ESCO regulation is buoying Dubai's energy plans

fmME reviews how Dubai’s energy management market has changed since the UAE’s first framework for energy services companies (ESCOs) was launched three years ago

Connection established: ESCOs have steadily made their way into the UAE’s energy management sector.
Connection established: ESCOs have steadily made their way into the UAE’s energy management sector.

This April, Al Shirawi FM revealed it has been accredited by the Dubai Government’s Regulatory & Supervisory Bureau for Energy and Water (RSB) as an energy services company (ESCO). The provisional accreditation is an assurance that Al Shirawi FM has appropriately qualified personnel and a robust financial status, and is qualified to deliver energy saving projects for both, public- and private-sector clients in the emirate.

ESCO-accreditation is becoming an objective that an increasing number of FM firms in the GCC are working towards, with the UAE’s outfits leading the drive. With energy-consciousness on the up within the Emirates’ built environment, FM companies certified as ESCOs, it appears, have plenty to look forward to in terms of contracts and innovation.

Late this March, Farnek Services also announced the receipt of ESCO credentials from RSB. The decision to approve Farnek was made by an accreditation board which assessed the company based on criteria such as experience, capabilities, financial strength, HSE credentials, and equipment.

RSB established a framework for ESCOs in February 2014 as the first step in Dubai’s plan to have 30,000 of its buildings retrofitted for energy-efficiency, and the three years since the move have seen a spike in the number of ESCO service providers and buyers in the UAE.

The Dubai Electricity and Water Authority (DEWA) created Etihad Energy Services in June 2013 as a Super ESCO to spearhead the city’s newest industry.

Etihad ESCO’s retrofit projects saved 54GHW of energy in 2016 with the retrofitting of 2,178 buildings, which equates to $9.3m (AED34m) in monetary terms, the organisation announced this January.

Key projects Etihad ESCO expects to carry out in the future include energy management services (EMS) provision for the Dubai Civil Defence, Hatta solar project, Dubai International Airport (Phase 2), and Drydocks (Phase 2).

The firm will also start work this year on the tender for its first private sector contract with Seven Tides, a luxury property developer in the UAE. Etihad ESCO’s retrofit programme for 2017 includes 2,000 buildings and energy saving of 20%.

Etihad ESCO’s busy calendar points towards a growing acknowledgement of retrofitting’s benefits in the UAE. Emirates Green Building Council (EmiratesGBC), in its October 2016 report titled Energy and Water Benchmarking for UAE Hotels, revealed how retrofits could benefit the country’s hospitality sector: “There is a strong need to replace old fixtures and ensure maintenance of water systems, with laundry services and landscaping contributing heavily to water use intensities.”

Hotels built “more recently” were found to benefit from newer technologies and efficient design, as well as stringent codes and regulations. This trend highlights the need for older properties to “consider retrofit as a solution to reduce their carbon footprint”, EmiratesGBC’s statement added.

Under the ESCO programme, RSB has designed energy performance contracts (EPCs) that cater based on the two main approaches to energy performance contracting. The shared savings model refers to ESCO investment into equipment and materials to generate energy efficiencies, and is remunerated from a pre-determined percentage of the savings generated.

Guaranteed savings’ is a more traditional and popular model, whereby an ESCO would recommend energy-saving plans – ring-fenced by contractual key performance indicators – with the building owner providing required finance.

Commenting on RSB’s EPC models, Markus Oberlin, CEO of Farnek, said that up to 30,000 retrofit projects could be carried out in Dubai by 2030, making it “essential that the primary savings made from energy-efficiency initiatives are reinvested as capital to upgrade the infrastructure of the building”.

He added: “Both these contracts are intended to be fair and balanced and allocate risk proportionately between the ESCO and the building owner.”

Dubai’s ESCOs are in for the long haul, and requirements for energy-efficiency being driven by the emirate’s government will further boost the sector.

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