The district cooling market heats up

With air conditioning said to account for as much as 50% of peak power load requirements, it is not surprising that efforts to cut energy consumption are very much focused on this area, particularly within the residential sector.

This efficiency drive has proven to be a great fillip for the district cooling industry, as property developers are encouraged to move away from conventional cooling methods to more efficient centralised systems.

Analysts say that in less than a decade the district cooling market has grown from a near standing start to be worth US$10-30billion over the next ten years.

District cooling is not a new technology, however. The first plants were built in Bahrain and Kuwait in the mid-1960s. But as energy conservation back then was not high on political agenda, district cooling was slow to gain in popularity.

That has all changed now, of course, as governments the world over are facing up to the harsh realities of climate change; the sector is going from strength to strength, as a result.

Emirates lead

The UAE is at the forefront of much of this growth, as Paul Beaudry from SNC Lavalin Gulf Contractors, which builds district cooling networks, explains: “The UAE has created the momentum behind the district cooling sector in the Middle East; they are ahead of the other countries.

There has been rapid development in the UAE and there is so much demand for energy that they have to find alternatives that use less energy to develop the country – they have no choice.

“Water cooling with these systems is more efficient and it takes half the space and half the energy of other technologies,” he adds.

In a district cooling system, water which has been chilled to 5-8 degrees Celsius is fed from a central plant via a network of underground pipes to buildings, where it circulates through fan coil units.

Within these units, fans blow air across coils carrying the chilled water and the air is subsequently cooled.

According to statistics, district cooling uses 40-50% less energy than traditional air conditioning systems, which can account for as much as 70% of a building’s electricity bill.

Producing one tonne of refrigeration using conventional air conditioning takes 1.7 kw of power, while district cooling can consume as little as 0.85 kw per tonne. This frees up considerable amounts of energy to be used elsewhere and means new power generation capacity has to be installed less often.

Other advantages that district cooling has over air conditioning are that the systems generate less noise; are less prone to breakdowns; and maintenance needs are considerably reduced.

Region follows

Although the UAE is currently generating the most orders for district cooling installations, demand is gathering pace in other countries in the region.

“Right now the strongest demand is in the UAE, but other markets are following behind: Qatar and Saudi Arabia are also going to be big users,” says Keith Evans managing director at Tas Middle East, which supplies packaged central cooling plants.

It is rolling out from the UAE and every Gulf country is taking it on. We are looking at jobs in Africa and India too.
 

Supply bottlenecks

As with other industrial sectors, the district cooling industry is struggling to keep pace with the rampant demand due to hold-ups throughout the supply chain.

“There is a bottleneck at manufacturers; getting components is hard as there is a stretch on supplies,” says Evans. “Vendors of chillers and pumps are struggling. It is hard to get vendors to commit to anything less than nine months sometimes.

It is also difficult to get prices for pipes and pumps fixed for more than a week as the price of steel and copper has gone crazy.

It is not just materials that are hard to come by though: workers are also in short supply. “The problem right now is that there are so many projects happening that the skills are spread thinly on the ground; people are poaching people from each other,” comments Evans.

Beaudry agrees: “It usually takes about 18 months to construct a district cooling plant. The thing slowing down the process right now is contractors, the people in the civil and electro-mechanical sector are very busy, so this is one of the challenges.

It is having an impact on cost for sure, and there is also a scarcity of materials, such as steel and cement – the costs of these are going up dramatically.”

“We haven’t got caught out yet as our contracts are quite short but it is a definite challenge,” he adds.

For the moment, the sector is firmly focused on meeting the requirements of new developments, but there is also a market opening up for retrofitting existing buildings, which can only add to the pressure on suppliers.

Evans admits, however, that the lack of skilled engineers and project managers is proving to be good for Tas’ business: “The engineering and project management is minimised with what we do, we bring in packaged plants and put up sites; all the engineering is done offsite and what we do after that is tie in the equipment we sell with minimum onsite work.

One of the most expensive commodities right now is project management and we make it simple for the project manager to fulfill his requirements and that makes our product very much in demand right now.

“Our fundamental business is turbine inlet chilling. But here in the Middle East, the majority of our business is turning to district cooling because of the demand,” he adds. “They say there is demand for 20 million tonnes of refrigeration in the Gulf over the next 10-20 years.

If it was half that it would still be a tremendous pressure on contractors, engineers and manufacturers.

Many equipment suppliers are investing in new capacity in response to this burgeoning demand. One example is Abu Dhabi Pipes Factory, which supplies pre-insulated glass reinforced pipes (GRP) to distribute chilled water in district cooling systems.

The insulation provides thermal resistance against heat gain in the chilled water.

The company has fitted pipes for Palm District Cooling’s projects in Dubai, such as The Palm Jumeirah, International City and Dubai Maritime City. For these sized projects, the pipes supply contract can be for as much as 40 km.

“The current situation is that GRP is in very high demand,” says Lal Adbul Salam, operations manager, Abu Dhabi Pipes factory. “We have a factory in Abu Dhabi and we opened a new one in Dubai six months ago because of this demand.

We manufacture and install pipes for district cooling systems as well as for other projects.”

“There is a shortage of pipes in the industry, availability is very tight right now. We are supplying pipes throughout the GCC, with high demand in Qatar, Bahrain and Kuwait. The demand from the district cooling sector is strongest in Dubai though,” he notes.

Efficiency gains

Even though district cooling is deemed an energy-efficient technology in comparison to air conditioning, there are moves within the industry to become even more efficient and environmentally friendly.

“Efficiency gains are the driving force behind the technology now, and suppliers are addressing the system as a whole,” says Evans. “At that first Bahrain plant the technology is the same today as it was in the 1960s.

The technology has not changed, but manufacturers now are tightening their tolerance and paying more attention to efficiencies of the plant. It is not only the chiller, it is how you design the plant, how you design the control system and the type of pumps you put in there.”

This pursuit of efficiency has prompted a rise in demand for modular cooling plants, which means capacity can be brought online in stages as developments progress.

Ken Currie, business development manager at Tas Middle East explains: “At first the main district cooling companies started building conventional very large plants that took 5-10 years to fill up as they didn’t have the customers. But having too big a plant is a waste of capital: you have a lot of capital out there before you can recover it.

“The shift towards packaged cooling units happened about five years ago. Developers weren’t prepared for large chiller plants and they wanted to get some assurance that they were going to get something prepared and delivered on time so they started to go with packaged plants.

Closed loop

The one big disadvantage of district cooling, however, is that the systems consume vast amounts of water, which, like electricity, is lacking in the Middle East.

Traditionally, district cooling installations have been run on potable water. But as concern mounts over the future of water supplies in the region, the industry is being encouraged to examine alternative water sources.

“The downside with district cooling is that it consumes water unlike standard air conditioning,” says Beaudry. “The industry started off using potable water, but now they are looking at using grey water or saltwater, which they are trying to use more of in Bahrain.

The problem with seawater is that it increases the capital cost because the equipment has to be designed to resist corrosion. Collecting and cleaning grey water does involve additional costs too, but it is not a bad option as it is still cheaper to use than potable water.

Evans echoes these sentiments: “We can and will use grey water and seawater, but there is a cost associated with seawater due to the metallurgy required.

It becomes a capital cost issue and how you extrapolate that over the life of the plant, furthermore you would have to retrofit existing systems.”

“Grey water is offered to clients. We can put a polishing plant on the site so we can reconstitute the water. In some of the projects we are doing in Qatar we are putting chiller plants next to a sewage treatment plants and the water comes to us then goes off for irrigation,” he continues.

While there is clearly reluctance to use non-desalinated seawater, the use of grey water and treated effluent in district cooling systems looks set to become an important trend.

Indeed, earlier this year, the Dubai Electricity and Water Authority (DEWA) wrote to all district cooling providers operating in the emirate, inviting them to use its treated sewage effluent in their cooling towers.

The utility is also encouraging firms to include storage plants in their designs to ensure chilling continues during off-peak times, when electricity is in greater availability.

Looking further ahead, the sector will inevitably look at making additional efficiency gains through coupling chilling plants with desalination facilities or tapping into alternative sources of energy, such as solar projects and waste-to-energy plants.

Evans’ vision of the future goes even further: “The ideal situation would be to have a cooling plant attached to power plant with a thermal storage plant that runs during off-peak periods and then puts it back into system when needed; a combined utility.

Advanced heat recovery from gas turbines is the way forward, by taking waste heat from gas flues you can convert it into either steam which can direct the drive or you can use it to provide chilling.”

What is certain is that district cooling will continue its rapid ascent in the Middle East; a region where cooling is not a luxury, but a necessity, and where an environmental conscience is beginning to take root.