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Cooling demand
The region's insatiable appetite for real estate has driven demand for district cooling plants. But the rising cost of power and water is hurting the industry. Tabreed CEO Karl Marietta explains how he plans to tackle the changing market.
Karl marietta's office in Abu Dhabi Mall is filled with flowers congratulating him on his new position. The new CEO of the DFM-listed National Central Cooling Co, known as Tabreed, is now in charge of the world's largest district cooling company. But he doesn't look like a man whose been celebrating since his appointment last month.
Fueled by record high oil prices and a booming real estate industry, demand for energy efficient district cooling services has increased dramatically over the last five years. But threats of a real estate slowdown, power and water shortages and the rising cost of materials could be jeopardising the industry's growth.
"The availability of electricity is a critical part of our business. The utilities are struggling to keep up with the amount of new customers that are asking for services, including us so there are sometimes delays and issues related to getting new services," he says.
After an explosive start, fears are now growing that the region's district cooling industry may be running out of puff.
District cooling has grown in tandem with the Gulf's booming construction industry, that has recorded double digit growth over the last five years in Dubai.
A 2007 National Investor report predicts total installed district cooling capacity in the UAE will reach four millions tonnes of refrigeration (TR) by 2012, at a compounded annual growth rate of 63 percent. Across the Middle East the industry could reach $30bn in the next 10 years according to the International District Energy Association in the US.
"District cooling goes hand-in-hand with the greenfield construction industry," says Shafiq Khoury, managing director of Dubai-based Palm District Cooling.
The region's desire to transform itself into a more sustainable country is further boosting demand for the technology. While traditional forms of air conditioning technologies rely on individual air conditioning units, district cooling systems work on thermal energy from chilled water in a centralised cooling plant, using up to 40-50 percent less energy.
"If you compare district cooling with a traditional cooling system it will only cool half of the development. Comparatively on the consumption side you [also] save around 20 percent electricity," says Khoury.
Tabreed is currently in talks with Masdar, the Abu Dhabi-based green city initiative, to convert the air conditioning in hundreds of buildings across the emirate of Abu Dhabi. The plan, which will significantly reduce energy use, will also see carbon credits being sold in Europe.
Demand for the industry's services has boosted competition in the form of state-owned companies.
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