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Green building technology to double in 10 years

Research flags global boom in energy saving despite regional hesitancy

Green building technology could be a business worth US $277 billion by 2020.
Green building technology could be a business worth US $277 billion by 2020.

Middle Eastern interest in ‘green’ building technology is caught between encouraging government policy and hesitancy among companies, despite expectations that the industry will double in ten years.

A new report by Lux Research, a New York-based consultancy for emerging technology, has said the boom in ‘green buildings’ designed to reduce levels of consumption of energy and materials will expand by 6.1% year-on-year, creating a US $277 billion industry in 2020, up from US$ 144 billion today.

Lux Research’s focus in Diamonds in the Rough: Uncovering Opportunities in the $277 Billion Green Buildings Market is in the cost saving technology, as opposed to the usual environmental surveys that study property values. It defines 'green building technologies' as any service, equipment, or material that improves the energy efficiency or reduces net material consumption of a building over and above that of the standard used at the time of original construction.

The energy-saving equipment – which comprises lighting, HVAC and water heating systems as well as energy-generation technologies such as rooftop solar systems - will reach a market value of US $146 billion in 2015, spurred by new growth in LEDs, smart lighting, and advanced heat technologies.

The services sector - including energy service companies (ESCOs) - represents the biggest growth potential, the research estimates, with demand response driving revenue from US $16 billion last year to US $55 billion in a decade.

Some providers believe that government policies, such as the Green Leaf Building initiative in Dubai, will see more projects from infrastructure to commercial develop.

Enviromena, the Abu Dhabi-based developer of solar products including power plants, is one such company to benefit.

Sander Trestain, vice president – technical, told CW that although the initiatives are quite new and occurred in a depressed market, they are on the path of becoming world leaders.

“There is a time factor associated, and not a lot of new buildings are being built. However, in Abu Dhabi we are seeing a lot of developments,” he said. “Additionally, it has established a 7% renewable target by 2020.”

Government-led initiatives have resulted in substantial interest from international venture capital. “From our perspective we’ve been able to close our second book of fund raising in January 2010,” he adds.

“There’s been a substantial inflow of green technology money and that demonstrates a real interest. Investors believe in a short- to mid-term series of subsidies and incentives coming from the government.”

Michael LoCascio, a senior analyst at Lux Research, states in the research’s release that subsidies will be important to the sector’s growth due to the 'comparatively long' adoption cycle of the technologies.

“The biggest driving factor, however, is straight-up economics. Technologies that can provide a payback in three years are more likely to be adopted by commercial building owners. Those providing payback in five years, however, are still attractive for government buildings.”

However, John Owen of SOLE UAE Solar Systems - a Greece-headquartered solar power installation firm - told CW that cost and time make it a difficult environment to sell solar solutions, despite signs of change: “In the region the take-up is slow, but it’s slowly picking up. The problem with the industry is that it’s perhaps too much [to spend] on a product, and can’t see five years ahead for when they will start making savings.

“A lot of power supply is still quite cheap. But electricity is soon to go up.”

Owen adds that scarce mandates have intensified competition for international renewable technology companies – with as many as 13 companies tendering for a single project at one time.

 

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