Governments must bring key regulations and set fair and stable rates for district cooling as a utility and for electricity and other forms of energy such as gas and diesel, said an industry expert.
It is a matter that requires the government to outline transparent procedures for settling rates between consumers and producers.
Once this is in place and practiced consistently it will lead to boosting the rate of district energy adoption, said Dr Anwar Hassan, the VP of Sales and Field Operations at Al Salem Johnson Controls (York), a specialist in providing integrated solutions in HVAC (heating, ventilation and air-conditioning) systems.
Arbitration and standards bodies, in addition to mandatory procedures and processes for setting rates and arbitrating differences, are needed to boost the confidence of investors that the value will surely be harvested, stated Hassan.
According to global strategy consulting firm Booz & Co, district cooling systems will be able to reduce up to 25-30 per cent of the cooling requirements of Saudi Arbaia by 2030.
District cooling, a centralized way to produce and distribute cooling energy solutions for industrial and real estate sectors, is seen one of the most viable and cost effective HVAC solution for urban cities with dense populations.
This centralized system eradicates the requirement for a separate system in each building and also provides more economic and environmental benefits than other solutions, said the consulting firm.
This central grid enables adoption of renewable energy sources (such as solar, thermal and biomass) which otherwise would have been difficult to realize in individual buildings.
Buildings are the largest source of energy demand globally and are central focus in addressing climate change. Heating, cooling, and powering residential, commercial, and government buildings consume 40 per cent of all energy produced worldwide, and as much as 70 per cent in the Middle East, it stated.
Under the extreme peak summer conditions, HVAC systems are no longer a luxury, rather a necessity to keep key sectors operating.
Hassan said there are key trends shaping the HVAC sector in Saudi –a greater drive for adopting designs that are energy efficient, the adoption of higher energy performance units and components in order to comply with energy performance standards created by Saso/SEEC and a strong anticipation of growth in residential unit’s sales due to new housing programmes.
The circumstances of customers, availability of load pattern, tariff pattern, building pattern makes it smart to craft a solution targeting specific outcomes. However many equipment suppliers have limited offering that traps the customer in one size fits all, he noted.
Dr Hassan believes that the district cooling concept is very much applicable in the region, albeit with some key regulations.
"The investment in piping systems to distribute chilled water to facilities must be regulated and charged as part of the general infrastructure. Also issues and disagreements about it should be arbitrated and regulated by industry bodies, allowing district cooling companies to utilize the network," he explained.
"This will be beneficial to society apart from offering more competitive rates for consumers (just like power distribution companies or telephone companies), and as a result not everyone has to dig the country," he added.
Dr Hassan believes success of such proposals would lead to the adoption of the most appropriate solutions in accordance with modern technology, while contributing to the efficacy goals of Saudi Arabia’s National Transformation Program 2020.
Some of the company’s leading projects in district cooling include: The Two Holy Mosques, King Abdul Aziz Endowment tower in Makkah (Clock Tower), Jabal Omar area in Makkah, and the third terminal in the Jeddah King Abdul Aziz airport.
Historic experience of many societies in dealing with utilities and retaining high degree of competitiveness resulted in separation of production and distribution utility domains.
Dr Anwar believes government regulations and initiatives can help place greater emphasis on life-cycle cost over initial cost.
"High efficiency solutions are usually more expensive in first cost and adopting them requires a clear understanding of the value they generate, articulating this value looks shaky if the elements making the value; like energy efficiency performance, power and water, are not on firm grounds," he noted.
The adoption and implementation is impeded by the lack of clarity on a number of practical considerations, for example:
•Determining whether treated sewage water is available;
•When is it available at a particular location; and
•At what rates it is going to be available.
These are difficult questions, but without clear transparent answer and commitment, and without such knowledge being publicly available, it is difficult for the energy efficiency conversations to progress, he stated.
“Contractors will remain bound by the contract terms of the project and cannot be expected to advocate more energy efficient solutions unless they are financially incentivized to do so,” he added.
There’s wide acceptance among consultants and owners that District Cooling is an environmentally and fiscally favorable concept and practice. However wide adoption remains elusive, remarked Dr Hassan.
Thus industry awaits the standards and guidelines from government to activate their environmentally favorable decision, he added.
According to him, district cooling is mandatory in government developments requiring 15000 tons or more.
"We have seen admirable efforts by King Abdullah City for Atomic and Renewable Energy (Kacare) promoting and offering financial grants for the development, research and commercialisation of products and solutions supporting the use of renewable energy in HVACR," observed Dr Hassan.
This is appreciated by companies that wish to play a role in advanced environmental solutions, he added.