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Marietta: district cooling is a capital intensive business and large-scale investments are needed in the sector in the next decade.

As the district cooling sector continues to grow in scale and importance in the Middle East, the opportunities within the region are also being recognised at a global level. But with opportunities come challenges, one of the biggest of which for firms is establishing a financial strategy to cope with the number of developments underway and planned for the future.

The topic was tackled by a series of industry experts during October at the IDEA International District Cooling Symposium in Dubai hosted by the Middle East Chapter of the International District Energy Association (IDEA).

Entitled Collaborating, co-operating and constructing the future, the symposium programme covered market trends and opened discussions on ways to overcome the obstacles to further growth, including the need for solid capital and financial strategies.

"District cooling is a capital intensive business," stressed Tabreed deputy CEO Karl Marietta. "This aggressive [market] growth requires capital and as we are a private company the shareholders expect a return on their equity," he added.

Tabreed has recently posted healthy profits, however the speed of industry growth means that alternative means of gaining capital investment are being investigated.

The prime drivers for the market growth are high oil prices, low interest rates and ample liquidity in the banks, explained Mohammed Elshentenawy, chief financial officer, Palm District Cooling. And this market is showing little sign of slowing: "It is forecast that there will be investments [in the construction sector] by 2015 of US $45 billion (AED165 billion) according to the projects released in the region to date.

These need to be funded and capitalised, however this $45 billion investment is proportionally small compared to the total investments announced for the region," stated Elshentenawy. These overall investments include a predicted spend of $1.5 trillion in the oil industry by 2011; "All of these investments will be competing for the same funds," he warned.

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