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Mon 29 Sep 2008 01:50 PM

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Power shortages could hit booming industry

District cooling investment to rise to $30bn but fears voiced over power supplies.

Power shortages could hit booming industry
WATER COOLER: Water and electricity shortages could hit the district cooling industry in the Gulf. (Getty Images)

Power and water shortages are the biggest threat to the district cooling industry’s growth in the Middle East, according to experts.

Riding high on record high oil prices and a booming real estate industry, demand for energy efficient district cooling services has increased dramatically.

Investment in the region's district cooling industry could rise to $30 billion over the next 10 years according to the International District Energy Association in the US.

But power and electricity could shortages could potentially lead to a delay in projects.

“The main challenge [for district cooling companies] is the water and power requirements,” Hala Fares, an analyst at Dubai-based investment bank Shuaa Capital told Arabian Business on Monday.

“District cooling uses desalinated water and given that the region and the population are growing rapidly, there is heavy demand on water and utilities, especially during the summer months,” she added.

Karl Marietta, CEO of the National Central Cooling Co, known as Tabreed, said: “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 is sometimes delays and issues related to getting new services."

District cooling systems work on thermal energy from chilled water in a centralised cooling plant and are up to 40-50 percent more energy efficient than traditional forms of air conditioning technologies.

Total installed district cooling capacity in the Gulf region is expected to reach 9.6 million refrigeration tonnes (RT) by 2010, against 745,000RT in 2005, according to an industry study.

The UAE alone is expected to account for more than four million RT by 2012.

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