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What trends have emerged following Saudi Arabia’s move to MEPS 3?

Positive impact will take time to take effect, says industry insider

| | Mar 14, 2019 | 12:56 pm
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Riyadh, Saudi Arabia, 14 March 2019: With Saudi Arabia moving to MEPS 3, Dr Anwar Hassan, Vice President, Field Sales & Operations, Johnson Controls, said strong enforcement and compliance have driven the market towards high-performance equipment. However, Dr Hassan said, since construction-contracting terms and the evaluation of offers from suppliers and contractors call for compliance with minimum requirements, without incentivising better performance, the practice in the field “still favour those who remain close to the floor of minimum requirement and disfavour, to some extent, those whose minimum performance is higher than the minimum permitted.”

Dr Hassan further commented that by their nature, positive impact from setting these minimum standards will take time to take effect, since they affect new purchases, “while the installed inventory in the country is large and of a vintage that has significantly worse energy efficiency”.

He added: “It was very interesting to see the authorities discussing and developing programmes that encourages replacement of low-efficiency old units and the purchase of high-energy efficiency premium units. Like all new concepts, the initial period will have to have quite a bit of ‘we learn as we do’, but what is encouraging is that there is no lack of energy in these programmes. There was short-term disruptive impact initially, but I believe the industry is over it largely.” Setting the floor, he added, does not incentivise better performance, in addition to being almost entirely contract-based on fixed-cost contracts.

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