Heading Toward Energy Efficiency Journey in UAE
A report released back in November 2015 by the Abu Dhabi Statistics Center indicates that that Domestic, Commercial and Governmental buildings in Abu Dhabi account for about 84% of the total electricity consumption in the emirate which was equivalent to a total of 44,386,471MWh in 2014 as shown in Figure 1.
Figure1- Electricity consumption broken down per building category for the Emirate of Abu Dhabi
Similarly, DEWA in Dubai reports the same trend with an overall consumption of 33,659,150 MWh for the same year as indicated in Figure 2.
Figure2- Electricity consumption broken down per building category in the Emirate of Dubai
Comparing the trend of building’s consumption to 2010, we observe about 35% increase in consumption in 2014 compared to 2010 levels in Abu Dhabi alone, while the differenceswere less pronounced in Dubai, with only a 17% increase [Same source].
Potential in UAE
Considering the aforementioned electricity consumption analysis and based on an educated guess by energy efficiency experts shows thatAED 1 billion worth of savings could be the achieved by targeting a mere 10% energy consumption reduction in the buildings sector (residential, commercial, governmental, and private buildings) based on the current average electricity tariff in Abu Dhabi and Dubai.
If a 10% annual saving target is applied to 40% of the existing buildings in the two emirates with an 70% success rate for the retrofits and a simple payback period of 3 years, this will generate a market potential of AED +2 billion for all the stakeholders.
The Way to Go
Energy efficiency is a strategy, and as with any strategy three essential elements need to be considered for it to succeed: Focus, Measurements, and Accountability.
Focus:by identifying priorities (e.g. How do we perform or Where is the facility standing in the scale of consumption), priorities should be tied with a specific, measurable, achievable, and realistic and time bounded (SMART) goal. The priorities and goals could be represented in energy efficiency or energy management policy signed off by the top management and should be shared with the whole facility occupants, users and/or employees as part of the corporate policies to be adhered and executed.
Accountability:by assigning a team that will take responsibility and ownership for executing the strategy. This team should have a direct reporting channel to the top management.
Measurements: as unmeasurable is unmanageable; measurements for progress and outcome is the most challenging practices to assess the ability to achieve the goals and to measure the project outcome represented in the savings.
As explainedin the introduction, the energy efficiency could be approached through different practices, schemes and nominations. Theseapproaches differ in execution methods, contractual obligations, period and/or generated savings while still maintaining the basic energy efficiency drive. A brief overview of some of these strategies is described below.
Plan – Do – Check – Act
The basic elements for any energy efficiency and/or energy management program is the(Plan – Do – Check – Act) Approach.
This isa tiered process initiated by the establishing the objectives and process necessary to achieve the EE goals and milestones which will be represented through a published energy efficiency policy for all building occupants.
This should depend on well-defined consumption baseline and energy performance indicators supported by feasibility study for the targeted measures along with a detailed action plan for the implementation, measurement and verification phase.This process could be satisfied by conducting a detailed or investment grade audit for the facility by a dedicated energy manager or qualified project manager.
The Do phase will include the implementation of the planned feasible energy saving measure. The implantation of these measures should be provided with sufficient documentation, training and operational consideration for the implemented measures.
When the implementation is completed, detailed measurement and verification should be conducted for the energy saving hand to hand with a detailed analysis to show the actual saving based on the energy performance indicators taking into account the energy consumptions variables. The measurement and verification along with the energy monitoring and reporting will yield to identify any deviation from the targeted KPIs and objectives and will allow to capture any opportunities to further enhance the building operation and reduce the energy consumption. All this should be tied with a solid communication protocol with the top management and the building occupant to highlight the progress output, achievements in addition to the corrective/preventive actions along with the actual facility monetary savings.
This ongoing process will assure the building will be operating within a systematic approach as part of the pursued polices within the organization.
ISO 50001:2011 – Energy Management System (EnMS) wasofficially launched in 2011.The standard states that the main objective of the standard is “to enable organizations to establish the systems and processes necessary to improve energy performance, including energy efficiency, use, consumption and intensity. Implementation of this standard should lead to reductions in energy cost, greenhouse gas emissions and other environmental impacts, through systematic management of energy.” (SeeEnergy management systems — Requirements with guidance for use ICS 27.010 for further details). This standard relies on the Plan-Do-Check-Act approach and detailing the detailed process to achieve the energy efficiency and management goals within the organization as an organizational internal system.
Such an approach is applicable for organizations with corporate structure, also suitable for industry in which process need a specific in-house expertise in the process to assure addressing all significant energy uses. However this needs an in house engagement (top-down) enforcement along with dedicated team headed by the energy management Champion or Energy Manager. From another hand this approach need an internal financing scheme.Hence it focuses usually on no/low cost measures or medium cost measure with return on investment(ROI) not exceeding 2-4 years usually.
Monitoring Based Commissioning (MBCx)
Another proven approach toward energy efficiency for existing buildings focusing on fixing the basics through a systematic process is Monitoring Based Commissioning (MBCx). MBCx implementation is a tiered process starting from planning and concluded with planning for sustained saving practices. MBCx involves three elements of energy management/monitoring system with retro/ongoing commissioning in addition to measurement-based savings accounting using the metered and monitored data.
The process are almost the same for the Plan-DO-Check-ACT approach; with different implementation techniques and reporting structure; as MBCx follows three primary streams:
- Savings from persistence and optimization of savings from ongoing commissioning based on early identification of deficiencies through metering and trending;
- Savings from measures identified through metering and trending; and
- Continually identified new measures using the existing monitoring and energy management system
MBCx focuses on no/low cost measures by optimum utilization of the existing control and monitoring system such as:
- Fix the basics with existing controls and monitoring system
- Enhance the existing control and operation
- Make repairs/upgrades to existing equipment to make it run more efficiently (low hanging fruit)
All energy saving projects are allowed, provided they do not require high capital investment.
This approach has proven a viable model with a feasible business case as reported by Lawrence Berkeley National Laboratory. The study examined the findings for the commissioning of 643 existing and new construction buildings scattered in the 26 states in the U.S. representing different climate zones; the findings proved that a median energy saving of 16% is achievable in the existing buildings with a payback period of 1.1 years. The study covered 99 million ft2. The average electricity tariff was $/kWh 0.109 as of 2009.
This model is viable in the region for many considerations starting from the poor utilization of the potential in the buildings management system; as many are not well maintained, commissioned and/or operated by non-skilled operators, from another hand; the operation and maintenance system and practices in the region are not q priority for most of the building owners and its usually tends to be a reactive approach instead of being preventive or predictive act of practice. Also few facility management staff and/or companies are incorporating the energy management and efficiency services within their contractual obligations and work procedures.
From another hand; it’s noticed that the utilities tariff hasknown a sharp increase where the governments and authorities have implemented a plan to gradually release the subsidies for the energy and water bills. This have been translated into increase of the tariff in Dubai since 2009 and an increase in tariff in Abu Dhabi in 2015. Further actions are expected to be envisaged and implemented to support the country’s vision of moving towards sustainability and efficiency. On top of that, the region consumption per capita trendsare considered the highest – as reported by the World Bank records- compared to other international trend.This is self-evidently explained by the harsh weather during the summer along with the late enforcement of energy efficiency oriented buildings codes and regulations along with the previously subsidized energy tariff and still considered low compared to the international energy tariff.
Energy Performance Contracting
Another approach represented in the Energy performance contracting is available for organizations to avoid financing the energy efficiency project and to delegate the responsibility of the planning, implementation, saving verifications and other operational obligations toward a specialized services providers called energy services companies (ESCO).
In the UAE,Etihad ESCO was formed as Dubai’s official ‘Super-ESCO’ by DEWA & Dubai Supreme Council of Energy in 2013. Their mission is to “improve energy efficiency of existing buildings by saving electricity and water using the ESCO/Energy Performance Contracting model”.
Performance contracting is a challenging and business model with many associated risks as this contract extends sometimes up to 7 – 10 years based on the project volume and contracted return on investment (ROI). It has to be initiated by the private and public firms’ management’s commitment to undertake detailed planning and build a framework for period checks for milestones and key performance indicators for the existing building energy efficiency. It has to be supported by a well-defined framework for corrective action in case of deviation or discrepancy. This cycle needs to be completed by accounting for continuous monitoring, verification, reporting to assure optimum and sustained benefits in the long run.
The implementation, execution and handling of such business requires specialized and high caliber expertise setup.
As any business model, there are different barriers faced by this model which are namely, awareness, competencies, regulations, and lastly, financing. Financing is the main driver toward such business viability and growth.
As there are many options for performance contracting project financing, the focus of this discussion will be on ESCOs as it has already been tested and applied in Dubai.
As the ESCO contract is linked with energy saving and CO2 emissions reduction there are considerably more challenges to be considered. These are in the form of performance contracts, financing scheme, legal framework, as well as savings and performance verification. Banks financing option is the bottleneck for the success of ESCO business model due to the high transactional cost due to high interest rates as well as insurance, guarantee and performance bonds with banks. This usually amounts to 12% – 16% of the project’s revenue. The associated risks of this model underlying corporate financing risks and performance risks, could be mitigated and managed through concrete, educated financing schemes based on successful business case studies, which had been funded by the government.
Without the mitigation of the aforementioned risk, the success of the ESCO industry will be limited and restrained.