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Qatar’s cup of joy

Hope soars at district cooling summit even before bid announcement.

| | Dec 15, 2010 | 4:07 pm
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Hope soars at district cooling summit even before bid announcement. Story and photographs: B Surendar

With three district cooling conferences in Qatar in close periodicity to one another – the first took place in October and the second and the third in November – it would have been hard to imagine that the last in line would have attracted any interest, but that’s precisely what it did.

The crowd was thick, and the discussions were not hackneyed. Over 250 people converged on the Grand Hyatt Doha to attend the 2nd Annual Middle East District Cooling Summit, organised by Fleming Gulf Conferences.

The Summit ended just days before Qatar won the bid to host the 2022 FIFA World Cup and the subsequent sense of euphoria regarding the pot-of-gold opportunities for the construction industry, but as at the IDEA Conference, earlier in the month, much of the discussion still revolved around the exciting potential for district cooling in the peninsula and in Saudi Arabia. An additional focus was Kuwait, from where a sizeable contingent arrived to participate in the discussions.

As at recent conferences, though, the lingering downturn-induced mood was an imposing presence. The financial turmoil has had a chastening effect on the industry, and the discussions took place against that backdrop. During his presentation, Gaith Ghezawi of Nalco, for instance, made the wry remark that while the original forecast for the GCC (pre-downturn) was 15.6 million TR by 2015, the new forecast was five million TR.

Speaking of Qatar, a member of the audience pointed out to the real estate slowdown in Qatar (a situation that is now likely to change, given Qatar’s successful bid) and a lower demand for LNG and a reduction in prices, owing to an increase in production of shale gas in the US and other traditional markets for the peninsula. Hisham Hajaj of Stanley Consultants dismissed the lower demand for LNG as a temporary phenomenon and expressed optimism about Qatar’s growth prospects.

Expectedly, Hajaj pulled for district cooling to come through, as did several others at the conference, including its moderator, George Berbari of DC Pro Engineering. “One day, we will have 50% of all cooling in Qatar done by district cooling,” Berbari said. “I am hoping the Municipality will lay the piping network and take care of the transmission (of chilled water). I am hoping this dream will be possible 10 years down the line.”

Later, speaking as a presenter, Berbari said that the Government in Qatar, and end-users were seeing how district cooling was important to curb the ever-mounting power consumption. Green buildings and district cooling, he said, were two important elements for curbing power consumption, adding that Qatar and the UAE had large per capita consumption of power.

District cooling, he said, was important to Qatar from an economic security point of view, as well. Saying that Qatar consumed 24% of the total quantity of natural gas it produced (a lion’s share for producing power), Berbari said the peninsula would benefit by lowering power consumption, so it could export more of the gas and boost its revenues.

“Electricity generation is skyrocketing in Qatar,” he said. “The country’s expected power demand for 2011 is 8,707 MW. By 2020, the demand for electric power in Qatar will reach 10,000 MW or even 15,000 MW. In effect, the country is likely to consume 50% to 75% of the total natural gas it produces. This will not only impact the country’s revenue but also deprive the world of a major source of energy and create higher global competition to secure energy supply.”

The high power consumption, Berbari said in his presentation, was relevant to the district cooling industry, because 65% of the total electrical load went for running air conditioning systems.

The power situation in Qatar, Berbari said, was further complicated by the country’s electricity tariff and subsidies regimen. “The figure is of $530 per capita subsidy in Qatar,” he said. “This is a substantial subsidy figure. And if we increase the consumption of energy, this figure will grow. For a projected 800,000 TR demand, the estimated real load will not exceed 500,000 TR, where 60% will have thermal storage and 40% without. Electric demand of the 500,000 TR is 400 MW for district cooling, as compared to 825 MW, in the case of traditional air-cooled systems. In that scenario, we are looking at an annual power consumption of 1.710 GWh per year for district cooling, as compared to 2,850 GWh a year for a traditional air conditioning system.”

In his presentation, Berbari said that district cooling in Qatar could help in other areas, as well. For instance, he added, while it could be imposed on completely new areas with medium to high density, it could play an important role when it came to retrofitting old stock of buildings in a bid to make them greener. Extending the green theme, Berbari said district cooling could help in green building energy monitoring and performance. For all this to happen, though, he called for greater support from the government. For instance, he said, TSE (treated sewage effluent) usage should be prioritised for district cooling. “If TSE is used for the district cooling industry, it has four times the impact on GDP growth than irrigation,” he asserted. Berbari also called out to the authorities to make a service corridor available in all future master plans. “District cooling should be a part of all future master plans,” he said.

Speaking from a government perspective, Waleed M Al Emadi from Qatar’s Ministry of Environment, admitted that Qatar viewed district cooling as a benefit to the country. “Regarding the matter, we as the Ministry of Environment support all district cooling efforts in the State of Qatar as an environment protection issue,” Al Emadi said.

Shifting the attention to Saudi Arabia, Hajaj said that the picture in the Kingdom was looking very rosy, indeed. Saudi Arabia, he said, was booming. In the coming two years, he added, the country would be adding one million TR of district cooling. “All new projects are using district cooling in their developments,” he said. “They are working on 15 universities, each with a district cooling plant. So district cooling is here to stay.” Added Jeevan Joy of SPIG: “It is true that there are several institutional projects in Saudi Arabia, like hospitals and airports. So district cooling is sustainable.”

Like Saudi Arabia, delegates at the conference agreed, Kuwait was warming to district cooling. An indication of this was the sizeable presence, relatively speaking, of key players from Kuwait, including Fadhel Al Kazemi, the CEO of Kazema and Professor Abdullatif Ben-Nakhi, Member of the Board of Governors of ASHRAE’s Kuwait Chapter. Al Kazemi, in fact, used the occasion of the Summit to launch Tekneen District Cooling & Utilities. In the case of Kuwait, it is no longer a case of why but when to opt for district cooling. As Yaqoub Almatouq of the Environment Public Authority (National Ozone Unit), Kuwait, put it, the power demand in Kuwait was very high, which meant that for any major project, district cooling was the best alternative.

Pointing out to the fact that the residential sector in Kuwait consumes 60% of the power generated, Al Kazemi said that district cooling was the most viable option. In his rather detailed presentation, he spoke of a grand national purpose in Kuwait and of how many projects in Kuwait were going in the direction of a reduction in the use of power and an increase in the use of renewable alternative energy. “We need to maximise competency in using fossil fuel and alternative renewable energy in both the supply side and the demand side of energy,” Al Kazemi said. “We need to implement integration of power infrastructure to produce power and to allow people to sell the surplus to the grid.”

Almatouq said district cooling was invaluable also from the point of view of cutting down on emissions of greenhouse gases. Speaking as a refrigerant expert, Almatouq pointed out to the availability of several refrigerants which had a low global warming potential (GWP) but which were toxic or inflammable. These could, however, be used, he said, if they were controlled within an integrated plant room, under the constant supervision of competent and skilled supervisors. In that context, he said, district cooling was tailor-made for deploying the refrigerants for beneficial use.

Though upbeat about the prospects for district cooling in Qatar, Saudi Arabia and Kuwait, all delegates agreed that for district cooling to be fully accepted, there was a need for it to wash itself off its excesses. For one, some of the delegates said it was essential that district cooling as a business should have a proper financial structure.

For instance, Berbari said that while there was nothing more important than banks for the district cooling industry, banks had shied away and were looking for a solid structure. “Are we generating enough cash to repay the banks?” Berbari asked. “Banks are pushing district cooling to have signed agreements. The delay in using capacity is also affecting the banks.”

It was interesting that a representative from Doha Bank was present at the Summit. Speaking obviously from the other side of the fence, Dag K H Reichel, Head, of Wholesale Banking at Doha Bank, said that the bank did not have much experience in handling district cooling projects but that, at the end of the day, financing any project was the same approach as project financing. “We will consider looking at these financial opportunities from a project finance perspective,” he said, adding, “Project financing is clearly dependent on the underlying cash flow of the project.”

Responding to this, Abdulhamid Al Mansour, the CEO of Saudi Tabreed said that it was important for the industry to build better awareness among banks about district cooling. Banks, he added, should know that the district cooling industry was reliant on load and ambient temperature, so it was not as easy as project finance for other projects. “Banks are used to seeing a performance test and a reliability test,” he said. “They can, then, extrapolate from the tests that as long as the district cooling companies operate properly they will be in a position to pay their debt off.”

Speaking along the same lines as Al Mansour, Lars Hargö of Capital Cooling, said: “We engineers do not speak the same language as financial professionals. We need to create communication tools to bridge the gap.”

Hargö advocated a risk-management loop, which would run through the different phases of a project. “The business project is there, but the right work process and tools must be in place,” he said.

Governance and risk management are crucial, Hargö added. “For instance,” he said, “it is important to establish a risk-identification process, a risk-management system and risk-monitoring and control systems. It is also important to conduct a risk-informed investment analysis.”

Speaking on the subject, Ghezawi of Nalco, said that while a financial structure was important, it was clear that end users were not happy with district cooling. By way of hazarding a guess, he asked: “Was it overpricing? Was it greed by the private sector?”

Also, zeroing in on the challenges involved in coming up with a proper financial structure, Ghezawi said that if the state was already subsidising on water and electricity, what was district cooling going to save on, then? “Also, subsidies are heavily concentrated on the residential sector, be it in Saudi Arabia, Kuwait, Dubai or Abu Dhabi,” he said. “If they offer the industrial sector half of the subsidies they offer to the residential sector, we will be able to give lesser cost. Unless we see subsidies removed completely, we will not see appreciation for renewable energy and district cooling.” Added Hajaj: “The issue is also with the developers. They want the cake and eat it, as well.”

Ghezawi and Hajaj did not state it explicitly, but the purpose behind their statements was to call for a need for regulations. Al Kazemi also called for regulations and also for legislation. He said it was important to institute policies and legislation to, for instance, encourage thermal energy storage (TES) and to explore and adopt alternative renewable energy. “District cooling is an investment, and whatever rates are issued have to be based on fair business practices,” he said. “I have seen in some countries that the developer pays nothing and the tenants pay too much.”

Speaking for Kuwait, he revealed that the country had a long-term policy in place, whereby it was working on district cooling codes and acts. “Several district cooling projects are being planned for cities and universities,” he said. “Once the act is there, you will see more district cooling.”

Al Kazemi said it was crucial to have regulations in place. “It is the way forward,” he said. “Power companies will not invest if there are no regulations. Concession is not enough.” Al Kazemi added that the regulations should include reference to reputable bodies, like IDEA and ASHRAE. “IDEA’s goals should be our goals, as well,” he said.

Berbari said that regulations should cover the utilities, as well. Currently, he said, utilities are not favouring district cooling. Once they do, Berbari added, district cooling will favour end users.

Berbari said there was a lesson to be learnt from how some parts of Europe were successful in creating a level playing field for district cooling. The state, he said, initiated district cooling projects and, after establishing the business model that simultaneously took care of the welfare of the end users, passed on the responsibility to the private sector.

On cue from Berbari, Dr Joachim Paul, the Founder of Vortex Systemtechnik, said that there had been a lot of discussion in Brussels to create the level playing field. Paul said that authorities should help to promote and actually make it easier to establish a district cooling infrastructure system. “They should be more proactive in giving permission to put pipes in the ground,” he said. “This type of model is actually the same as the deregulation of electricity.”

In addition to better financial structuring, regulations and legislation, delegates said, there was a need for better project management to improve the health of the district cooling industry. Speaking on this subject, Hargö of Capital Cooling said there was a clear path ahead to reach project success, which, he added, included a solid business project management structure, a robust business project management process and a standardised and implemented business steering and control model.

Hargö told the audience at the Summit that it was important to have genuine knowledge about business project management, including about such aspects as the market, technique/engineering, finance and organisation.

A proper business project management process, Hargö said, increased efficiency in design, build, transfer and operation processes; increased finance profitability; and helped cut the realisation time.

For district cooling to be successful, delegates agreed, it was also important to look at the water side of things. As Ghezawi of Nalco put it, the current yearly water demand for district cooling (at 40% average load) was 40 million m3 a year for two million TR hours. In the medium term (2010-2015), it was projected at 100 million m3 a year and in the long term at 300 million m3 a year (for 15 million TR hours. After giving the figures, Ghezawi asked, “The big question is, do we have the water?”

Earlier, during his presentation, Berbari had spoken about the importance of TSE and the need for service corridors. At the Summit, two water-technology companies – GE and Nalco – took the discussions further by making detailed technical presentations on the subject. Another water-technology company, Modern Water spoke specifically on Manipulated Osmosis (more on this in subsequent issues of Climate Control Middle East).

In his presentation, Shereif Alsayed of GE said that by 2025, global treated wastewater could be a significant source of water. Challenges remained regarding TSE make-up, though, he said, including inconsistent water chemistry, specifically fluctuation of calcium hardness and alkalinity and variable ortho-phosphate content. “Further, if you are treating the water with zinc, then zinc phosphate is something you have to consider as a deposition,” Alsayed said.

In addition to inconsistent water chemistry, there were concerns regarding microbiological control, he said. The presence of organics and ammonia content were concerns, he added.

Availability of TSE was a third challenge, Alsayed said. This, he added, imposed limitations on cycles.

Alsayed said that GE had carried out an evaluation of TSE in an evaporative laboratory tower (ELT). In all, GE conducted four studies. The first study involved recycling TSE make up at 2.5 cycles at free pH. The second involved recycling TSE make up at 2.5 cycles with gradual increase in pH. The third involved recycling TSE make up at 2.5 cycles with the pH control at 8.1 and over an extended period. And the fourth involved monitoring alkalinity and chlorine demand variations. Based on the study, Alsayed said, GE arrived at the following conclusions: Circulating Dubai TSE at 2.5 cycles with pH free control resulted in calcium carbonate and calcium phosphate deposition. Gradual increase of pH resulted in calcium phosphate deposition at pH of 8.3. Circulating Dubai TSE at 2.5 cycles with pH controlled at 8.1 resulted in clean metal surfaces and corrosion rates of 2 mpy for CS and 0.2 mpy for copper. Alkalinity and chlorine demand are decreased at the same order of magnitude as ammonia is gradually stripped out of solution.

To a poser from the moderator, Berbari, as to if he would recommend to use 8.1 without polishing, Alsayed said that based on Dubai TSE, it was possible to operate at 2.5 cycles of concentration and pH controls. “For that, though, we have to pass through UF RO,” Alsayed added.

Ghezawi, in his presentation, said that TSE was indispensable to the success of district cooling, and all efforts must be pursued to secure the source. Ghezawi said that Saudi Arabia currently produced an estimated two million m3 a day of TSE, while the UAE produced 1.2 million m3 a day, Qatar 700,000 m3 a day, Kuwait 600,000 m3 a day, Oman 270,000 m3 a day and Bahrain 200,000 m3 a day.

All this, Ghezawi added, if not used properly, would be dumped into the sea, which would be akin to wasting a valuable resource.

Like Alsayed, he said there were several and significant challenges to the use of TSE, and called for a capable chemical and microbiological treatment programme to make the gains from TSE tangible and appealing. “Clearly, if we use TSE in cooling towers, we are at high risk of Legionella, so this is a point we have to address,” he said. Likewise, from a chemical point of view, one degree increase in the approach temperature could mean 1.5-2.5% increase in power consumption.”

‘General awakening that DC is the way forward’

Moderator: What are the challenges to district cooling in the region?

Mohammad Abusaa: The earlier challenge was the cultural acceptance of district cooling, but today, developers have accepted us, but not the end-users. Also, financing is a challenge. The challenges are in financial modelling than on the technical side.

Jaap Kalkman: We like district cooling. It has got good growth, and it is not a complicated industry. So fairly nothing can go wrong. We would like to participate in tremendous opportunities in Saudi Arabia, not only because it is the biggest economy but also because there is a general awakening that district cooling is the way forward. Things need to be more structured for the private developer, though. We need to structure those projects to make them attractive for private equity.

Abdulhamid Al Mansour: Saudi Arabia is like a government economy. The government has only to facilitate regulation and outsource district cooling, because it is the biggest user of district cooling. They need to utilise their lending institutions, which will facilitate funds. As regards to your questions, yes there are challenges. Off-taking issues are there.

Berbari: At The Climate Control Conference (C3) in Riyadh, in March 2010, we stressed on how TSE and the National Water Company are like a breath of fresh air for the district cooling industry. So that was a major obstacle removed for district cooling. How do you see bringing TSE to remote areas as affecting district cooling?

Gerhardt, Alco: TSE is a must for district cooling. Earlier, there was reluctance to use TSE, owing to technical reasons, but now that has been resolved. Also, I don’t see any real future without TSE. In the long term, I see real water reuse – I see blow-down water being recycled. That is another opportunity, but it is 10-15 years away.

Abusaa: Also in Makkah and Madinah, there is a huge quantity of water that is not contaminated. I don’t know what they do with that water.

Berbari: Saudi Arabia is using crude oil to produce power. Let us talk about that.

Al Mansour: The government is fully aware of using more crude for power, which will reduce resources for consumption. They realise power demand cannot keep skyrocketing. The options are to lift subsidies or to increase energy efficiency of air conditioning.

Excerpts from a panel discussion during the Summit

Moderator: George Berbari

Panellists:
– Mohammad Abusaa, ADC Energy Systems
– Abdulhamid Al Mansour, Saudi Tabreed
– Jaap Kalkman, Arcapita

VOICES

I don’t see in the short term that governments will take the risk involved in terms of heavy investment. They will leave it to the private sector for 10-15 years. They will gradually increase their equity by slowly penetrating to take greater involvement. So we are looking at long term. We need good slab rates and a reduction in the subsidies from the grid network. Also, there is a need for regulation – in any development that requires a minimum of 15,000 TR, district cooling should be mandatory.

– Adib Moubadder, Emicool

Mubadala in Abu Dhabi is studying regulation for district cooling, so these ideas are at least being discussed.

– George Berbari, DC Pro Engineering

Are we doing the right things? Are we doing things right? What kind of buildings are we constructing? It is crazy that we have buildings in Europe that need cooling in winter? Architectural design has gone wrong.

– Dr Joachim Paul, Vortex Systemtechnik

If Qatar wins the 2022 bid, we will see one million TR (in the peninsula).

– George Berbari

Productive talks

Torsten Haegele of Diehl Middle East, Hans Altmann of Techem, Steffen Koehler of SIPOS Aktorik and Lars-Åke Kjell of Wärtsilä were among the several presenters at the Summit. Excerpts from their presentations…

Torsten Haegele
Diehl Middle East

The integrated wireless and wired open protocol interfaces of our meters ensure a future expansion and unlimited flexibility.

Our project engineers carry out installations, inspections and commissions. If we have the best products but an unqualified gentleman installs them, then the result will not be good.

Ultrasound meters are beneficial, because they have no moving parts and, hence, no wear and tear. The free-beam principle eliminates noise signals and measuring errors. The dynamic flow design gives dirt particles no chance of settling. The natural reflector principle creates a high velocity over the reflectors. As long as we have the transducer and the reflector clean, we are all right.

The meters come with a special design, wherein the customer can decide whether to opt for a wireless or a wired solution. They have unlimited data capability in real data or open metering.

The meters offer billing services, such as provision of bills in multiple formats, contractual management, and provision of end-to-end solutions for the timely billing of services provided to customers.

The meters can help reduce customer queries and complaints, reduce operational costs, ensure accurate and timely billing and improve revenue management.

•••

Member of the audience: We need real-time updates to have invoice for the customer.

Torsten Haegele: We leave it to the customers. If they ask for constant monitoring, we can provide that. We can do every 12 seconds of radio and every five minutes of wired. So yes, we can produce quickly, but we also have to pay attention to server limitations.

Another member of the audience: With open protocol in your system, if I want to change one of the meters to another of some other company, will it be plug and play?

Haegele: The standardisation process of Mbus will ensure that. If the norm is strictly applied, yes it is possible.

Hans Altmann
Techem

End-users of district cooling are faced with a bouquet of charges, including demand (capacity) charge, connection charge, consumption charge, temperature surcharge, demand (capacity) surcharge, meter-maintenance charge, late-payment charge and reconnection charge.

Broadly speaking, district cooling costs can be in the form of an area-based charge or consumption charge. In the case of an area-based charge, there is no control over cost and no incentive to save. There is excessive waste of energy and high service charges. In the case of a consumption-based charge, there is full control over the cost, 15-25% energy savings and a reduction in maintenance costs.

Generally speaking, there is a legal basis for cooling cost allocation, which includes a definition of the cost, and an obligation to register consumption, to install registration devices and to allocate cost based on consumption.

If cost is to be based on consumption, there are two types of tools, the first being conventional metering systems and the second being our radio metering devices

The value chain in our approach includes system consulting and financial services, our experience in asset management over several decades, market know-how for automated meter reading using radio frequency and our ability to process all meter and tariff data, thus resulting in consumption information. Further, the value chain includes consumption management for analysing energy consumption and a centralised billing regimen with the best possible fit to our customer’s business model: either in our data centre or in the customer’s ERP.

Our approach offers precise metering and precise billing. In this, all usages are shown precisely, the different behaviour of the users is recorded and taken into account in the bill.

The aim of our approach is fair allocation of costs and responsible use of valuable resources.

Lars-Åke Kjell
Wärtsilä

One per cent of all installed power capacity in the world has a Wärtsilä stamp on it.

The DCAP system (District Cooling and Power) system that we are offering is for a highly populated community. It is a combined cooling and power plant solution.

As Wärtsilä, we are known to have flexible fuel solutions. We can operate on associated gas, natural gas, biogas, heavy fuel oils and crude oils.

To make DCAP work, we will need to establish fuel-supply and water-supply agreements. The combined cooling and power plant and the power plant company need to arrange for the fuel supply and the water supply.

Distributed power generation can be done with air-to-air cooling

Combustion turbines and combustion engines both de-rate with high ambient temperatures and high altitudes; however, combustion engines have better output and performance in high temperatures and high altitudes

If we are to use a distributed generation plant, we transform it into a district cooling and power plant with the same efficiency.

The most cost-effective plant configuration will be used to maximise the residual engine heat for absorption chillers.

In the case of a conventional, grid-powered district cooling plant of 25,000 TR capacity, 25 MW of power will need to be used. In the DCAP scheme, only 11.8MW electricity is needed.

•••

George Berbari: Yes, the power plant can work with air-cooled radiators, but when you have a cooling tower, the water can improve your capacity and efficiency.

Lars-Åke Kjell: Yes, it does, but very marginally. Cooling towers pose a big headache, in terms of makeup and discharge.

Berbari: How do you see the future for tri-generation?

Kjell: There are some projects. Tri-generation is, of course, something we have done in many places in Europe and India, but in this region, so far we have not done anything. We are not going into smaller projects. In Dubai, there is a need for power, so we can contribute. And in that respect, we can deploy DCAP.


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