Transforming the MEP industry through cleantech
Three major cleantech transformations have already occurred in the UAE
Cleantech is pertinent globally, and more specifically, in the UAE. In many aspects, cleantech is also the “saviour of the day,” especially when markets are going through prolonged downturns, when businesses desperately need to innovate to survive, and when government policies evolve. Cleantech, almost invariably, not only helps businesses become more responsible – socially and environmentally – but also makes businesses financially more resilient and robust, capable of meeting market challenges. While cleantech has numerous stakeholders, its recent evolution has predominantly tilted the leadership onus on to the MEP industry.
Thanks to the various initiatives undertaken at both public and private sectors, the MEP industry has a major role to play in transforming the cleantech industry – albeit with a little help from other quarters. Three major cleantech transformations have either already occurred in the UAE over the past decade and a half or are currently occurring. And the MEP industry has been at the forefront of all three.
The first and most significant cleantech transformation started happening in early 2003, when the first Green Building Conference was organised in Dubai, followed by the formation of the Emirates Green Building Council (EGBC) few years later. Between 2006 and 2007, despite serious reservations on the viability of LEED certification in this part of the world, the first three LEED certified projects were delivered in Dubai, in close succession – first, the Wafi District Cooling Plant (LEED Gold); second, Pacific Controls HQ (LEED Platinum); and third, Metito HQ (LEED Gold). All scepticism towards the applicability of LEED certification was put to rest. Thereafter, Trakhees enforced mandatory LEED certification for all new projects under its jurisdiction.
Currently there are around 100 LEED certified projects in the UAE, in addition to the Estidama-certified buildings. This is a remarkable transition from being sceptic about green buildings, to making it a norm – all within a decade. UAE has been voted the fastest adopter of green buildings amongst all countries and listed in the top 10 countries with the highest number of LEED certified green buildings. The entire MEP industry rallied together in the mid-2000s to make this happen, ably supported by the authorities through appropriate mandates at the right time. Architects, consultants, contractors, equipment suppliers, automation companies, and facility managers got together to make green buildings a reality. By adopting green building standards, developers had profitable benefits, the MEP industry diversified its revenue streams, and the public benefitted from sustainable buildings.
The second major cleantech movement has been in energy management. While the business case for energy management was a given, there was always scepticism about the administration of such contracts and evidence of energy savings. The ESCO model (Energy Services Company) has been around in the UAE for a while, wherein the ESCO invests in energy efficiency equipment and recovers the investment through an ongoing share of the energy cost savings accrued.
However, the model was neither very popular nor effective. Therefore, while sporadic energy management projects were being executed, the industry itself was not flourishing. In 2011, the launch of Emirates Energy Star as a financed energy management program (though not an ESCO), significantly transformed the energy management landscape. Riding on the back of a completely new business model, the program penetrated the market rapidly, notching up around 100 projects in two years. By shifting to a relatively low fixed fee structure, the program was able to convincingly make its case with developers, who found this model much easier to deal with. Simultaneously, Etihad Energy Services was launched to popularise the ESCO model in Dubai, with the help of standardised contract and IPMVP energy savings measurement protocol. This ESCO model is making steady progress with numerous federal buildings. These two initiatives quickly enhanced the energy management industry, one by revamping the business model and the other by streamlining an old business model.
Finally, after the initial slow start in 2015, Shams Dubai is quickly picking up with more grid connected solar PV projects coming in line every few months. This cleantech initiative is only made possible by virtue of the Shams Dubai Regulation. With the opening up of the grid, DEWA has enabled private solar PV projects to realise payback periods of six years or less. Thus, commercial and industrial establishments are finding it lucrative to invest in solar PV with the added security of protection from future utility tariff increases.
Three diverse cleantech paradigm shifts brought about by different machinations have benefitted the MEP industry by creating new types of projects. Energy efficient, environmentally responsible and innovative products and services are now securing a larger share of the MEP industry. Additionally, since all three initiatives have the impact of reducing Opex for developers, related industries will always thrive, irrespective of economic downturns.
Sougata Nandi is the Founder of 3e Advisory, a firm that specialises in setting cleantech start-ups on a sustainable business model. Sougata was the second LEED AP from the UAE in 2005, led the Green Building movement in UAE by delivering six of the first 12 LEED certified projects, and also led the Emirates Energy Star program between 2011 and 2013.