to other group companies such as Nakheel and the Jebel Ali Free Zone Authority (JAFZA).

Empower (the Emirates Central Cooling Systems Corporation), has a strategic partnership with Dubai Properties and a good client base in the Dubai Holding companies, such as Dubailand and Dubai Media City.

"Three or four years ago, people said they did not need district cooling," says Ahmad Bin Shafar, Empower's CEO. "Today with the price situation and all the growth happening, they prefer to go with our solution. District cooling pricing is fixed for the next 25 years, subject to the increasing of the other utilities, namely electricity and water," he adds.

"Dubai Properties understood the value of adding district cooling, which would give them saving on their peak requirement, because you reduce your electricity requirements by 30%, so you are optimising your requirements."

Building the case

But if the master developers have now unequivocally given firm backing to district cooling, where does this leave the individual building developers?

Bin Shafar believes it is just a question of time before people become aware of the benefits. "People always show resistance to the new things. When they started with the internet, people said they didn't need it. Nowadays, they use it for their travel plans and it is cheaper for everyone because there is no human involvement. It is the same for district cooling - it is a new investment. Sooner or later it will be known."

"When it comes to the building, we are now shifting the building owner from the traditional system to district cooling," adds Samer Khoudeir, sales and marketing director for Empower.

For the individual building developer, there is the benefit of cooling being provided from central plants, which removes the need for having chillers on the roof of a building. This is a significant advantage, given the premium put on space in Dubai these days, since the roof could house a swimming pool or other leisure attraction instead.

"I think if they have a piece of land to develop on Sheikh Zayed Road in Dubai and the whole road is linked to this system, they will go for it," says Ghannoum. "But if you are going to develop a separate building and you do not have the infrastructure ready, I think it would be debatable."

The same is true for retrofitting. Khoudeir says district cooling's penetration level with today's mega-projects is at 100%. But for projects already built with a conventional system, there would need to be a district cooling network in the vicinity to warrant switching systems. If there is one in place, the developer would have to contemplate replacing the chillers.

One design consultant for district cooling projects said individual developers are often reluctant because a lot of infrastructure is required, but pointed out that "the payback is there", suggesting a recovery period of 5-10 years for the initial capital investment in district cooling is possible, assuming that the system is operated efficiently.

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