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Utilities Middle East talks to Keith Levers of Palm Utilities about the company's progress so far and where it sees its future opportunities coming from.

Palm Utilities had a good 2008. As it enters its fifth year of operational existence Keith Levers, the company's CEO, is aware things may be tougher in 2009.

That said, with a lot of groundwork done in the preceding years, the company's consumption revenue is expected to at least double in the coming year.

"As a company we've progressed fairly well up to date," said Levers. "In terms of connected load we're probably the largest district cooling company in the world. We developed very quickly in terms of the cooling capacity we've got in place."

"Last year was significant because a lot of what we had constructed was commissioned; this will carry on into 2009, with demand picking up."

"In terms of consumption we're not seeing a great deal of movement at the moment, we've got a lot of assets coming on stream and our revenues are growing. In 2009 growth was expected to be triple 2008, but it will probably just double; still good growth. I think 2009 will be a tough year, but by the fourth quarter there should be some stability back and growth occurring."

Start up

As with any utility, the up-front capital investment for Palm Utilities as a district cooling start-up was significant. The cash was spent on building plant for the Palm Jumeirah, with demand predictions based on figures from other sources.

Of some concern, according to Levers, is the fact that the company is not seeing these demand predictions come to fruition as quickly as first estimated, but it has a clear strategy to manage demand growth elsewhere.

"Of a bit of concern now is that we don't see the development [on the Palm] coming along to the same programme that was given to us. But what we've done on Jumeirah Lake Towers (JLT) - where there will be 120 towers with a 165,000 ton connected load - is to control capacity in accordance with demand growth, through a direct contract with developers."

These contracts require developers to provide dates that they anticipate buildings being commissioned and the tonnage they require. The 165,000 ton connected load will eventually be provided through an estimated five plant rooms, of which three are finished.

Each plant room may have a final capacity of up to 40,000 tons, but to begin with Palm Utilities simply install enough chiller modules to provide a portion of that capacity.

"Our big issue is getting the plant room built," explained Levers. "That's the two-year part of the programme, but to put another chiller module in is only about 30 weeks. So once the main infrastructure is there, adding other modules is not so difficult."

Levers is also big on having plenty of backup and redundancy, preferring to see developments have two or three plants, with connection routes to more than one 32kv sub-station.

"We're not keen on building one plant for a developer, because if there's an issue with the plant we won't be able to serve," said Levers. "We're never in that situation. We look at the back up and redundancy for everything, which is how district cooling should be."

Future plans

While Levers doesn't completely rule out the possibility of the Palm branching out into other supply, such as power, these service additions are not on the cards at the moment. Instead the company's plan is one of regional and international expansion.

Having predominantly been a Dubai World company the first order is to break out of the group and then out of Dubai. First up will be the creation of a joint venture with a local partner in Abu Dhabi.

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