DC PRO talks about district cooling issues in the region

George Berbari, CEO of DC PRO Engineering, puts to rest issues surrounding the district cooling market in the Middle East

George Berbari, CEO, DC PRO.
George Berbari, CEO, DC PRO.

The mega event Expo 2020 can be considered as the primary driver for the district cooling market in the UAE, says George Berbari, CEO of DC PRO Engineering.

However, Berbari admits that Saudi Arabia is also a strong driver for the sector. He says: “We are seeing a huge housing and strong institutional demand in Saudi Arabia. Probably, Saudi Arabia will come back as one of the strongest district cooling markets in the Middle East, particularly with the support of the government and the recent law that requested that all government projects above 15,000 tonnes should implement district cooling. It’s now regulated by Electricity & Cogeneration Regulatory Authority (ECRA) and it’s been driven and supported by the government. We also are expecting a reduction in subsidies that will take effect around September-October [this year].”

Berbari gets right down to the challenges and opportunities when it comes to the use of treated sewage effluent (TSE) in district cooling. He says: “Using TSE reduces the construction cost and operating cost of district cooling because TSE is less expensive than fresh water. The price of TSE water in Dubai is half a fil per imperial gallon compared to 4.5 to 5 fils for potable water. So it reduces the cost of district cooling operation by 8% to 10%.”

However, Berbari says that TSE is a bit more corrosive and contains more dissolved materials. He explains one method of using TSE. He says: “We can use it directly in cooling towers and reduce the number of cycles from six in potable water to around three in TSE water in Dubai. Particularly, after the commissioning of the ultra-modern Jebel Ali sewage treatment plant, where the quality of TSE water has improved substantially in Dubai to one of the best quality in the GCC.

“Now, the challenges that the government faces is whether to use TSE for park irrigation and district cooling, or to only use it in the irrigation of farms? If TSE is used in district cooling then the contribution to the GDP is 10 folds higher than if used in agriculture. So I see an opportunity for the government to make more money, particularly for Dubai Municipality who sells TSE. The cost of cubic meter of TSE is between 4 to 5 dirhams, which translates to 1.2 to 1.3 fils per imperial gallon. I believe Dubai Municipality can increase the rate and increase the revenue by increasing the TSE price to 1.5, which will make it more attractive for them because district cooling can afford it; however, agriculture cannot afford it.”

Currently, he says, both agriculture and district cooling are receiving TSE wherever possible. There is also an increase in district cooling users. “We are facing shortage of TSE water in summer and excess in winter. And you know, even here, agriculture is better in winter, and in summer, it is difficult to grow anything. So maybe, agriculture should be supplied with TSE water during winter, while district cooling should be supplied with TSE water in summer,” Berbari suggests.

Efficiency and tri-generation

District cooling as a utility is very sensitive to the capital investment, says Berbari. The key factor in district cooling is to understand the phasing and not to overbuild. He adds: “We need to understand the actual peak capacity compared to connected capacity or contracted capacity. So you may contract 50,000 tonnes and the actual peak would be 30,000 tonnes. Many companies make the mistake of building for 50,000 tonnes, which during the financial crisis was difficult to manage for many district cooling companies.

“The right way of doing it today is to plan to build for probably 30,000 tonnes with some 10% to 20% buffer to allow for future expansion and to allow for proper phasing. This is where we play a crucial role in controlling the capital cost. Because one of the things that can increase the internal rate of return or IRR is if you build for 30,000 and your contract is for 50,000, so your cost is low, while your revenue stream is high.

“The second thing that we are doing is optimising the district cooling cost and efficiency. Today, if you use your district cooling knowledge well, you can reduce your footprint of district cooling plant by 30% to 40%. This means that you reduce your construction cost of civil work by 30% to 40%. And you reduce your cabling and piping by 30-40%. Now, this is very important for the district cooling industry if it is to survive, because it cannot afford wastage.”

He does admit that district cooling today is not the most efficient cooling system available. Berbari remarks: “Yes, it is more efficient than VRF, but there are now small systems such as water-cooled, magnetic bearing, or geothermal cooling systems that are more efficient than district cooling, sometimes as high as 35%. Therefore, we started developing an alternative called tri-generation. Instead of generating power in a power plant, we send it to district cooling.”

Tri-generation or combined cooling, heat and power (CCHP), is the process by which some of the heat produced by a cogeneration plant is used to generate chilled water for air conditioning or refrigeration. An absorption chiller is linked to the combined heat and power (CHP) to provide this functionality. He says: “Today we have triple-effect absorption chillers, where every kW of heat will give us between 1.5kW to 1.8 kW of cooling. This is major push for tri-generation. When compared to electric district cooling tri-generation saves 60% primary energy, and 60% emissions.”

DC Pro Engineering claims to be pioneers in tri-generation, which is still emerging in the region.

There are two projects where DC PRO is involved when it comes to tri-generation: one in Al-Bustan, Riyadh, which is a residential complex with 850 villas, and he claims it will be the most efficient tri-generation using diesel energy. The other project is in Oman, where DC PRO integrated natural gas, along with solar PV.

Tariffs

Finally, Berbari says, one of the biggest hindrances to adopting district cooling is the high billing structure. To which he gives a viable solution: “We are looking at Dubai Electricity and Water Authority (DEWA) to change the rate. Because right now, if you have the conventional cooling system, you pay on average 30 to 32 fils per kW-hour, while district cooling and central AC in general would come up to 44.5 to 45 fils per kW-hour. And that is impacting district energy and central AC systems quite negatively because inefficient systems are being encouraged. If you put air-cooled split or air-cooled VRF, you will benefit from lower rates compared to centralised system as a community or big building or a district.

“The second thing is that when the consultant and owner are under a district cooling system, they are obliged under a contracted capacity for 25 years. And even if they use half of it, they are penalised for life.”

He insists that the solution for such issues should come from regulatory bodies.

He says: “After eight or 10 years when district cooling pays back the investment, then the utility providers should charge at actual capacity. Most of the district cooling model is still the same as to how it was at the beginning of the district cooling industry, when it was 1kW per tonne. We see that most of the contracts today are based on 1kW per tonne, and are based on potable water. Overall they did not regulate the price and they did not talk to DEWA to restructure.

“I believe that today it is the role of Dubai government to find an advanced solution where DEWA, district cooling, and the end users are all happy with the industry if they want this industry to survive. Right now, DEWA is happy, district cooling utility is happy, but the end users are not happy and I think this is because of artificial conditions not related to district cooling entirely, except in part.”

He proposes that the slab rate of DEWA should be restructured such that it is a fixed rate. He clarifies: “We don’t want to touch DEWA’s revenue. We want to redistribute that rate and make it, let’s say, at 40 or 42 fils per kW-hour, where district cooling can have 42 fils during day and 32 fils at night. This would encourage thermal storage because until today only 30% of district cooling in Dubai has thermal storage. We need to have thermal storage to store chilled water during off-peak night hours and use it during peak day hours.”

He adds that we are all living the solar revolution and we must take advantage of that. He says: “Now with solar energy, we either put batteries that are five to 10 times more expensive to store power. Or we can store it in chilled water during the day when the solar plants are producing energy. This means the way we design a thermal storage will change. The thermal storage might grow two to three times in volume.”

He concludes by saying that the district cooling market should get innovative. He says: “We need to look at how to integrate the future with district cooling. We should build our knowledge and be part of the future.”

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