Bringing Value to District Cooling in the Middle East


District cooling technology can have advantages for areas with heavy demand for air-conditioning. It can be more reliable, more energy efficient and have less negative environmental impact than standard approaches to air-conditioning. However, the region’s district cooling sector frequently miscalculates the cooling loads which subsequently makes developers or property owners wary of the costs involved.

District cooling plants are often operated as profitable businesses with the purpose of satisfying shareholders and as such, there will always be onerous contractual conditions.

Owners enter into a formal contract with District Cooling Providers (DC Provider) for a defined ‘contract load’ that represents the peak cooling requirement the building will experience. In return the Provider guarantees to deliver the contract load at the energy transfer station (ETS) as a chilled water flow rate within a specified temperature tolerance. The energy transfer station is the property of the Provider and incorporates an energy heat-meter that records real-time energy consumption by the Owner’s property.

The Provider tariff structure is typically:

1.An initial connection charge that goes towards offsetting the cost of the Providers investment providing.

2.Monthly consumption charges base upon real-time metering of energy consumed (kWh/ TRhr) at the consumption tariff.

3.Quarterly or annually applied demand/capacity charges to reserve the contract load and proportionally recompense the Provider for operation, maintenance and depreciation costs related to the district cooling plant, reticulation network and energy transfer stations.

The Owner is expected to return the chilled water to the Provider within the agreed temperature tolerance as monitored by the Provider’s ETS energy meter; should the temperature tolerance not be achieved the Provider may apply a surcharge to the Owners bill.

Some Providers allow renegotiation of the contracted load since it has ramifications both on the Owner in the form of higher demand charges, and for the Provider in reserving capacity that may not be utilised and inefficient plant operation.

However, once the contracted load has been finally agreed, making further amendment, unless it was being increased, will be problematic requiring a costly and likely protracted legal approach.

The consequence of the Owner signing up to a contracted load agreement with an over-exaggerated cooling load can be financially catastrophic in terms of the initial capital cost and recurring demand charges.

The Owner’s initial investment will be for the ETS and the associated connection charges levied by the Provider which are typically US$156/kW. An exaggerated cooling load will result in an over-sized ETS and an unnecessarily increased connection fee.

More grievously, the Owner will be obligated to pay the recurring demand charges, typically US$58/kW, year on year amounting to vast unnecessary expenditure.

On a recent peer review engagement Black & White Engineering realised substantial savings for the Client by detailed analysis of the air-conditioning systems that resulted in a significant reduction to cooling load. The incumbent consultants design averaged 228 W/m² and made provision for a 56.59MW connection to the DC Provider network who would have happily satisfied that provision since it would generated US$8,816,000 in connection charge revenue and thereafter US$3,306,000 year on year demand charges, consumption charges are additional to this.

Enter Black & White Engineering who revisited the design generating a thermal model incorporating profiling to mimic building operation and usage. The initial outcome was a 33.41MW cooling requirement, averaging 134 W/m², employing aggressive but realistic profiling. However the final cooling load averaged 150 W/m² increasing to 37.1MW to align with certain Client criteria. The incumbent consultant accepted Black & White Engineering’s rationalised design although then guided the Client to sign for a contracted load of 37,45MW for a building that had physically reduced in size bringing to life the adage ‘you can lead a Client to water but can’t make him drink’.

Based upon Black & White Engineering’s intervention the Client benefitted from a 19.14MW reduction to the contracted load saving US$2,982,000 in connection charges and US$1,118,000 year on year demand charges. Over a 20-year period savings of US$25M will be achieved.

Sadly this is a common occurrence and in many cases Owners and Developers will be oblivious to the magnitude of potential Opex savings and unaware that a lean design will perform more efficiently.

There are instances where master-plan developers allocate land plots without sufficient electrical power allowance for sub-developers to generate on-site cooling to effectively mandate the use of district cooling within the master-plan. Under these circumstances all plot developers are captive customers to the DC Provider and its essential that cooling loads are stripped back to the bare minimum.

As engineers it is essential that we undertake proper assessment of the peak cooling load considering diversities related to solar and occupant behaviour. Within Black & White we have all the tools and experience necessary to determine the contracted load. Building facades are modelled, occupant and spaces are profiled that mimic space use and associated fresh air creating a virtual environment and the final fully diversified output is reviewed and benchmarked against similar projects.

This however should not be the end of rationalising the contract load.

The DC Provider is contractually obligated to deliver chilled water at the prescribed conditions and there is no need to include any safety margins for degradation of the Owner’s HVAC plant. It is acceptable to retain reasonable design/safety margins within the Owners plant selections for degradation over time however they should not be included within the contracted cooling load.