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Mon 21 Jun 2010 04:00 AM

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The upside of a downturn

The recession has encouraged a move towards efficiency.

‘The big boys use the crisis to get even bigger," says Tawfiq Abu Soud, executive director at Drake & Scull Water and Power. His company builds district cooling facilities and has been hit by the decline in construction that resulted from the financial crisis. Drake and Scull responded by adapting to the new requirements of the market.

Development in Dubai had taken place at breathless speed, and with scant regard towards resources. In the district cooling sector, plants were constructed without careful deliberation about the actual needs of new developments, say industry players, an approach that resulted in  the creation of significant dead assets.

Then suddenly, as funding dried up and projects development slowed down considerably, the mood changed. The last thing that cash-strapped developers and utility providers wanted was to pay for a bloated infrastructure, and EPC contractors were charged with delivering cooling systems that fitted the needs of developments. This often meant a shift to smaller plants, built to meet the requirements of individual developments. Abu Soud speaks of a more mature market.

The case for decentralisation is also being made in the wastewater industry. A move towards more, but smaller plants would save on sewage pipes and transportation costs, which can be higher than the actual cost of treatment. Once again, efficiency savings are there to be had.

A more sophisticated approach is not confined to the private sector, however. Driven by the competitive instincts, Dubai's Electricity and Water Authority (DEWA) has been keen to upgrade its electricity network, says Dr. Maher Chebbo, EMEA vice president of utilities & communication industries at SAP.

While much of the movement towards energy efficiency in the utilities sector will be driven by common sense and an authority with an eye on the ball, it is undoubtedly also a consequence of market players coping with tough times. A more modern utilities infrastructure that is fit for purpose, and truly efficient, will in no small part be a legacy of the crisis. Boys don't only get bigger, they become more mature.

Florian Neuhof is the editor of Utilities Middle East.

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