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What ails our industry – Part I

In the first of a six-part series, George Berbari speaks his mind out on what he describes as the ‘miserable current status of the HVAC industry in the GCC’. He begins by training his focus on the District Cooling industry…

| | Apr 13, 2015 | 3:28 pm
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George Berbari

George Berbari, CEO of DC PRO Engineering

Throughout my career, I have felt I have a message to express, a trend to set and a mission to keep challenging the prevailing status quo – be as it were hurtling towards a benumbing lack of progress – in a bid to help derail it into a path of hope.

Today, the status of energy, global warming and current trends saddens me to a point of total disappointment and despair, but should I give up or keep trying to demonstrate through action and design new role-model projects, which I hope, will set trends like I did in the fields of fresh air, District Cooling, efficient ducted splits, EC motors-driven fan coil units (FCUs) and VRVs (also known as VRFs)?

I regard myself as one of the pioneers of District Cooling in the region, but I am ashamed of the shape of the District Cooling industry today and consider it my duty to do my bit to alter the situation for the better.

In my view, the major players have lagged behind in technology, as if reluctant to emerge from a decade ago, and are focused on competing on increasing capacity, revenues and size. They seem content in using the motto that they are saving 40% energy compared to air-cooled systems and have not addressed customers’ complaints about expensive District Cooling services.

I am not suggesting there is anything wrong in aiming to be among the largest District Cooling service providers in the world and in trying to increase profits and size. However, District Cooling needs to evolve into an industry that embraces the future and offers serious solutions to global warming at competitive rates that customers can afford.

The road to evolution and improvement comes through a willingness to introspect and to ask questions of one self. Here are a few pertinent ones, in my humble opinion…

  • If the customer’s actual peak cooling load is 1,000 tonnes of refrigeration (TR) and the customer’s consultant has designed the building with a design peak of 1,600 TR, then why is the District Cooling industry happy in overcharging 600 TR x AED 750 (or AED 900) per TR per year, which equals to AED 450,000 (or AED 540,000) a year? Yes, it is true that District Cooling providers have to put in the investment in plant and piping and also in customer connection, based on 1,600 TR, but what are the corrective and preventive measures being considered? Are the providers publishing actual building peak? And what are they doing, so that their future customers do not find themselves in a similar situation, caused by not adhering to the recommended square metre per tonne? Are they trying to reduce the connected capacity up to 20% after three years of operation and after confirming the actual peak load? Shouldn’t this be the least we ought to expect from them?
  • When the District Cooling providers switch from the expensive fresh water to the more affordable treated sewage effluent (TSE) in Dubai and, through doing so, achieve eight fils per tonne-hour reduction in cost, shouldn’t they pass on a major part of the savings to the customers and reduce the current 64-65 fils per tonne-hour to 56-58 fils per tonne-hour?
  • The ADDC (Abu Dhabi Distribution Company) has announced new utility rates in Abu Dhabi favouring District Cooling and central air conditioning schemes. Under the new regime, common building services and District Cooling plants are charged a commercial rate of 16 fils per tonne-hour for electricity and AED 4 per cubic metre of water, while residential apartments are charged 21 fils per tonne-hour for the first 20 Kwh per day for apartments and the first 200 Kwh per day for villas; subsequently, they are charged 31.8 fils per Kwh for electricity and AED 5.95 per cubic metre for the first 0.7 cubic metres per day for apartments and the first five cubic metres per day for villas. (The District Cooling industry issued new peak and off peak rates, assuming the industrial rate of the past; they subsequently addressed the anomaly by issuing a competitive new rate of 24 fils per tonne-hour.) The new rates by the ADDC are game-changers against ducted splits in Abu Dhabi, where the cost per tonne-hour at 1.7 kW per tonne x 26 fils per Kwh average price of electricity translate into 44.2 fils per tonne-hour, and a minor advantage against air-cooled chillers at 1.6 kW (chiller + primary chilled water pump) per tonne x 16 fils per kWh-hour, which equals 25.6 fils per tonne-hour. How will the District Cooling industry benefit from the new regime in Abu Dhabi? Is connecting to residential villas and low-density developments more feasible than ever before?
  • DEWA charges 44 fils per KWh for central air conditioning and District Cooling while selling power to ducted splits and VRFs at 29 fils per kWh. Similarly, in my opinion, the slab rate in Saudi Arabia is not favourable to the District Cooling industry. Residences are charged five halalas per kWh as the first slab rate to residences, whereas central air conditioning schemes and District Cooling schemes are charged 26 fils per kWh. In Dubai, DEWA has promised to revise the rates. The question is, what are the District Cooling providers doing to persuade DEWA and the other utilities to hasten the change in rates?
  • The GCC countries are putting aggressive targets in place to incorporate at least seven per cent Renewable Energy in electricity generation. Why are renewables not even on the agenda of the District Cooling industry? Be it around the District Cooling plant or away in the desert, the District Cooling industry ought to work towards having at least 10% of their energy produced through renewables.
  • The Government of Dubai has announced the renovation of 4,000 government buildings under the Etihad Energy Service Company. The DEWA HQ has been awarded to a leading ESCO on the basis of using 3 x 200 TR variable speed centrifugal chillers with magnetic bearing, which makes the entire plant designed for less than 0.9 kW/tonne, as compared to 0.85 – 1.05 kW/tonne in the case of the District cooling industry. The question that comes to the mind is how can the District Cooling industry benefit from the new technology?
  • Tri-generation can save 70% of DC primary energy as compared to electric chillers. What is the District Cooling industry doing to promote tri-generation and to put a case where it can have a priority use of the Natural Gas in the UAE and diesel in Saudi Arabia? In the UAE, where we have 100,000 TR operating on Natural Gas, the District Cooling industry is entirely dormant. In Saudi Arabia and Oman, we are seeing greater momentum for tri-generation, but it is still not sufficient to create a massive change.
  • District Cooling, despite 15 years of progress and growth, has managed to penetrate only around five per cent of the HVAC market, with the largest penetration – of 20% – reported in Dubai. Can the District Cooling industry change its tactics and technology to convince the majority of the remaining 95% of the market to adopt District Cooling?

DEWA has announced the largest solar photovoltaic BOO scheme, under which ACWA Power, a leading traditional regional power producer with a strong renewables leaning to it, has offered a world record low price of 5.84 US cents per kWh or 21.5 fils per kwh. It is to DEWA’s credit that it has fully embraced the opportunity by raising the 100 MW target to 200 MW, or 260 MWp, in the process securing a cost that is lower than what a traditional combined-cycle power plant can offer. Case-in point, the combined-cycle power plant in Abu Dhabi will generate power at a cost of 8.64 US cents per kWh or 31.8 fils per kWh. DEWA’s achievement is not just at a regional level but also at an international level. In fact, it is a global game-changer, when you consider the fact that it costs 12.88 Euro cents per kWh in the case of Germany’s feed-in solar PV tariff. One reason for that is that the solar PV, to be deployed in the DEWA project, can produce up to 1,650 Full Load Hours per year as compared to a mere 850 Full Load Hours in Germany.

In Oman, my team and I have designed what we believe is the world’s most efficient tri-generation plant synchronised with grid power and onsite 1 MW PV power, which along with EC motor FCUs and thermal diffusers and ultra-efficient heat recovery wheel will enable an 86% reduction in primary energy. The project, for the Innovation Park, in Muscat, will have a fast payback of five years, and if the cost of the power plant and the power distribution infrastructure is considered, the capital cost saving at a macro economy level is immediate. The project will soon be released for tender, and so we are in for an exciting time from a technology innovation point of view.

At this juncture, the pertinent question is, ‘What can we learn from the Oman project?’ Equally pertinent is the question, ‘Shouldn’t the District Cooling industry strive to adopt a similar success story?’ I sincerely hope the District Cooling players would ask these questions of themselves. I cannot overemphasise the need for urgency in embracing technological innovations for the very survival of the industry. I, for one, wish and pray for the well-being of the District Cooling industry, and hope that the providers will regain their appetite for technology and take ground-breaking efforts towards developing successful role models for the whole world to follow.

George Berbari is the CEO of DC PRO Engineering. He can be contacted at gberbari@dcproeng.com

CPI Industry accepts no liability for the views or opinions expressed in this column, or for the consequences of any actions taken on the basis of the information provided here.

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