At this year’s MEP UAE Conference 2018, which will be held on 9 May, at Grosvenor House, Dubai, among the several relevant topics that we have lined-up, retrofitting through ESCOs will be one of the subjects that will be addressed.
By definition, an energy services company (ESCO) is an energy service provider that provides the technology of mechanical and electrical services to an existing or new building project for the estimated life of the building for a certain fee. Rather than follow a traditional model of multiple subcontractors, the fully funded design, supply, installation, and maintenance is under the ESCO model providing the total service.
Such a delegation of responsibility will provide the building owners with the very latest technology and future proofing of the systems over the life of the building. In new installations, these technological changes provide huge savings for the developer in the adoption of the electrical/mechanical cost incorporated in a service fee through the operational expenses (opex), which experienced ESCOs guarantee is less than the traditional tendering system of capital expenses and the residual opex.
Etihad ESCO is a DEWA venture that was established in 2013 to make Dubai's built environment a leading example of energy efficiency for the region and the world. As a Super ESCO, it enables the energy performance contracting market in Dubai by developing energy efficiency projects targeting more than 30,000 buildings. Etihad ESCO aims to jumpstart the creation of viable performance contracting market for energy service companies by executing building retrofits, increasing penetration of district cooling, building capacity of local ESCOs for private sector and facilitating access to project finance. Dubai ESCOs market will provide new business opportunities for joint ventures, international partnerships as well as engage UAE national entrepreneurs through a diversified supply chain from financial institutions, technology providers and equipment manufacturers to service providers across the project development, management and reporting stages.
Retrofitting is an important subject, especially when the government is involved in pushing the agenda.
Late last year, at a seminar organised in Dubai by the Institution of Structural Engineers (IStructE), Saeed Al Abbar, director of ASEG, said that carrying out MEP retrofits can be tricky because clients typically expect activities to be implemented while the building remains operational.
“We have to work around everyone still occupying the building, so that creates a […] logistical challenge,” said Al Abbar.
Also, in a roundtable organised by MEP Middle East, Ramy Boufarhat, COO, James L Williams Middle East, said that ESCOs need to team up with MEP contractors. He said: “If companies like us join these ESCOs. This combination can guarantee savings for the client; ESCOs can help finance retrofit projects if you’re worried about the capital expenditures and it will ensure that you are being energy-efficient.”
Sougata Nandi, founder of 3e Advisory, says that while ESCO model is maturing in Dubai and other emirates, it is important to understand that an ESCO project works well in relatively big energy management projects. In addition to the investment in energy saving equipment and associated energy engineering costs, project financing and ongoing management costs constitute significant portions of the overall cost of ESCO projects. Thus, for relatively small, or simple projects like retrofitting existing lighting with LED lights, should preferably be executed using in-house financing.
Financing has been one of the major hindrance when it comes to retrofits. Discussing such issues in an open forum will prepare the MEP stakeholders to address and execute retrofit projects the right way.