Is district cooling still a hot topic?

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A JV between Empower and Logstor of Germany promises to cut supply-chain costs and boost the cost-effectiveness of district cooling, which is facing a difficult time as large-scale developments are being scaled back.

The US$25 million facility in Jebel Ali will cater to the requirements of the district cooling and oil and gas sectors across the Middle East. Known as ELIPS (Empower-Logstor Insulated Pipes Systems), the facility represents Dubai’s success in bringing fresh investments into the Emirate. Further, it demonstrates Dubai companies’ progressive outlook in investing in new ventures, expanding existing facilities to provide full integrated solutions, and producing raw material internally instead of importing it, said Empower CEO Ahmad Bin Shafar.

“Empower decided to enter into this JV with an eye on securing the supply chain of pre-insulated pipes used in district cooling networks, which constitutes 20% to 25% of total capital outlay. The facility will ensure timely delivery and installation of pipe networks that will have a major impact on Empower’s project timelines,” said Bin Shafar.

ELIPS will ensure high quality of insulation and casing of pipes, enhancing efficiency and maintenance costs of district cooling services. It will boost the supply chain by eliminating artificial price fluctuations created by various players due to the demand-supply gap, added Bin Shafar.

Preben Tolstrup, CEO of Logstor, which owns a 49% stake in ELIPS, said: “We are the world’s leading pre-insulated pipe manufacturer, with more than 50 years’ experience and ten factories worldwide, serving customers in more than 50 countries. With the prime purpose of supplying top-quality district cooling pipe systems to the entire region, the world’s most advanced technology to be introduced at this new plant will set the standards for many years ahead.”

“This factory represents an opportunity for Empower to achieve backwards integration. It will also consolidate our status as a leading regional player in pipeline systems by meet the industry’s primary requirement for pre-insulated pipes.

Empower’s position as the region’s number one company for district cooling is more realised now with the opening of this factory,” said Bin Shafar.

Logstor has been serving the Gulf since 1992, and is now marking its commitment to serve the region by establishing an anchored presence with ELIPS. Depending on dimensions and output from 100 to 300 pipe joints a day, the factory will offer job opportunities for a wide range of competences, from operators to highly-skilled engineers.

ELIPS will use spray technology for manufacturing large-diameter pre-insulated pipes, which will ensure high-quality products and also result in savings in raw material costs as compared to traditional injection technology. This technology also enables the JV to enter the oil and gas industry, which is not possible with traditional injections. Currently, only one out of five existing pre-insulated pipe manufacturers are using spray technology.

In confirmation of this view, Empower – the largest district cooling provider in the MENA region – recently added Mirdif Gate Buildings to its burgeoning portfolio. Key projects already supplied include the Dubai International Financial Centre, Dubai Healthcare City, Jumeirah Beach Residence, Business Bay and City of Arabia. The latest project was preceded by extensive studies before investing into central stations and networks to fine-tune the return on investment in both the short and long term, added Bin Shafar.

“Dubai is moving rapidly towards increased use of district cooling as an alternative because of its efficiency in rationalising electricity consumption, conserving natural resources and reducing operating and maintenance costs,” he said. The 320 TR Mirdif plant will provide services to 59 buildings.

Bin Shafar was careful to add: “Empower is very clear in identifying priorities and responsibilities; it focuses on enhancing performance through a group of management and operational teams. Empower’s network is scalable to cope with any demand that might occur at any time in any of its projects in Dubai.”

Recently it was reported in the media that Empower had informed developers such as ETA Star in the International Media Production Zone (IMPZ) on the outskirts of ‘New Dubai’ that it would no longer be supplying district cooling services to ongoing projects such as The Centrium.

Ken Currie, business development manager at TAS ME, said that district cooling providers have to resort to technology in order to survive the global downturn. “The prevailing uncertainty has meant that district cooling plants have been built with only a third or even a quarter of the actual load connected. This is a nightmare scenario.

“However, some developers are still building, so you are still required to provide chilled water.” Additional problems are that concession agreements are not finalised, financial models no longer work, billing has to be cut back, and future load forecasts are weak.

What can the industry do to mitigate such risks? “There are technological solutions to limit the capital outlay and the cost of distributing chilled water. If you can cut down the cost of both, and keep the lenders happy, then you will be on a much better wicket.”

Currie said this approach calls for a close examination of the actual cost of providing your first tonnage of refrigeration. “The question is how much it will cost you before you can turn on the switch and produce your first chilled water,” he maintained.
One such solution is packaged or modular district cooling.

“This requires a smaller footprint. Plant can be located at ground level, with no need for a basement, and hence no major excavation or dewatering. You can throw down rough foundations, bring in one or two self-contained modules, and start to produce chilled water straightaway. This can be a temporary solution, or you can place the units in a fixed position right at the beginning and then add modules as needed.”

Modular district cooling plants are movable assets and can be transported to wherever they will be needed the most. Another option is a distributed cooling system, which utilises a common piping and pumping network.

“The benefit of such a system is that it is infinitely extendable, while it can also use dead or wasted space such as internal wells and multi-storey car parks. You can even have supplementary thermal storage systems on roundabouts, tied together with small-diameter piping,” said Currie.

It is clear that developments such ELIPS will have a significant impact on the district cooling industry by helping it contain costs and thereby provide a more cost-effective service. Other good news for the industry is DEWA’s announcement it will introduce smart metering. “Commissioning will be within six months,” DEWA CEO and MD Saeed Mohammed Al Tayer said in June.

Smart metering devices provide utilities and end users with more reliable information about consumption, which means consumers will be able to track their water and power consumption, and conversely help reduce this, as the GCC’s per capita consumption is one of the highest in the world. “We are now waiting for district cooling providers to modify their plants with thermal storage to increase their energy efficiency,” said Al Tayer.

IMEC Electro Mechanical Engineering executive director Aslan Al-Barazi confirms that ice thermal storage can help control commercial cooling costs. The technology is gaining popularity due to new DEWA legislation requiring district cooling providers to use 20% thermal energy storage from their total project load capacity (the options being either water or ice thermal storage).

“There are many other benefits in using ice thermal storage. These include the advantages of peak design cost assessment, energy and space savings and emergency cooling in case of power failure, as well as taking advantage of day/night tariffs when these eventually come into play,” said Al-Barazi.

IMEC is the exclusive representative for Fafco SA from Switzerland, which manufactures an ice storage system using static tanks to make ice at night by means of the charging process of an ice chiller. It then discharges the cooling load through the ice tank during the high on-peak rate period in the daytime. The system also allows project engineers to achieve colder chilled water supply temperatures for special types of project applications.

“Fafco heat exchangers, situated on top of the tank, are easy to maintain and deliver maximum thermal performance with minimum glycol content,” said Al-Barazi. Ice thermal storage is well-proven in district cooling applications in Europe and the US, which means the UAE has access to a vast pool of international data and experience in this regard.

Despite the problems it is facing at present, district cooling still has a long-term future. At the International District Energy Association’s 2009 District Energy Space Awards, in the ‘Beyond North America’ category, Qatar Cool won gold (number of buildings) and silver (total building area). In 2009 the district cooling service provider contracted 44 new buildings, serving 11 million square feet.

Meanwhile Dohaland’s signature Mushrei-reb project has gained momentum with the developer beginning work on the district cooling plant in Phase 1A. And elsewhere, district cooling is also making an impact: Denmark has just inaugurated its first pilot district cooling system as a first step in an ambitious carbon emissions reduction strategy, while Malaysia is investing US$16.9 million in a massive district cooling system to serve Cyberjaya near Kuala Lumpur.