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The Echo Effect

The success story of Qatar is being told and retold. But beware the echo effect – the district cooling industry seems to be caught between the paradox of a buoyant economy and the slowing construction industry. By Pratibha Umashankar

| | Oct 15, 2010 | 3:45 pm
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The success story of qatar is being told and retold.but beware the echo effect — the district cooling industry seems to be caught between the paradox of a buoyant economy and the slowing construction industry. By Pratibha Umashankar

District cooling entered Qatar with a bang. Qatar Cool, a subsidiary of United Development Company (UDC), one of Qatar’s leading private shareholding companies, announced on September 26, 2006, that it had begun operating the country’s first ever district cooling plant, which would provide 30,000 TR to office complexes in West Bay.

A flurry of behind-the-scenes effort and groundwork, which began in 2003, had preceded the pioneering initiative and entrepreneurship. The announcement had met with enthusiasm, spiked predictably with a mixture of scepticism and trepidation. From nudging uninitiated clients to sign up to the service to laying a 28-kilometre-long underground piping, the project was riddled with challenges.

But the network was in place in 2005, thanks to Qatar Cool collaborating with Kahramaa (the Qatar General Electricity & Water Corporation), Q-Tel (Qatar Telecommunications) and ASHGHAL (The Public Works Authority).

As Qatar Cool hosts the fifth International District Cooling Conference & Trade Show (a first for Qatar), from November 7 to 9 at The Grand Hyatt, Doha, conducted by IDEA, it will also unveil the largest district cooling plant in the world – The Pearl Qatar. The plant will supply 130,000 TR of chilled water daily to cool more than 15,000 buildings and provide indoor comfort for the 40,000 Pearl Island residents. This marks the district cooling concept coming a full circle in the country.

The concept of district temperature control itself is an ancient one. Two millennia ago, the Romans pumped hot water into open trenches and channelised it to their now legendary baths, homes and public buildings. Roman hypocaust was a system of central under-floor heating.

District cooling is not a new concept in the Middle East, either. The region was introduced to it way back in the mid-1960s, when the first plants were built in Bahrain and Kuwait. Since the concept was, perhaps, ahead of its time, and conservation of energy was not a priority then, it did not gain much traction. But now, with global warming in focus, reducing energy consumption and, by extension, district cooling, has become relevant. With air conditioning accounting for 70% of peak electricity demand in the hot and humid climate of the region, district cooling, which offers electricity savings of about 40% over conventional cooling, has, in fact, gained immediacy.

The advantages of district cooling – that it is energy efficient, cheaper in the long run, lowers operating costs, reduces the burden on the electricity grid, is easier to maintain and is environmentally friendly – is now almost a cliché. But not all clichés bear rigorous scrutiny. And whether or not this one does, needs to be examined, especially in the context of Qatar, since the country is about to inaugurate a district cooling plant of such great magnitude.

18.5% – the magic figure, and still counting…

The success story of Qatar is being told and retold. The magic figures of its rising economy are reverberating through the halls of global financial institutions and the Middle East market. Through an echo effect, the good tidings keep bouncing back. And that is exactly what everyone is anxious to hear, after a string of bad news that has dispirited the region. An aside: it is worth remembering, though, that what gets repeated gets amplified, and often exaggerated.

That said, no one can deny Qatar its moment in the sun. Riding on the crest of an all-time high GDP growth rate, Qatar seems to have stolen Dubai’s thunder with a subtle sleight of hand – the emirate known for ‘the first, the biggest and the tallest’. Qatar Economic Review, a publication of Qatar National Bank Capital, with figures sourced from Qatar Statistics Authority (QSA), forecasts the country’s real GDP to grow by 14.5% this year and tipped to touch 17% in 2011. But the projection – and the perception – in certain circles pegs it as high as 18.5% for 2010, and predicts it to reach 19% next year. In fact, the IMF reports “predict a real GDP growth rate of 18.5%” (Quoted from Qatar: Transport keeps on moving; article originally published by Oxford Business Group on July 26, 2010.) Either way, Qatar is touted to be one of the best performing countries in the world, in terms of economy.

Apart from the $20-billion-worth, 400-hectare manmade offshore island project in the West Bay area of Doha, with its first ring of towers set to be ready, other major projects in Qatar are the Doha International Airport, the 21-square-kilometre Lusail City (with infrastructure projects and Qatar Entertainment City), Qatar-Bahrain Friendship Bridge, Qatar Convention Centre, Qatar Science and Technology Park, Education City Development (infrastructure projects and Sidra Medical & Research Centre) and the Musheireb (Heart of Doha) project.

Barwa is another major initiative, with its flagship project, Barwa City, built on 2.7 million square metres of land in Musameer, just outside the Heart of Doha. It has 128 apartment buildings, 6,000 flats and 1,024 studio units. The self-contained ‘city’ includes schools, a hospital, mosques, parks, shopping complexes and health facilities and, of course, district cooling facilities.

Qatar Construction Sites (October 8, 2010) gives the following figures:

  • Qatar Bahrain Causeway: $1.5 billion
  • Port developments projects: $5.7 billion
  • NDIA: $5.5 billion upon completion
  • Expansion of the existing airport: $140 million
  • Dubai Towers-Doha: QR2.3 billion
  • Al Waab City: $1 billion
  • Lusail City: $5 billion
  • Energy City: $2.5 billion

This apart, about QR72.7 billion (almost $20 billion) is said to have been earmarked for road and infrastructure projects for the period of 2009 to 2014. All this translates into good news for the district cooling sector, as the massive construction work will have a spill-over effect on it.

Sitting as it is on 25 trillion cubic metres of natural gas (the third largest in the world), Qatar is aiming higher than ever. The country’s gaze is towards the distant future. Diversification is the new mantra, and it sees shifting consciously away from an economy purely and entirely driven by hydrocarbons as the way forward. This signals a strategic change – all round excellence through diversification. Qatar National Vision 2030 (QNV) – the policy document launched in 2008 – is the blueprint that will help chart the country’s trajectory.

The salient features of the blueprint are: building a knowledge-based, competitive, globalised economy that guarantees employment for the local population and a high standard of living for all its residents. Qatar plans to invest heavily in the education and infrastructure sectors – communication, roads and transport.

According to an article, titled Qatar, a new labour force (originally published by Oxford Business Group, August 12, 2010; Copyright 2010 ABQ Zawya), the projected education spending for the 2010-2011 fiscal year is $4.8billion – more than double the allocation under the 2007-08 budget (when just over $2.2 billion was dedicated to the education system), and more than 10 times the $440 million budgeted for in the 2004-2005 term.

The article goes on to say that of the total education budget for the present fiscal year, $2.1 billion has been earmarked for buildings and educational facilities. This, again, spells good news for the country’s district cooling sector.

DISTRICT COOLING HAS ARRIVED

District cooling is fast emerging as the most viable cooling solution for a country that has set its sights high. With an ever-growing demand for indoor comfort, it has witnessed rapid growth in Qatar. The market has gathered momentum and appears set for further expansion, despite negative trends that have affected the region.

Kamal Taj, Vice President, ASHRAE, Qatar Oryx Chapter, and head of Mechanical Department, KEO Doha, agrees. “The district cooling sector is an evolving market, and there are many players and many technological innovations,” he says. “We have an excellent presence in Doha. And ASHRAE Qatar Oryx chapter has more than 100 active members.” Apart from The Pearl Qatar, he cites the example of the Education City with its own district cooling plants with a network capacity of 154,000 TR, as an evidence of the sector’s growth.

KR Sankaran, Regional Director (Northern Gulf) at Johnson Controls Air Conditioning & Refrigeration, Qatar, concurs. “The concept of district cooling is growing fast in Qatar, and with emphasis of the government on sustainable development and energy efficiency, we are sure that the benefits that district cooling offers in terms of sustainability will ensure a growth for this application,” he says.

Bassam Al Awar, General Manager, Tour & Andersson Middle East, Africa & India, adds: “District cooling has proved to be economically and environmentally a sound decision. For most of the mega projects in Qatar, district cooling is the right solution. We are very optimistic about the district cooling market in Qatar, as it is one of Tour & Andersson’s key and growth markets,” he adds.

Inside the district cooling plant at The Pearl Qatar

Inside the district cooling plant at The Pearl Qatar

ddAbhinav Goel, Regional Manager (Qatar, Bahrain and Kuwait) for Daikin McQuay Middle East, explains why district cooling has, indeed, arrived. “Major developers are increasingly looking for energy conservation and sustainability,” he says. “They really get excited and attentive when you speak to them about efficiency and sustainable performance for the life-time operation of the equipment.” He cites the example of his company: “One of our key selling points is McQuay Dual Compressor Centrifugal Chiller, with part load efficiency. It uses HFC-134a refrigerant and gives efficient and sustainable HVAC performance as HFC 134a has zero ozone-depletion potential and no worldwide phaseout schedule.”

Peter Blanchflower, Regional Marketing Leader (Middle East, India and Africa) at Trane, reveals that Trane, which has been active in the Qatar market for over 30 years, will open a branch office in Qatar at the fag end of 2010, which shows the faith the players in the industry have in the Qatar market. He gives economic reasons: “The economic indicators for Qatar are robust (GDP, inward investment, Foreign Direct Investment and population) and are expected to remain so. In addition, demand for oil and gas is expected to grow steadily, as the global economy emerges from the recent downturn. Prices for these commodities have held up well, and are expected to remain healthy in the short to mid-term.”

Despite the many positives listed by Blanchflower, Rami Mahmoud, Regional Manager, Victaulic, admits that the district cooling market in Qatar has been hit by the global financial downturn. However, he is quick to add: “But the country is very buoyant and is bouncing back. Victaulic continues to see growth within the infrastructure industry and is highly positive about the market here in Qatar.”

Mahmoud qualifies his statement with a rider – the sector needs to be innovative to keep ahead of the game. “Project managers in Qatar, as in many other regions right now, are looking for technical innovations that deliver time and money savings, whilst also reducing environmental impact,” he asserts.

Sankaran agrees with Mahmoud regarding the need for technological innovations, and adds that the developers have responded positively and adopted the suggested innovations and high-efficiency equipment. “Soon, you will see several projects with these innovations and our high-efficiency equipment,” he says.

The general opinion is that you can reduce consumption and cost by fine-tuning the technology. Interestingly, Blanchflower believes that the clients are still a little circumspect about innovations. He terms their response as being, “Relatively cautious.” He may probably be voicing the sentiments of a section of clients, as there is generally an in-built resistance to anything new.

But it is evident that the district cooling sector has come of age in the country. Most of the customers and government agencies see its obvious advantages. The initial hurdles of educating developers of the efficacy of the system and convincing them to enlist to the service have now almost been crossed.

But has the faith reposed in district cooling been justified? “Yes,” says Goel. “The faith in the system is justified, since it has many advantages, like sustainability, cost-effectiveness, higher efficiency and centralised service. What is more, maintenance and operation are in the hands of one qualified source.”

Al Awar, agrees with Goel and succinctly sums it up. “The DC plant in West Bay and others are now in operation for more than four years.”

CHALLENGES AND SOLUTIONS

Despite the perceived ‘maturity’ of the sector, the fact remains that district cooling still carries the ‘work in progress’ tag and is, therefore, not without its share of challenges.

Jean François Chartrain, COO, Marafeq Qatar, in a feature titled French connection, (Climate Control Middle East, January 2010), points out one of the basic problems: “The challenge here in Qatar is that the country is new to the concept of introducing private operators to sustain the development of Qatar and to optimise investment and operations, of not only utilities, but also services to the end-user. The concept of private capital is very new.”

While admitting that district cooling is the most cost-, energy- and resource-effective solution to the cooling requirements for climates with hot-dry conditions, he feels that client confidence is crucial to the sector. “It is critical, though, that the mistakes and situations made are not repeated and that the perceived risks are mitigated prior to implementation,” he explains.

He adds: “Improved understanding of project economics, government legislation and the business environment can help to identify and mitigate the perceived threats to a cooling project’s success. This, combined with improved planning, design, maintenance and energy-efficiency initiatives, like co-generation, will enable cost efficiency, sustainability and energy savings to be achieved.”

This, he feels, will not only help ease the power crisis, but will also reduce the carbon footprint through increased energy efficiency and lower CO2 emissions.

Downturn-related challenges

Another concern is that, despite the robust economy and a burgeoning real estate sector, things have slowed down even in Qatar, as it has not been immune to the global downturn. But Blanchflower sees this as a blessing in disguise when he points out: “Whilst we have all seen Qatar and, indeed, Saudi Arabia, adopt a more cautious approach recently, this is only to be expected, following the recent turmoil in global and local markets/economies. However, this gives us greater confidence that the projects we are seeing move forward are more assured of being successfully executed. In place of ‘anything goes’, we now have a more mature approach.”

It is, indeed, a fact that the Qatar property market has been hurt by the fallout from the financial crisis and the regional real estate downturn. This has resulted in:

  • Denting investor sentiment
  • Access to mortgages being constricted, as banks are reluctant to lend, especially long-term loans
  • Falling rents – rents at up-market office towers in the New District have fallen by about 25% since 2008 (according to CB Richard Ellis, property consultants)
  • Uncertain construction costs – falling prices of raw materials
  • Low occupancy rates (fallen from 95% to about 85% (according to CB Richard Ellis, property consultants)

With a stock of more than 254,000 residential units and 18,000 buildings under construction, the supply in the district cooling sector has exceeded demand. “The Qatar market seems to have been overbuilt,” Taj admits. “Yes, there is currently an oversupply of real estate properties. The rentals for the residential properties have come down by 15% to 20%.”

Hisham Hajaj, Vice President-International, Stanley Consultants, believes that the Lusail development and Barwa City projects have slowed down and thinks that the commercial sector has been overbuilt.

Supply outstripping demand translates into underutilisation or non-utilisation of big district cooling plants, if completed projects remain unoccupied. This will further negatively impact the industry, as the projects tend to become high-maintenance white elephants.

Kamal Saad, ACG Area Manager, as quoted in Qatar Construction Sites (October 8, 2010), euphemistically calls this uncertain phase a “transitional period until the prices stabilise, as they were over-estimated before”. He points out that everybody is now waiting, but he dubs it as, “not a negative waiting situation, rather a preparation period, as clients and project owners are getting their drawings ready and monitoring the land and building material prices to reach the lowest level, so they can start construction, later.”

Goel, while admitting that at the moment things have somewhat slowed down, looks at the positive side. “Qatar has learnt from the mistakes of neighbouring countries and is scheduling the development in phases to match the influx of population into Qatar,” he says. “Apart from creating state-of-the-art residential colonies, equal importance is being given to diversify the economy with heavy investments in mega industrial and education projects, which will help in attracting more and more people into Qatar and, consequently, the demand.”

District cooling is admittedly a capital-intensive sector, which is predicated to huge investments. A few of the participants at a district cooling seminar held in Doha, last year, had pointedly asked if the banks in Qatar had the necessary liquidity in the first place, and even if they had the financial muscle, did it translate into a loosening of the purse strings. (Sharq contrast by B Surendar, Climate Control Middle East, November 2009). The questions appear no less relevant today, as they were last year. Easing in bank lending appears to be the lubricant that might give the sector a bit more of wriggle room.

Hajaj offers a practical suggestion when he says, “If you present a strong case with accurate financial model, banks will lend you.”

With many players making inroads into the relatively buoyant Qatar market and competing for a wedge of the district cooling pie, the slices will grow thinner, and there may not be enough to go round. Qatar, like Dubai, might, then, become a victim of its own success and buckle under the burden of the region’s high expectations.

Despite the challenges, Sankaran says that his company is very optimistic about the Qatar market. He enumerates the reasons: “Qatar has always grown at its own pace. The projects are getting finalised as per schedule, though sometimes we have seen some minor delays due to changes in design and planning but not because of funds.

“District cooling has a good scope for expansion in Qatar. In the West Bay area, due to significant demand from residential/hotel towers, district cooling companies are taking steps to meet the growing demand.”

Non-downturn-related challenges

Apart from the financial challenges the sector has also come up against non-downturn related hurdles. Taj sums them up as, “Just the normal challenges, like availability of land for district cooling plants, cooling water sources and running of underground chilled water distribution piping.”

Another issue that needs to be looked into is that of metering. Qatar is making attempts at individual metering and a structured regimen for billing. This would imply that district cooling providers would have to install sub-metering systems in individual units.

Qatar Cool is experimenting with sub-metering in the villas in The Pearl Qatar. In the West Bay area, there is a common meter with an option offered to clients. It is, thus, up to the building owner to charge the tenants on an individual basis by dividing the total charge among them. This implies a flat-rate model, which not all residents would take kindly to. In the final analysis, various checks and balances have to be incorporated if the sub-metering system has to be effective in Qatar.

A corollary to this is: district cooling utility companies depend upon supplying chilled water to residential, commercial and mixed-used units for their financial sustenance. This requires them to measure the chilled water consumed and bill tenants for the amount consumed. The tariff system, it has been felt, needs to be rationalised so that the end-user is not short-changed. As it is hypothecated to initial costs that have to be borne by the project developers and suppliers, a fool-proof system that benefits both parties needs to be in place. Admittedly, compared to the West, district cooling is a nascent industry in Qatar and the region. Hopefully, therefore, it is a part of the teething trouble which will eventually get sorted out.

Chartrain puts this into perspective: “There is a culture of subsidising of utilities in Qatar. So people will question why they must receive separate bills for district cooling and, more so, why they are so high compared to water and power costs.”

This is reflected in the disgruntled murmurs, as can be gleaned from the blogosphere – and they are authentic voices, not politically correct statements made for media consumption – which refer to hidden costs of district cooling. They are obviously from consumers who have not paid attention to the small print before signing up.

Inside the district cooling plant at The Pearl Qatar

Inside the district cooling plant at The Pearl Qatar

It is a fact that the problems of sub-metering and billing challenges were ignored in the initial stage, when the district cooling industry entered the region, with the result that most district cooling providers put bulk meters on buildings. The fact remains that the process of rationalising the metering/sub-metering system needs to begin now, before consumer confidence in the system wanes. The powers that be and all the players making a concerted effort to arrive at a common ground could be the solution.

Other areas that need tightening are construction and installation practices. Generally speaking, industry insiders are of the opinion that the sector needs:

  • A watchdog and a regulatory authority to bring it in line with other industries
  • Coordination between end-users and providers to determine the exact cooling load based on the needs and demands of individual projects
  • Collaboration between banks and private players
  • Improved technologies, whereby carbon footprint is smaller
  • Rationalising of tariffs

By its very nature, the district cooling industry guzzles large volumes of water, typically in the range of thousands of cubic metres a day. The continuous demand for fresh water puts great pressure on the water resources of the country.

Water, which is precious in a world that has become increasingly thirsty, is even more so in the desert nation. Its supply being limited makes it expensive. Qatar’s district cooling sector still uses potable (desalinated) water, unlike Dubai.

There is no decree that desalinated water should not be used for district cooling, yet, admits Taj, but adds that there is talk about other options. “There is a requirement to provide provision for the future use of TSE, as and when it is available in Doha, he says. “The Heart of Doha project will be designed to use TSE,” he reveals. He concedes that other than potable water and TSE, there are no other viable water supply sources at present in Qatar.

Fayad Al Khatib, the General Manager of Qatar Cool, agrees that a plant needs to be designed for TSE usage. “Mechanical filtration as well as RO is always considered and talked about,” he says.

Hajaj goes a step further and says, “Qatar is developing a TSE water piping network to meet the demand of district cooling and irrigation.”

Regarding polished water, Al Khatib says, “Polishing depends upon the quality of water available and blow down requirement. Viable alternatives to potable water in the district cooling sector are sea water along with RO plant.”

Al Awar thinks that STP (Sewage Treatment Plant) water or, in some areas, even well water, using small RO plants, could be viable options. He pithily sums up the issue when he says, “Payback on district cooling plants are very long – about 15 to 25 years, depending on the prevailing KWH rates. So the two key issues are financing and water resources.”

Water consumption in Qatar has increased dramatically in recent years, while freshwater availability is rapidly decreasing. Maybe Qatar needs to rethink and go the way of Abu Dhabi and Dubai and make it mandatory for district cooling plants to use only TSE.

Another challenge, as highlighted by Chartrain, is that people in Qatar have very high expectations on the quality of service. They expect quick delivery. “To overcome this challenge, first of all, we have to prove that we are efficient,” he says. He believes that one way of changing public perception is by providing a highly reliable service. “Private companies usually bring with them efficiency and flexibility to find out the best way to satisfy the customers’ needs,” he adds (CCME, January 2010).

Speaking on making people realise the tangible benefits of district cooling at the government level, he says, “It is a political decision to install a district cooling system and to enforce buildings to connect to a utility, so that they benefit from the resultant efficiency.”

Chartrain believes that the move to go in for district cooling, even if it is more expensive initially, has to be made, as it will prove to be beneficial in the long run. But in an era of short-term gains and clamour for immediate results, do people have the patience and resilience to wait? It is the country and communities that have to take a consensual call on this.

Also, do banks and businesses, which are willing to make only short-term investments and want long-term benefits, asking for too much? Therein lies the paradox.

THE QATAR CONUNDRUM

Qatar stands at the crossroads of destiny. It is ready to soar into the rarefied space occupied by the fastest growing economies in the world, and take its rightful place there. But it finds its wings being clipped by the regional sluggishness that has injected an element of risk into all major projects.

If we juxtapose the high GDP and growth rate against the scenario of projects being delayed, it becomes difficult to join the dots. The larger picture that emerges is confusing and ambivalent.

It is evident that slowing down of projects has dented investor confidence. This could lead to the real estate sector getting trapped in a vicious circle. The district cooling sector seems to be caught between the paradox of a buoyant economy and the slowing construction sector.

Last year, the general mood, which permeated to the district cooling sector was, “Let’s wait and watch” and “let’s go slow and steady”. Qatar has, since then, built steadily, despite the slowdown, and is in danger of facing the predicament Dubai now finds itself in – things reaching a boiling point.

With mega projects at varying stages of development, Qatar will continue to register a healthy growth rate. But the real challenge would be after 2012, when these projects will get completed. This coincides with the completion of major natural gas projects the country has undertaken.

To counter precisely such a situation, the Qatar government has increased its public spending and is investing heavily in education and infrastructure. The endeavour, as stated earlier, is to make the economy more broad-based, resilient and durable. But these sectors typically take decades to yield tangible results. Long-term investments bear long-term fruits, especially in terms of employment in the private sector. This is, of course, not to imply that a country should not invest in its future and the future generation. Qatar has shown great wisdom by channelising its resources not only in real estate but in nation-building.

Qatar’s population, now at 1,696,563 according to the 2010 census figures, is projected to rise by almost a third to 2.4 million by 2030, according to Euromonitor, an international market research company. The projected population and a continued influx of expatriate workforce, might justify investment in the country’s development projects. But Qatar’s population largely comprises expatriate ‘floating population’. If the region experiences a ‘double dip’, which Qatar may not be able to absorb, as it did the first time, loss of jobs would lead to a sizeable number of expatriates leaving, thus further reducing the demand for housing and infrastructure. However, campuses and commercial projects may not be impacted by low occupancy. Interestingly, The Pearl Qatar could face the problem of low occupancy, whereas, West Bay might not.

According to a report compiled by the Saudi American Bank Group (Samba), issued at the end of June this year, Qatar – like all other hydrocarbons-based economies in the GCC – will face long-term diversification challenges once gas production peaks.

But according to data issued on July 1 this year, by the Qatar Statistics Authority, though the hydrocarbons sector contributed the giant share to the 22.71% year-on-year increase in GDP for the first quarter, the transport and communications sector expanded by 14.7%. This assumes significance, as it suggests that non-hydrocarbon sector, if properly nurtured will help spur the country’s growth. (Based on statistics cited in Qatar: Transport keeps on moving, 26 July, 2010, copyright, 2010 ABQ Zawya)

Economic diversification becoming one of the drivers of the expanding economy is, indeed, good news. This is especially so, as Qatar cannot afford to put all its eggs in one basket, as shale gas has become a reality, with US, seriously thinking of tapping this resource in a far more robust manner. Viewed through the prism of a broad-based economy, the country gradually weaning away from LNG-dependence may not necessarily spell doom for the district cooling sector. But once again, it throws a refracted image.

CONCLUSION

This sense of ambivalence is reflected in the general ethos. The soaring GDP notwithstanding, the outlook is that of a survivor rather than a victor. The mood of triumphalism has given way to relief – relief that Qatar, at least for now, has weathered the storm.

This is undoubtedly mirrored by the district cooling sector. What essentially form the bread and butter of district cooling in Qatar are mega government and semi-government projects and big commercial, industrial and education sector developments. Fortunately, these sectors enjoy a strong backing from the government and the developers.

This has prompted major players to believe that despite uncertainties, district cooling will survive and thrive in Qatar. “I think the district cooling sector has a bright future in Doha, with proper government support for land for district cooling plants, proper regulations for utilities and due importance to sustainability issues,” Taj says.

Mahmoud thinks that the financial indicators in Qatar are still positive, with construction appearing to pick up and infrastructure growth predicted to surpass the rest of the Middle East until 2014. “Victaulic sees a lot of positives in the government investment plans, such as the US$9 billion Doha International Airport,” he says, and adds, “And an optimistic industry is taking the right steps to secure growth and private infrastructure investment.”

“Chartrain is optimistic about district cooling in Qatar, because “it is part of the standard of living in the country to have air conditioning. And they would definitely like to use district cooling in densely populated areas.”

Sankaran endorses this view and lists reasons for his faith in the industry:

  • The per capita income growth
  • Qatar Government’s enthusiasm to bring World Cup in 2022 – indicates there will be major infrastructure developments
  • The government is focused on development from the bottom up – its growth plans are economically sustainable

The key word doing the rounds is “growth”. Qatar is perceived as one of the two pillars of hope for the industry, the other being the Kingdom of Saudi Arabia. The two have held the tottering region’s construction sector and, by extension, the district cooling market together. But it must be remembered that Qatar is only a tiny peninsula. No matter how strong its economy, it might be able to sustain its own development but not bear the onus of the entire region. Also, when we say, Qatar, in reality, it means Doha.

Another danger that has generally been sensed but not openly articulated is that official optimism and trumped-up projections can often do more harm than good to a country’s economy, as was evidenced in Dubai. The echo effect could easily get distorted into Chinese whispers. But for now, it makes sense for the district cooling sector to soar, piggybacking on the upsurge to avoid the drag effect.

District cooling or standalone units?

The fact that such a question is still deemed to be relevant reflects on the district cooling sector in the region…With a few big projects slowing down, due to cash-flow problems or technical glitches, focusing on smaller projects and modular plants to rejuvenate the market has been seen as a solution – starting with a small project and increasing the capacity as the development increases/adds on, with the same pipe/reticulation network, at minimum cost.Standalone projects, too, have begun to gain currency stemming from the industry’s anxiety about low occupancy. It was felt that if the utilities had to wind up, then the building owners would be forced to opt for standalone systems.

Peter Blanchflower is of the opinion that for large, sustained, concentrated loads, the appropriate commercial and engineered solution is undoubtedly district cooling. “By centralising cooling plant, both capital and operating costs can be optimised,” he says. “But for smaller loads, fragmented across a wider geographic area, the economics usually point towards individual chiller plants. The cost of capital, the price of utilities and the issue of ownership and control all come into play.”

Kamal Taj agrees: “Individual projects are looking for standalone solutions, but large developments like the Barwa Financial District project, comprising nine office towers, is still being designed with district cooling system,” he says.

Jean François Chartrain delves deeper into the issue. He says: “In the case of district cooling, it has been possible to measure energy efficiency, but in the case of standalone projects, you cannot arrive at an average energy efficiency value. Nobody has conducted such a measurement exercise, because it is expensive.”

Referring to an exercise his company undertook to measure the comparative energy efficiency between the two systems, he says, “The conclusion we arrived at was: how we operate a standalone system will determine the energy efficiency of the system. Theoretically, while standalone projects have efficiency of 4kW/hour, this efficiency is reduced by two or three kW/hour compared to initial estimates, because, for example, the operator has forgotten to switch off the chiller. Strange things happen in standalone projects, and it, in turn, affects the efficiency. In fact, our exercise in measuring comparative efficiency was a big advertisement for district cooling. We carried this message to journals in Europe.”

Abhinav Goel, whose company, Daikin McQuay, which also promotes VRVs in a big way, says: “Yes, some projects are looking at standalone solutions, since some of the district cooling projects have been delayed/cancelled, but there is no doubt that district cooling is a sustainable and cost-effective solution. However, each project needs to be looked at on its own merit, and we offer the right solution after a detailed study of the project.”

Goel thinks that this reinforces the importance of looking each and every project differently and providing a customised/tailor-made solution for each project, keeping in mind the best interest of end user

The cup that cheers

A successful World Cup bid may have far-reaching implications for the district cooling sector in Qatar…Spurred by the experience of successfully hosting Doha 2006 Asian Games, Qatar, a tiny desert nation, has staked its claim to host the 2022 soccer World Cup, vying with Japan, Australia, South Korea and even the United States. This, despite the fact that it has never qualified for the World Cup.The bold bid displays the quiet confidence Qatar has in its ability and resources to create world-class facilities for the international event – infrastructure, stadiums, games village for the teams and hotels and entertainment outlets for about 700,000 visitors it hopes to attract. It has plans to pump $4 billion to build nine new stadiums and renovate three existing ones. All this hypothetically translates into big construction projects and spells good news for the district cooling sector.The country appears not to be worried that the event will take place in June and July when the mercury soars. It has plans to keep the pitch temperatures at about a comfortable 27°C. The district cooling industry sees immense opportunities here, as it believes it will have a major role to play in the endeavour. There is palpable enthusiasm in the sector about the prospect.

“The bid for the 2022 soccer World Cup will boost the demand for district cooling,” says Jean François Chartrain. “The event is only the emerging part of the iceberg. When a country hosts such an event, other collateral benefits come into play. We can cool down open areas with the best efficiencies. Such events offer an opportunity to find new solutions.” (Climate Control Middle East, January 2010)

Abhinav Goel agrees. “We are very optimistic and are keeping our fingers crossed for the first week of December, when the winner of the 2022 World Cup soccer bid will be announced,” he says, and adds, “If successful, this will create tremendous opportunities and speed the decision-making process for finalisation of mega projects.”

Shrugging off concerns about the possibility of a post-event scenario of being left with unutilised mega structures, December 2 is the day Qatar is waiting for with bated breath. While the bid is significant in itself, winning it will put the stamp of international endorsement on the country’s stature and economic heft, it believes.

REPORT CARD

A few of the respondents have listed major district cooling projects their companies are involved in. Though not an exhaustive list, it gives an idea of how the sector has fared…Daikin McQuay

  • Education City
  • Barwa City
  • Sidra Medical Research Centre
  • Khalifa Stadium
  • The company supplies its products directly and engineers directly and also through its local distributor.

Johnson Controls Air Conditioning & Refrigeration

  • Qatar Foundation Projects
  • New Doha International Airport
  • St Regis Hotel
  • Barwa Financial District

* The company supplies engineered products directly for all the above projects but sells all the unitary products through distributors.

Tour & Andersson AB

  • Barwa Commercial Avenue
  • The Pearl project
  • Qatar Convention Center
  • Doha New International Airport
  • Sidra
  • World Trade Center

* The company operates through its authorised distributor, Faisal Jassim Trading Company.

Trane (Part of the Ingersoll Rand group)

  • Ras Lafan
  • Qatar Airways: four-star hotel and new arrivals hall
  • Intercontinental Hotel (West Bay)

* The company supplies equipment and provides chiller plant and building management control systems. Commercial chillers, air-handlers, controls, service and parts are handled directly by its staff. Residential and light commercial equipment are handled by a distributor.

Victaulic

The company has not provided the customer/client list. However, it says that it has supplied solutions to large-scale chiller plants, featuring chilled water and condenser water systems, with Victaulic couplings, fittings, valves and accessories, including the new Style 107 coupling, Advanced Groove System (AGS) for medium- to large-diameter piping.

* The company operates in Qatar from its regional base in Dubai and a sales engineer based in Qatar and a local team.


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