Saudi Arabia’s focus on mega cities, large-scale infrastructure projects and urban development has created significant opportunities for the HVACR industry. So believes Steve Lemoine, CEO Middle East, Dalkia EDF Group. These projects, as well as the various real estate developments, he says, have led to an increase in demand for HVACR systems in commercial, residential and industrial sectors in the country, and the entry of many newcomers in the field of HVACR.

Historically, he says, the market has been organised around traders of equipment and equipment manufacturers, but today, the market has matured and is much more structured. “The development of the HVACR industry in Saudi Arabia is driven by innovative services, with detailed reporting and digital tools,” he says.

Joining the discussion, Khalid A Al Mulhim, Business Development Director, Suhaimi Design – Protecooling, says that since the launch of mega cities and mega-projects – as part of Saudi Vision 2030, targeting diversification of the economy from oil-dependence – the HVACR industry has seen a lot of development and growth in terms of market size and focus on sustainability. As the country pushes for greener alternatives for solving an ever-increasing demand for cooling in an inhospitable climate, he says, there is a huge impetus for further development of sustainable and green technology. Furthermore, Mulhim says, the focus on IAQ has been a significant factor in improving the filtration and ventilation systems employed to enable a healthier indoor environment, post-pandemic.

Asim Ahmad Hashmi, Sales Director – Applied Business, SKM Air Conditioning Equipment, echoes Al Mulhim and Lemoine’s thoughts on the growth of the HVACR industry in Saudi Arabia. He says: “Saudi Arabia has launched many high-profile projects, and they are moving at a good pace. Therefore, there is a boom in Saudi Arabia’s HVACR market and enough business opportunities for manufacturers, suppliers and contractors.”

Shifting the discussion to the growth of green HVACR systems in Saudi Arabia, Al Mulhim says the demand for green HVACR systems in Saudi Arabia is on the rise, with market size expected to rise rapidly along with its increasing population and construction projects. Innovations, he says, are continuously being introduced in the market, offering better energy efficiency, environmental sustainability and user comfort. He says, “Some green systems being employed in the new projects are monitoring-based commissioning (MBCx), a building management methodology utilising the data from monitoring the building systems and analysing it for proper operational performance and energy efficiency; and District Cooling, which increases energy efficiency and reduces the overall carbon emissions of the HVAC system.”

Lemoine says green HVACR systems are still at the very beginning of their development and deployment in Saudi Arabia. To speed up the deployment of green HVACR systems, he says, there is a need for a more adapted regulation to promote these solutions. Moreover, he says, the Saudi green initiative and the country’s pledge to achieve net zero by 2060 will play an important role in setting up green standards and pushing the boundaries of implementing these clean solutions.

Asim Ahmad Hashmi

For his part, Hashmi says that the demand for green HVACR systems is likely to continue to grow in the country, especially in line with the national initiatives around sustainability and energy efficiency. For instance, he says, SKM has been promoting inverter technology integration, which is designed to achieve a high Seasonal Energy Efficiency Ratio (SEER), optimise cooling, reduce energy wastage and contribute to the country’s renewable energy goals; and heat-recovery systems, which recover the wasted energy from the system and utilise it for maximising energy utilisation and reducing overall energy consumption and smart controls.

Hashmi, touching upon how green financing plays itself out in Saudi Arabia, says green financing for products and services can contribute to the country’s transition to a green economy, as it has a crucial role in supporting the initiatives of renewable energy projects and products. Besides the funding coming from overseas investors or institutions related to green initiatives, he says, banks have developed green financial instruments, like green bonds, green loans and sustainability-linked products to fund the projects or products, which results in positive environmental impacts and offers investors opportunities to align with sustainability goals.

Steve Lemoine

Saudi Arabia, Lemoine says, is starting to develop such green financing mechanisms to accelerate the deployment of such sustainable solutions in the energy field. The local authorities, he says, are enhancing all kinds of low-carbon-generation solutions for a cleaner future and electricity. “Some of the largely deployed solutions across the country,” he says, “are solar and wind generation, as well as more clean hydrogen and its derivatives.” Saudi Arabia, Lemoine says, is focusing on getting ready for a post-oil era. He believes that in the very short term, there is a trend of greater deployment of green financing, showing the world the Kingdom’s sustainable vision.

For his part, Al Mulhim says, Saudi Arabia has invested significantly to accelerate the green transition; however, a significant majority of existing facilities runs on more conventional technology, which is, in most cases, more cost-effective. The cost of implementation, he says, is still a stumbling block for many facilities in this regard. However, he expects that in a few years, as the green market starts to develop and become more competitive, the implementation of greener technology will be more universally adopted and will be encouraged by the country’s regulations and standards.

Saudi Arabia’s regulatory landscape

To sell any product in Saudi Arabia, Hashmi says, requires the manufacturer to ensure that the product is SASO-compliant. SASO (Saudi Standards, Metrology and Quality Organisation) clearly defines minimum Estimated Energy Requirement. Therefore, he says, manufacturers design their products to meet the energy requirement of SASO. For instance, Hashmi says, the country’s Tarshid (National ESCO – NESCO) is pushing inverter products for replacement projects, like Energy Service Companies (ESCOs) in Dubai. The residential villa segment is moving towards VRFs, making energy efficiency the prime focus, he says. And in the case of air-handling units (AHUs) and fan-coil units (FCUs), there is a big push for using EC motors instead of conventional AC motors, he adds.

Weighing in, Lemoine says that during the last few years, Saudi Arabia’s HVACR market has been shifting to a more structured organisation and is constantly increasing its standards. The common goal of local and international actors playing a role in the sector is not only to improve the quality of the services delivered – be they engineering, MEP or O&M – to the users but also to increase the lifetime of the equipment being serviced. In addition to this, Lemoine says, Saudi Arabia has launched an important plan to implement energy-efficiency measures, which include the modernisation and replacement of old and inefficient HVACR systems. Furthermore, he says, the recent increase in electricity prices in the country, due to fewer subsidies, and an increase of the VAT to 15% has also accelerated the trend of providing more efficient HVACR systems.

Khalid A Al Mulhim,

Whilst the thrust being given to the use of efficient HVACR equipment in the country is one aspect, the focus on refrigerants is another. Al Mulhim, giving an overview of the refrigerant landscape in the country, says efforts to phase out ozone-depleting agents, like CFCs and HFCs, have resulted in the development of equipment utilising more eco-friendly refrigerants. SASO, he says, provides energy-efficiency standards to encourage the development and production of higher-efficiency products and appliances. Al Mulhim says: “The increased emphasis on green architecture and sustainability also promotes lower power consumption by minimising cooling loads through better architecture and insulation. Moreover, standards and regulations have been developed for the integration of HVACR equipment with renewable energy sources, such as solar power, and the Saudi Building Code sets guidelines to ensure proper installation and maintenance of HVACR systems, which is necessary for their performance.” Training programmes, he says, also have been introduced to produce well-equipped certified professionals to handle newer technologies, as per international best practices.

Further, touching upon how HVACR companies are responding to meeting the energy-efficiency requirements of the Saudi Building Energy Efficiency Code (SBEEC), Mulhim says the Code provides the standards and requirements for energy efficiency, and HVACR equipment manufacturers innovate and develop products to satisfy the standards. The resultant products, he says, are labelled based on energy efficiency in compliance with SBEEC.

He says that there is further development to be made in terms of energy auditing and enforcing mandatory compliance of the efficiency standards to meet with international specific energy consumption standards, which would incentivise and accelerate the transition to higher efficiency operation.

There are semi-government entities like Tarshid, Al Mulhim says, implementing energy conservation projects through ESCOs for many institutions. However, he adds, there is still a lot of room for growth in terms of demand and implementation of advanced technology for higher efficiency operation. He says that another way to encourage efficiency in the public and private sectors is through performance contracts, where would guarantee a certain level of energy savings.

Lemoine says: “HVACR companies are already heavily involved with ESCOs like Dalkia to implement energy efficiency measures in buildings. By responding to the energy efficiency requirements of the Saudi Building Energy Efficiency Code, they would typically employ a range of strategies and technologies to meet the code’s standards.” In the case of Dalkia, he says, the focus is to adopt the most efficient solutions to reduce energy consumption, greenhouse gas emissions and overall operational costs for Dalkia and its clients in the long run. Furthermore, Lemoine says, Saudi Arabia has been actively deploying energy-efficiency measures in new buildings since 2017. The government, he says, encourages energy-efficiency improvements in existing buildings through registered ESCOs.

Sustainable Shift: District Cooling in Saudi Arabia

The District Cooling industry has been in Saudi Arabia for a long time, Lemoine says, and the acceleration of the construction of mega projects has been bringing in the need for more District Cooling networks. Though a District Cooling system is more efficient than the sum of individual systems, he says, if the density of the real estate project is high, investing in new District Cooling networks requires a long-life timeline and tight planning. Lemoine says: “Dalkia’s engagement usually covers between 20 and 30 years of investments and secures plants that are always up and running – plants that are efficient, digitalised and decarbonised.” Touching upon the decarbonisation of District Cooling plants, he says that the District Cooling sector will be one of the main beneficiaries of clean or decarbonised electricity, as the growth of renewable energy sources is tremendous in the country.

Al Mulhim is optimistic about the growth of District Cooling in the country. Highlighting the large-scale District Cooling projects launched in cities like Riyadh, Jeddah and Makkah, he says that demand is expected to grow, as many projects are in the pipeline. Furthermore, he says, the technological and other developments relating to District Cooling networks, such as advanced control systems, renewable energy integration, innovation in energy storage solutions, updated policy and regulations, and efficient building design, are aiding in fighting climate change. He says: “Renewable energy integration will help to reduce the carbon footprint of the District Cooling systems, in line with Saudi Green Initiative targets and will help diversify energy sources. There is much room for research, development and innovation in this field in Saudi Arabia, considering the amount of solar energy generation potential.”

Commenting on how Green Hydrogen can be effectively integrated as a source of energy for District Cooling systems, and its potential benefits in terms of sustainability and environmental impact, Lemoine says integrating Green Hydrogen as a source of energy for District Cooling systems can be a promising approach to enhance sustainability and reduce environmental impact. Moreover, he says, there are many ways to integrate Green Hydrogen into District Cooling systems effectively. Lemoine says: “Green Hydrogen is produced without emitting greenhouse gases, making it a clean energy source. Integrating it into District Cooling systems can help significantly reduce the carbon footprint associated with conventional fossil fuel-based energy sources.” As the global focus on sustainability intensifies, he says, the Saudi government may offer incentives and support for adopting green hydrogen, which can further enhance the economic viability of such systems.

For his part, Al Mulhim says that Green Hydrogen can be integrated using hydrogen-powered chillers and as an alternative power source using fuel cells. Hydrogen fuel, he says, offers zero emissions, diversification from fossil fuel and effective energy.