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‘An attractive investment destination of global standards’

The Sultanate of Oman is taking on a more proactive role managing supply and demand of energy, all while cultivating new industries in an effort to promote economic diversity. What trends among HVACR consumers have emerged as a result? Hannah Jo Uy has the story…

| | Oct 10, 2018 | 4:57 pm
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Shaikh Raid Bin Abdullah Al Araimi

The Sultanate of Oman has been on a steady path towards economic diversification, effectively pushing a number of industries into the spotlight. Shaikh Raid Bin Abdullah Al Araimi, Vice Chairman, Al Raid Group, an Oman-based developer, cites tourism, light industries, fisheries, agriculture and mining as key sectors in the government’s focus. As a result, Al Araimi says, these sectors are witnessing an inflow of foreign direct and indirect investments, which can be attributed to a number of factors, namely, “Oman’s political stability and business environment, flexible laws and regulations and state-of-the-art port services and logistics that make it an attractive investment
destination of global standards”.

Geeju Paul

Geeju Paul, General Manager – Air Conditioning Division, Muscat Electronics, holds a similar view with regard to tourism, citing it as a segment where the company has also seen strong growth. Additionally, Paul says, the investment in retail segment is expanding, with a number of luxury shopping malls cropping up. Al Araimi provides Al Raid’s Al Araimi Walk, as an example. Scheduled to be completed in 2020, Al Araimi Walk sits on 140,000 square metres of leasing space and is set to host a number of restaurants, retail stores and entertainment facilities. Its strategic location, Al Arami says, allows it to remain accessible to people from Batinah region, as well from interior regions of Oman. The company shares a projected footfall of 10 million.

Ahmed Al-Mazrouy

In addition to an expanding retail sector, Ahmed Al-Mazrouy, CEO, Al Majis Industries, says that there has been a noticeable uptake in real estate projects at major cities, such as Muscat, Salalah and Sohar. Claudia Massei, CEO, Siemens Oman, weighs in, saying, aside from hotels, shopping malls and industrial facilities, the healthcare sector is booming. Paul seconds this, saying there are a growing number of private hospitals in the pipeline.

Sliding Up the chord
In view of such trends, Paul says that projects are steadily picking up in the Sultanate, describing the contracting and tenders segment within the country to be at a “stable scenario”. This spells good news for the HVACR sector, Paul stresses, as relevant products towards the end of projects, are “sliding up the chord”.

Al Araimi, in discussing HVACR requirements of recent and upcoming projects, says the company recognises the importance of proper cooling and ventilation systems for the comfort and satisfaction of customers, especially in view of the luxury developments under its portfolio. “Ideally, the temperature must be 22.5 degrees C, with a minimum of fresh air [changes] of 18%,” he says. “However, anything under 100% is always ideal with dispersed fragrant spritzers to distribute and refresh senses. Apart from these, energy-efficient HVAC systems are extremely important. The best of water-cooling systems that use centrifugal technology and environmentally-friendly refrigerants must be chosen, as well.” Currently, the developer is working closely with the District Cooling company, Tabreed Oman, for its projects, particularly with regard to Al Araimi Walk. Al Araimi says that water-cooled chiller systems for the project were developed in partnership with Tabreed Oman, who will also make the capital investment, undertake the implementation and manage operations for a two-year period. “A District Cooling company always provides 24-hour maintenance service, with highly specialised teams, stocks and spare parts, to minimise its initial investment,” he says. “This will ensure cooling services are provided year-round without disruptions. Furthermore, an HVAC package will be tendered and a capable, experienced contractor will be selected at a later stage to implement the design intents.”

While comfort and reliability are vital, especially in the move to be a hub for luxury projects, energy efficiency is also emerging as a strong requirement among consumers. Paul says this is a natural reaction following the withdrawal of government subsidies in both private and commercial segments.

Dr Floris Hendrikus Schulze

Dr Floris Hendrikus Schulze, Managing Director and Head, CESI Middle East, says there has been a reduction in electricity demand in 2017 over the predicted development, as a result. “The sector is seeing a reduced demand from customers subject to Cost Reflective Tariffs (CRT) pricing scheme, where the actual costs now support investments in energy efficiency,” he says. Dr Schulze says that in residential developments, new, energy-efficient “white goods” and efficient lightning solutions are also curbing demand growth.

The commitment to curb energy demand was especially felt, following the Oman government’s announcement that it will implement GSO 2530:2016 on ‘Energy Labelling and Energy Performance Requirements for Air Conditioners’ by November. Oman’s 11.5 minimum energy performance standards puts the country one step behind Saudi Arabia, which has moved to MEPS 3 at 11.8, and on the same level as Bahrain.

Paul says that while initial compliance with new regulations may result in consumers having to pay 30% more, having to opt for newer and more energy-efficient products, eventually the price gap will reduce as manufacturers get into mass production. “As we have seen before in how the price [difference] between inverter and conventional split units used to be higher, but now the difference is very small, it’s only a matter of time,” he says. “The market has to switch to a new series, and as the volume goes up, the prices will stabilise.” Paul adds that, overall, there has been growing consciousness among people towards more environmentally friendly solutions, as well, with an observable move towards non-HFC or Freon-based refrigerants.

These requirements, Paul adds, makes a case for VRF technology, which continues to enjoy steady growth, gleaning from the company’s observation over the past decade. “The shift is happening from the split side and from the chillers side,” he says, “Customers using chillers in medium-sized projects are shifting to VRF systems.” Similarly, Paul says, projects that traditionally use split ACs have also opted for VRF technology, because the number of outdoor units is significantly reduced.

Claudia Massei

Massei adds that with a lot of projects concentrated in and around the economic free zone area, there is a steady demand for other solutions related to building envelop as well, as part of the trickledown effect. Looking at trends going forward, gleaning from Siemens’ long presence in the Oman market, Massei shares that there has been increasing demand for fire and safety systems, especially following the emergence of new regulations.

“Every single building needs fire and life-safety systems, which may not have been true 10 or 15 years ago,” she says. “[Demand for] security systems as well, is growing a little bit. In the hospitality sector, some buildings are starting to install BMS. In general, there is a trend towards increasing the level of technology within a building.”

The demand for greater automation and controls may also be attributed to the subsidy withdrawals, which has prompted stakeholders not only to choose more energy-efficient equipment but also to optimise its usage within the building. “There were definitely some concerns because electricity subsidies were being cut off,” Massei admits, “so any savings would be going back to the people’s pockets.” She says, however, the move towards greater automation has also been exhibited by those unaffected by subsidy withdrawals, specifically government buildings, which are responsible for heavy usage on the national energy grid. “They conducted an audit for a lot of buildings and found that often air conditioning and lights were left on during the weekend,” she says. “So, they have undertaken several actions to try to [minimise] energy waste.”

The need for automation and better controls could also be attributed to growing recognition of LEED certification across the Sultanate. Massei points to the Oman Convention and Exhibition Centre as an example as being a LEED-platinum project, where Siemens provided the BMS, stressing that it features 5,000 data points to ensure the temperature is constant and there are no deviations. “They have environmental standards they want to
comply with, and that makes them more technologically driven,” she says.

Al-Mazrouy says that he is pleased to note a number of projects in Oman certified under LEED, showcasing the stakeholders’ growing appreciation of its importance. “Green Buildings [are becoming] a necessity in Oman and some Green specifications are already in the present building code,” he says. “Such specifications include insulated roof, land scrapping, reflector light painting and double glassing.” He stresses that it is important for people to realise the value of change, advocating for more pilot projects demonstrating stakeholder benefits. “For example, the immediate and direct benefit from Green Buildings is the reduction in electricity and water consumption and also reduction in the cost of building materials. These reductions will be visible to the bill payers and subsidy provider.”

Al Mazrouy adds that there is still more to be done in changing the consumer culture. “Change is difficult and requires continuous dialogue and networking, using all available media to spread the message,” he says. For their part, Al Mazrouy says, Majis Industrial Services has taken a number of initiatives on electricity demand-side management, including replacing conventional lighting to energy-efficient type (LED), adding that the company is also working to have an energy mix for water solutions, and is aiming at least 20% of energy consumption from renewables by the end of 2020. “However, the tariff of renewables must be commercially viable for the company,” he stresses.

Supply side: The progress of renewables
This falls in line with Oman’s move to set renewable targets in the power generation mix. Dr Schulze adds that the most imminent development is for the contracting of grid-connected PV in the coming years, in tranches of 500 MW each. “The development of the renewable energy potential from Oman’s vast wind resources will require an interconnection from the Dhofar region to the main interconnected system,” he says adding that PDO and Shell development are actively supporting renewable energy projects in solar PV.

Dr Schulze says that CESI Middle East has been, and continues to be, involved in supporting several utilities in Oman, and the Regulator of Oman in setting up rules for a safe and adequate integration of small-scale and larger-scale renewables into the grid. “This includes rooftop solar and hybrid systems in which diesel generation is combined with solar,” he says. The company, he says, is also supporting Shell in rolling out the Nationwide Solar into Schools programme, a project involving the use of solar power for domestic consumption in public schools.
Dr Schulze says CESI is also supporting Nama Group Oman with its Automated Meter Reading (AMR) technology implementation project, which is closely monitored by the Authority for Electricity Regulation, and serves local distribution companies, such as Muscat Electricity Distribution Company (MEDC), Mazoon Electricity Company (MZEC), Majan Electricity Company (MJEC), Rural Areas Electricity Company (RAECO) and Dhofar Power Company (DPC). “With a goal of enhancing the quality and speed of processing metering data, this AMR rollout will work towards improving billing accuracy, mitigating losses, lessening query related costs and reducing debtor days,” he says.

Other interesting projects of note in Oman, Dr Schulze says, include the interconnection between the north and south of Oman and support for several distribution companies in the reduction technical and commercial losses. “The company is also heavily involved in technical and commercial feasibility projects to connect the GCC interconnected grid to neighbouring regions, which will boost and support the trade and exchange of energy,” he says. Dr Schulze says industrial consumers have expressed interest in their own solar PV deployments, as a business case, lowering the electricity cost and are considering entering into a new source of income by generating green energy, which in the future, may be exported through interconnected links to neighbouring countries and regions.

Al-Mazrouy says that while there are a number of successful initiatives, the market remains relatively conservative. “One of the deceleration factors is cost of renewable in comparison to conventional,” he says. “Majis is working on a renewable initiative of 1.3MWhr and soon will float the tender. The bidders will be limited to those who are approved by the distribution companies via Distribution Code Review Panel (DCRP).”

As the country continues in its move towards economic diversification, new trends continue to emerge as the Sultanate looks towards a future free from dependence on oil.

 

Hannah Jo Uy is Assistant Editor at Climate Control Middle East magazine. She may be contacted at hannah@cpi-industry.com


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