x Abu Dhabi, UAESunday 21 January 2018

Dewa to cut carbon emissions as part of government drive

New super energy services in Dubai charged with reducing energy use in government buildings.

Demand for power in the UAE is growing at three times the global average and will exceed 40,000 megawatts by 2020. Pawan Singh / The National
Demand for power in the UAE is growing at three times the global average and will exceed 40,000 megawatts by 2020. Pawan Singh / The National

Dubai’s utility company plans to slash carbon emissions from buildings as the Government kick-starts a market for European-style private energy services companies.

The new Dubai super energy services company, which will be 99 per cent owned by Dubai Energy and Water Authority (Dewa), would be charged with reducing energy use in government buildings, said Taher Diab, director for strategy and planning at the Dubai Supreme Council of Energy. He was speaking on the sidelines of the Emirates Green Buildings Council Congress yesterday.

The new body, to be known as Etihad Esco, will be formally launched in January with the initial task of reducing carbon usage in seven Dewa buildings including the company’s headquarters.

It will then invite technology companies in the emirate such as Honeywell, Johnson Controls and Siemens, to bid for the work of retrofitting the buildings.

At the same time, Dubai Regulatory Services Bureau, the government body responsible for regulating power and water suppliers in Dubai, said that the Dubai Supreme Council had approved its plans for an accreditation scheme for private energy services companies in Dubai that would be launched in January.

Only technology companies with the official energy services company (Esco) accreditation will be eligible to bid for the work of reducing emissions in the selected Dewa buildings.

The buildings are thought to include the Dewa headquarters building in Al Garhoud as well as service centres and operational sites.

If the pilot scheme is successful the new super Esco hopes to tender a further package of energy bills at 30 to 50 government buildings.

The company is also talking to other bodies about following suit including Dubai Police, Jafza, Dubai International Financial Centre and a number of the city’s malls.

Private energy services companies operate in the US and Europe by bidding for contracts to reduce carbon emissions in buildings. Generally this involves firms bidding for the rights to manage the energy consumption for a building in return for a fee from the landlord or occupant roughly equivalent to a firm’s energy costs over a period.

The companies then install energy saving technology in the buildings, reducing costs and pocketing the difference if there is any. If the project does not provide returns on the investment, Eso may be responsible for paying the difference.

“We want to create the sort of Esco market in Dubai that you can see in the USA and Europe,” Mr Diab told the conference. “At the moment there is no energy services market in Dubai, so we need to get the ball rolling.”

The idea of creating an Esco market in the UAE has been talked about in official circles for a number of years. It is understood that the Abu Dhabi Government is also considering taking similar measures.

However, Mr Diab said that technology companies planning to operate such a model here often struggled to get bank financing.

He said that the reason the Government was creating its own Super Esco rather than relying on technology companies to do the job was in order to use the government’s name to leverage bank debt.

“The great thing about creating a Super Esco which is 99 per cent owned by Dewa is that the banks know what Dewa is and are much more willing to provide financing to it,” he added. “Once the model is better understood then private Escos will be better able to get back financing for this sort of thing.”

“This will be a new asset class to finance green buildings,” said Stephane Le Gentil, chief executive of Etihad Energy Services. “Companies are starting to realise that this is a way of saving energy through an off balance sheet vehicle.”

James Grinnell, head of water at Dubai Regulatory Services Bureau said that the Government would publish standard contracts to be used by Escos and clients.

Despite a few headline-grabbing building initiatives and a clutch of buildings designed to use cutting- edge technology, the UAE remains one of the worst polluting countries in the world, producing nearly five times as many tonnes of carbon dioxide per person per year than the global average of five.

According to Jones Lang LaSalle, Qatar, which is home to 173 of the Middle East and North Africa’s 1,250 Leadership and Energy and Environmental Design-accredited building projects, is the most polluting country in the region per capita, producing a massive 44 tonnes of carbon dioxide per person per year.

According to the UAE’s Minister of Energy Suhail Al Mazrouei, demand for power in the UAE is growing at three times the global average and will exceed 40,000 megawatts by 2020.