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‘Sustainability requires significant shift in mindset’

Sébastien Arbola, CEO, Engie MESCAT (Middle East, South and Central Asia and Turkey), speaks with Hannah Jo Uy of Climate Control Middle East on how regulation could pave the way for the alignment of public and private sector interests, the need for greater collaboration in the move towards sustainability and solar power’s future role in alleviating the heavy demand of air conditioning on existing energy grids. Excerpts from the interview…

| | Feb 12, 2019 | 4:48 pm
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Sébastien Arbola, CEO, Engie MESCAT

On the occasion of Engie’s participation in the World Future Energy Summit, could you provide your overall projections for the GCC region’s renewable energy sector and how the company aims to participate in its advancement in the broader context of sustainability?
For a couple of years now, we have seen a lot of initiatives coming from all the countries in the region. The UAE and Saudi Arabia are putting out the blueprint and roadmap for 2030 and beyond, acknowledging that sustainability is a key element of growth. When you talk about sustainability, there are a couple of clusters. For energy, it’s the share of renewable energy in the system. Renewable activity has been done a couple of years back with all these solar farms in the desert. I think this will increase. Saudi Arabia recently announced a 58-gigawatt project, and a few landmark projects by 2030 – 2030 is not today, but it is tomorrow. You have to launch many, many projects. It’s the same for Dubai and Abu Dhabi – they are launching huge projects. They have and will continue to launch, I would say, 1 gigawatt of new solar farms in the desert every year. It’s coming at a faster pace. You have different matrix [and targets]. For example, in the UAE by 2050 [there should be] 44% renewable energy in the system. That’s huge, it means you have to transform your energy grid and [address] the storage issue. Because renewable energy is an intermittent source of energy, you have to bring onboard a lot of storage – physical storage, chemical storage and CSP.

It will include a lot of mindset shift for [everyone in] the sector, and this is clearly, in itself, a revolution. It’s not as if you put solar panels in the desert and it will come across this bar of 44%, even 25%, of renewable energy in the mix. It means a lot of changes on how you plan your energy mix and [address] the intermittency part. That’s one thing. Another way in which sustainability affects, or will affect, the energy sector is linked to energy efficiency. If you want to be sustainable you also want to consume energy better, and if you look at what takes more energy – it’s first and foremost cooling the air [and the] refrigeration industry. Seventy per cent of peak load electricity consumed here in the UAE and in the GCC region [is owing to] air cooling systems. The most efficient way to cool the air is District Cooling. District Cooling penetration is very low – around 15% of the cooling market in the Middle East. A lot also has to be put in place to develop District Cooling and its adoption rate. Aside from that you can think about the energy efficiency of the buildings. So, retrofitting is also a huge part. Because of the inefficient nature of buildings, the insulation and so forth, you can also attack the consumption by reducing the leaks in the system. As ENGIE, we are active in these three fronts: renewable energy, District Cooling and energy efficiency. It is really the blueprint of the market. It is what lurks behind these big goals of having 44% or 25% of renewable energy or sustainable growth, and this is what is important to us, because we are a private actor. This dimension is too big for one set of players alone. The government here has done a great job giving guidelines and issuing blueprints. Now it is up to us, the stakeholders. The private and public sectors also [need] to align.

Could you comment on the feasibility of solar power as a source for air conditioning, given that, as you had mentioned, cooling is responsible for the majority of a building’s consumption? While the United Arab Emirates, and the rest of the region, has no shortage of sun, many stakeholders believe, if rooftop solar-powered air conditioning is to be considered an option, the lack of space on the roof of high-rise buildings is a significant challenge. Or do you suggest another model to better integrate solar power in the energy mix of dense urban areas?
I would say that the endgame would be for a community, a home or building to be self-sufficient. Basically, having good, strong insulation, smart devices to monitor the energy efficiency and usage, maybe AI and then solar panels and District Cooling. That is, maybe, the ultimate end game for an isolated community, when density is not so strong. When you have big cities and density is very strong, I do believe that it is better for the whole system to have very large solar plants in the desert, not so far away, because then the economies of scale are huge, the level and cost of electricity is lower and to bring this electricity to consumers in the city would be cheaper. On top of that, [for stakeholders] to still do what I referred to as smart energy management with good insulation. I think it is better to do that than to put a couple of solar panels on the rooftop, it doesn’t make any sense. I would say the same for air cooling. To have a chiller on top of your roof is not smart in terms of energy efficiency. It’s better to connect to
a District Cooling system, provided the density is big. If density is not big, to be part of a network is not economically satisfactory. But I think the big trend in today’s world, and it’s also true here with the evolution of Dubai and Abu Dhabi, is that there will be a lot more urbanisation. Urbanisation means density and less spaces. Here, I think the city planning, and planners, will be key.

In this regard, would you say there is greater demand for collaboration among stakeholders? 

It requires a lot of city planning. It’s much easier to plan before a District Cooling [network] is built than after, because to dig the holes and put the pipes costs more. It’s also more difficult to stop the roads, and it is much more complex. But if you have some regulation, if city planners look at the long term and try to incentivise this, I would say the energy saving for District Cooling versus individual chillers is 50% – it’s huge. Just a couple of years back there was a lot of incentives in the price of electricity, water and all. Certainly, the B2B environment is looking at the bill and trying to reduce it; the same goes for real estate developers.

I think it’s quite well-known how a smart city should be run. What is difficult is to align the planning with the public-sector interest, which is more long-term compared to the private-sector interest, which can be short-term and cost [driven]. If I am the real estate developer of one or two buildings, for me I’m better off, maybe, investing in the chillers, because I would say the over-consumption will be paid by the one renting my space – not by me, I would not see it. So, the total cost for cooling the air is not really paid by the same person. The layman is important, it’s not very easy. The same goes for retrofitting. Who pays for the retrofitting? Is it the landlord? Is it the one renting the house? Same for the solar panels. If you rent your house, you’re fine to have this, because you pay less. Each month, the bill is less because of the net metering schemes but maybe the landlord will not want to invest. It’s often the case. I think a great deal has to do with some regulation. This is an area where regulation, if applied smartly with a strong regulator and framework, is really a plus in kick-starting good and sustainable habits. This staunch framework with proficient clients, with government and energy ministers applying a systematic framework and with investors and banks financing, can be quite transparent, and everybody could see the interest of all parties. Once you kick-start this planning and regulation in a sustainable way, it will go very fast. But first, it’s about alignment, governance and framework.

Do you believe these ingredients will also be applicable for other countries in the Middle East?
It’s more difficult, but I think there is no reason why [not]. Here, we have the blueprint. But I think the two leaders are United Arab Emirates and Saudi Arabia. I would say that when it comes to the level of objectives and advocacy, the United Arab Emirates and the Kingdom are frontrunners on that part. They make the change happen and invest a lot of time and effort. You see high-level representatives here [at WFES], and you can see the drive – the transparency is there. However, how to organise the framework and how to align interest to attract the private sector for parties to invest money and time – I think this is always the point that needs to be refined.

 

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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