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Wed 17 Dec 2008 04:00 AM

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Serial chiller

The district cooling market is booming and nobody is profiting more than the companies building the plants. Peter Ward talks to SNC Lavalin managing director Paul Beaudry on how the sector is performing.

The district cooling market is booming and nobody is profiting more than the companies building the plants. Peter Ward talks to SNC Lavalin managing director Paul Beaudry on how the sector is performing.

The Middle East is proving to be an ideal region for the district cooling. The conditions are perfect, the demand is high and the people in power are quite happy to invest.

It is a great industry to be involved in and there are few firms better placed than those building the district cooling plants themselves. SNC Lavalin is one such firm and now has a major presence in the Middle East and in the district cooling market sector.

SNC Lavalin managing director Paul Beaudry took over his role in the firm last year and even in that short time, he has seen considerable growth: "I was named managing director in 2007, I helped set up the company here a few years ago and the person that was in control retired and I took over from him. It has been extremely challenging because we have been growing like mad."

Although not an engineer himself, a fact he admits can be "awkward", Beaudry has been working in construction for 26 years. He has spent 22 years with SNC Lavalin, despite his first university degree being in mathematics.

He was born in Canada and after studying in Paris was offered the chance to work for a construction company in Africa. He has now lived on four different continents and worked in Iraq, Lebanon, Europe and the United Arab Emirates among others.

Market growth

A growing market more often than not breeds competition, and district cooling is no different as Beaudry reports: "There is definitely more competition as there are new players in every different sector. Be it the operators, the builders or the suppliers. It's quite obvious why, this is the most dynamic area for district energy in the world.

There is a recession, there's quite a bit of investment still going on in this area, so people are moving over here to pick up the slack that is happening in other areas of the world."

The worldwide recession has yet to have a major impact on the Middle East and Beaudry believes this region should be safe for now at least: "In the short term there won't be much of an impact, the medium and long term depends on how long this world wide recession continues and obviously that will have an effect on this area."

Beaudry adds: "None of our projects have been hurt by the recession. In fact we see this year as being a better year than last year. This year is better than 2007 and 2009 is going to be better than 2008."

The firm reported it secured double the number of projects this year than the previous one. Although it doesn't predict this figure will double again, it is expecting another substantial increase.

Currently the company operates in a number of countries in the Middle East. Beaudry reveals: "SNC Lavalin as a whole is all over the place, we work in about 100 countries.

We basically are in most of the countries in the Middle East, be it Saudi Arabia, Qatar, the UAE and Bahrain. I think we are in virtually all these countries. On the district cooling side right now we are in the UAE, Bahrain, we are opening a subsidiary in Saudi Arabia."

The subsidiary, announced in the November issue of MEP Middle East, is currently being finalised and is an area where the firm sees a lot of potential: "We see Saudi Arabia as being a major player in this area.

It's going to be more than an office; it's going to be a company. You have to get projects, we are bidding on a certain number of opportunities but Saudi Arabia is one of those countries where everything is huge so you could rapidly become gigantic."

This move into Saudi does not mean Beaudry is dismissing the important role the UAE has played and is still playing in district cooling. Beaudry stresses: "The UAE government promotes district cooling quite a bit.

The UAE accounts for 64% of the capacity in the GCC of district energy. And 92% of what is under construction so I think the UAE has been an avid promoter of the district cooling industry. I think the other countries are starting to see it as well though."

Top billing

One of the advantages that the district cooling sector has in Saudi Arabia is the day night tariffs that are used in the country. This method of billing promotes the use of thermal storage to keep energy quite literally on ice. It can then be used when the demand is at its highest.

"We believe that day and night rates are very, very good for the district energy industry. It would favour all kinds of options.

Thermal storage tanks, ice storage and things like that would work very well if you had different rates for the night and for the day. This is something that we think would be beneficial the problem with some countries is that they are growing rapidly and is that it's a real challenge for the power sector," Beaudry notes.

District cooling takes half the space and half the energy. If we can save the energy on district cooling plants then energy can be used for something else. By putting different rates for night and day this will help the district energy industry."

There is no doubting that district cooling saves energy and ultimately money in the long run. However some questions have been raised over initial startup prices and Beaudry is quick to point out the answers: "The payback is quick and the benefits are definitive, there's no question about them.

I think it's a big advantage for these countries and I think the UAE has understood that dramatically. It is in their interests to promote district energy in the Gulf. There are substantial cost savings to be done with district energy." Telling technology

Beaudry reveals that for the district cooling sector and people involved in the industry there are several advantages to being in the Middle East, the most notable of which is the suitability of the technology to this climate.

"These are fabulous countries for district cooling. There are extreme temperatures so it's very efficient and very beneficial. What you need with district energy is extremes, countries that have 22-23 degrees are probably not ideal. We like extremes, we like very hot or very cold and this is what we have in the Gulf.

It also works well in places like Canada compared to the middle of the US as you have the extreme temperatures. The problem is that you install the capacities for your extremes, the hottest or the coldest.

If the extremes are very short then a lot of the time you aren't using all of your equipment and you have excess equipment," Beaudry states. He adds that is the extreme temperatures in a climate last for six to eight months then it is perfect for district energy.

Firms such as SNC Lavalin are not cruising along without facing challenges in the district cooling sector however. Beaudry outlines: One of the challenges is the building permits. They are a regular bureaucracy in any country and they aren't different here. When you are building in places like Dubai and Abu Dhabi more and more there is a challenge in the traffic, you have to work around that, that's definitely a problem."

Another problem stems from the sometimes tricky access to service corridors in cities in this region. "The service corridors are a big issue. The service corridors in the older areas of Dubai, it wasn't planned to have district cooling so when you are using corridors for bringing in the water, you are competing against everybody for space. It's a bit of a mess," comments Beaudry.

Another issue which SNC Lavalin shares with most of the construction industry is the availability of manpower and in particular skilled labour. Beaudry highlights the problem: "People and resources definitely has been a problem in this country for several years with construction booming finding the right people and getting lodging for these people as well is also a challenge."

"Construction is basically a service industry, you are a people company and you are just as good as the people you hire. The machinery is there but someone has to operate it, somebody has to design the plants, somebody has to actually hold the hammer and pound the nail.

So you have to find the right people and organise them in such a way that they do the project in an efficient way according to the plan, the schedule and the budget," he adds.

Beaudry also reveals a problem there was with materials as steel, concrete and cement prices rose quickly. However he now explains that falling prices on these vital resources are being welcomed by his company and the industry in general.

Power problems

Power supply is a well documented problem of the district cooling sector here. SNC Lavalin also builds power stations and is currently constructing a 2,000mW plant in the UAE. Beaudry admits that district cooling plants are having problems with power: "I suppose that it is delaying putting district cooling plants online.

There is a little bit of a challenge to some of these plants if they don't have the energy then you can't put the plant online and you can't commission them without energy."

Water supply can also be a problem, mainly because the plants use such a large quantity of it. Beaudry reports: "Up until now projects have been using portable water. Now the government has decided we need to be using treated sewage effluent (TSE) water or grey water.

There is a fair amount of that. I don't think that's a big issue at least not in the UAE. If you look at some of the smaller countries around here for example in Bahrain they use seawater.

The only place where you would have a problem of water as a very big problem is Saudi Arabia but they are trying to address that as well. It's a bit more of a challenge but otherwise I think if you are using the effluent then there is a fair amount of water and I don't think it's a big issue."

District cooling is a pioneering sector and one with unique advantages. The only major problems on the horizon for the industry lie in the supply of power and water. However, there is an eager willingness to try new ideas in the industry and it is this that will most likely see it overcome these challenges. And it is people like Beaudry, engineer or not, that will be steering the sector through.

Paul Beaudry: Up close and personal• Born in Canada

• Has been involved in the construction industry for 26 years.

• Has lived on four different continents; Europe, Africa, South America and the Middle East.

• Obtained his first degree in mathematics and sees himself as a numbers man first and foremost.

• Prides himself in having the right people for the right positions and believes employees are the most important part of a company.

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