Yasser Al Jaidah
Chief Executive Officer
Energy efficiency should be considered an energy resource and take part of a country’s share of total primary energy consumption. Energy efficiency is becoming a top priority in energy policies around the world as it is cost effective to implement and widely available. Encouraging energy efficiency and conservation is an important part of a government’s commitment to building strong, healthy and sustainable communities and to ensure that the energy needs of all living in the Gulf Cooperation Council (GCC) are met. One of the least-cost and most efficient solutions in reducing emissions and primary energy demand in the GCC is the development of modern low-carbon district energy, more specifically district cooling in its cities. District cooling technology has many inherent advantages over conventional cooling, yet a benefit that stands out above the rest is that it is more energy efficient than standard approaches to air-conditioning. Increased power savings in generation would translate to more Oil and Gas being available for export rather than dedicated to local consumption to cover cooling needs. Which could account for up to 70 percent of energy consumption, in GCC cities. However, the current market structure in the region places district cooling at a disadvantage to realize its full benefits. Government’s intervention is essential especially in Qatar and it pursuit to meet its 2030 economic, social, human and environmental development objectives. I see district cooling helping on all four fronts.
Speeding up the introduction of energy efficiency into the energy mix reaps multiple benefits of an inclusive green economy. Cities account for over 70 percent of global energy consumption and 30 to 40 percent of greenhouse gas emissions worldwide. In several cities in the GCC cooling can account for up 70 percent of local energy consumption. Any solution for the climate and energy transition must explicitly address sustainable cooling. Under the right conditions, district cooling can offer numerous advantages over conventional cooling in the GCC. The technology has many advantages for areas of high cooling density — densely populated areas with a heavy demand for air-conditioning. By aggregating the demand for cold air in dense areas, district cooling is not only more cost efficient, but also more reliable, more energy efficient, and has less of an impact on the environment than the conventional approaches to air-conditioning.
The current market makes it hard to see the economic advantages of district cooling in the chain of transaction for a property. There are many reasons for the lack of economic transparency, but for this article I would like to focus on one major issue, the industry faces in the GCC, and that is low power prices because of government subsidies. The low electricity tariffs in the GCC obscure the economic advantages of district cooling leaving developers, investors, or buyers, believing that district cooling is economical only at very high densities; , which is not the case if actual cost of power was placed in the equation. Nevertheless, this does not affect market participants much, but does put a burden on a country’s balance sheet, not to mention its environmental objectives. Given the case, it puts government and its electricity utility arm in an important position to effectively plan and mandate the technology in areas where it sees fit to suffice the country’s energy objectives that is if subsidies are retained.
Local governments can effectively catalyze district energy deployment first and foremost in their role as planner and regulator. Local governments have an important role in planning community-based energy solutions that can help meet specific targets and objectives. By adapting the local regulatory framework, governments can encourage the development of district energy through vision and target setting and linking the benefits of district energy and broad energy and environment policy targets.
Energy efficiency and conservation is an important policy target that can be achieved when planning communities and through the design of individual developments, so one measure that local governments can do is to treat district cooling as an essential utility and to be a part of its urban planning, just like water and electricity. They could draw out appropriate areas with sufficient cooling density and designate them as appropriate zones for district cooling. To ensure overall fairness in pricing and all rights protected they could oversee and ensure the tariffs are fair for all involved in the value chain from cooling suppliers, developers, and the end-consumers. Governments could potentially go beyond pricing and place clear mandates in service standards.
With the GCC countries likely to grow rapidly and urbanize further in coming decades, district cooling could save these countries from investing substantial sums in new power stations. District cooling can achieve its potential as a cost-effective and sustainable way to cope with the region’s growth and demand for energy specifically for cooling.