The VRV market is a low-hanging fruit, waiting to be plucked, says Anil Pakale, Regional Sales Manager of Daikin McQuay ME, in an interview with B Surendar, adding that the company has set its sights on capturing 65% of the region’s market.
Backed by what it claims to be 65% of the global market share for VRVs (Variable Refrigerant Volume air conditioning units), worth $7 billion, Daikin McQuay set up shop in Abu Dhabi in January, with the avowed objective of capturing 65% of the region’s market. Anil Pakale at the helm of affairs, has been mandated with achieving the magic number. It is not a difficult feat to pull off, believes Pakale, despite the DC mantra continuing to hold strong in the region. He has his reasons – and probably a few aces up his sleeve. District cooling has lost its sheen, he thinks, and it is time to go back to the future, and the future lies in VRVs, he argues. But he builds the background first, before staking his, and Daikin McQuay’s claim.
“Daikin took over McQuay in 2006 and came to be known as Daikin McQuay,” says Pakale. “Prior to that, McQuay was owned by a Malaysian company, where the emphasis was not on R&D but on milking the cow. But Daikin is committed to product innovation and R&D, and that’s evident from the market – the turnover for Daikin is $13.3 billion.”
Daikin and McQuay had different distributors before the merger, reveals Pakale. After the merger, one of the strategies the company deployed was to sidestep the distributors and deal with the end-users directly. “It happened as of September 2009. And now, the products are directly sold by our engineers, with the exception of small DX units,” Pakale adds.
Speaking about the recently set up UAE operation, Pakale says: “We started building a team. We have six engineers in Abu Dhabi. Daikin McQuay was not doing even $2 million till September 2009. Whatever sales was happening was through distributors and direct sales efforts by McQuay sales engineers, based in Dubai. But this year alone, since we are going without any distributors or dealers in Abu Dhabi, we will do three to four times the business.”
Anil Pakale
Pakale is confident that his company will continue to multiply by a factor of two every year, as he estimates that the market size for HVAC equipment is $200 million in Abu Dhabi. “The market here is primarily an applied market or a DC market – chillers, air-handling units (AHUs),” he says. “For three to four years from now, the market will be focused only on the air side of things – stuff like FCUs and AHUs. This is because the largest district cooling provider here – Tabreed – has built a lot of redundant capacity.”
Here, Pakale hits the most vulnerable soft underbelly of district cooling – too much of air conditioning tonnage in the market, that did not anticipate the real estate slump. Consequently, district cooling is cooling off in Abu Dhabi, with demand waning considerably. The VRV market is poised to step into the breach, predicts Pakale. In fact, he believes that it already has a foot in the door.
“They would still have some places where the developers and owners have not reached an agreement with the district cooling provider. So, they will, on their own, build smaller water-cooled plants,” says Pakale. “They have no other choice but to do so, because their projects have been designed for district cooling,” Pakale pronounces.
Pakale’s pronouncements obliquely allude to the worst-case scenario: In the event of not having yet reached an agreement with the district cooling provider, the developers and owners of some of the projects will be forced to install plants – albeit smaller in size – on their own, as against the monolithic ones built earlier with excess capacity, which were unfortunately, not put to optimum use. Pakale cites instances of such developments – MENA Plaza, Capitala and Arzanah Medical Complex. “All these are typically 4,000 to 5,000 TR capacity plants,” he says. “In the present scenario, not many big-sized district cooling plants will come up,” he prophesies.
Pakale offers Sheikh Zayed University, Abu Dhabi, as another example of a customer, who, having waited for a connection, has decided to fend for itself. “It has gone ahead and installed a 6,000 TR plant on its own,” says Pakale. “Fibrex is the MEP contractor for the project. Fibrex is also doing a mall – Deerfield Mall – close to Shahama, which, again, is small in capacity (5,000 TR). It had been designed for district cooling, and, is, therefore, stuck with no other option but to go ahead with water-cooled centrifugal plants.”
Speaking against this backdrop, Pakale makes a case for VRVs as opposed to a networked system like district cooling, as he believes that most plants are shifting from district cooling schemes to standalone units. “Had these customers not designed their projects with district cooling in mind, they could have gone for alternatives, such as air-cooled chillers, VRVs and multiple split-unit systems,” Pakale points out.
He thinks that the market is now ripe and ready for VRVs, and that Daikin McQuay has responded proactively to the situation. “We would be looking to supply chillers to those that have already been designed with district cooling in mind; for the rest, we are looking to supply VRVs,” he explains. “We are working with the top two or three consultants, who are in association with three government entities – Town Planning, Abu Dhabi Municipality and Musanada. The three entities are looking for energy-efficient possibilities in standalone systems as part of Abu Dhabi’s 2030 Vision.”
If this, indeed, is the case, it implies a turnaround, Pakale feels, as this stance is at variance with the generally accepted view, or rather the perception, that district cooling is more energy-efficient than standalone units. In fact, district cooling has always been promoted as a more sustainable solution, he says.
“The three entities are not looking at district cooling; they are going to enforce designs on projects,” Pakale emphasises. “The owner is supposed to follow the designs, else Town Planning or the Municipality will not give approval for other things, and so their projects will get delayed,” he elaborates.
This is where suppliers of standalone units, like VRVs, come into the picture, Pakale feels. They can supply the projects with VRV systems, which are an alternative to water-cooled systems. Casting our gaze farther, it is interesting to note here that Daikin McQuay also manufactures water-cooled chillers, thus placing it in a win-win situation. If a project has been specifically designed for district cooling, Daikin McQuay has an opportunity to supply the customer with water-cooled chillers; wherever district cooling has not been prescribed as the norm, it can carve itself a market to supply VRV systems.
“The three entities are specific about the type of system to be used, and the type of refrigerant to be used,” Pakale points out, and explains further: “They have called lots of vendors and listened to them, and they are looking positively at VRV systems. The VRV market in Abu Dhabi stands at between $10 million and $12 million. But with efforts of all VRV suppliers (that is, getting into discussions with consultants), we can grow the market to $100 million in three years’ time. And Daikin McQuay wants 65% of that market – consistent with our global market share of 65%.” One can almost hear Pakale declaring, “QED – quod erat demonstrandum!”
Not content with proving the point he originally set out to prove, Pakale takes the logical premises further: “Though it comes at a premium, we believe that our VRV system is more energy efficient than that of our competitors, and that it has a faster payback period than that of our competitors or other systems,” he says, and adds, “Ours is an air-cooled system with the efficiency of a water-cooled system, at full load. And at part load, it outweighs and is far superior to a water-cooled system, because it gets the advantage of low dry bulb. (In their case, wet bulb does not drop as drastically as dry bulb.)
“We also have water-cooled VRVs that are more efficient (25% additional energy savings), but they have not caught on.” He concludes his argument with a rhetoric question: “If we go for water-cooled chillers, then why not for water-cooled VRVs?” He, then, proceeds to answer the question himself: “If the application permits, then go for water-cooled VRVs; if no water is available, then go for air-cooled VRVs.”
Pakale drives home the point when he says, “In district cooling schemes, the total installed cost is two to three times more than the cost of equipment. In VRV, we are just 25% of the total installed cost. It is just a straight run of interconnected pipes – copper pipes, quarter of an inch to one inch in diameter, which are easy to lay and easy to service. You clip it (pipe) on the wall and run it full load. You can get 1.1 to 1.2 kW/TR for Abu Dhabi conditions. Another advantage is that it has an in-built BTU meter. Every single indoor VRV machine has an in-built eletronic-expansion valve and that acts as a BTU metering unit. So, we can do a billing system.”
It appears that in Pakale’s opinion, the VRV market is a low-hanging fruit, waiting to be plucked. But what about large-scale applications? How do VRVs work there, if at all? Pakale concedes that it is still a district cooling domain. But he is quick to cite an example to prove the contrary. “In Japan, though, in a 100-storey building, which is on a DX system, they have a VRV regimen in place,” he says.
Speaking of market closer home, Pakale lists projects in Abu Dhabi that have opted for VRVs: “VRV units have already been applied at St Regis Resort, on Saadiyat Beach, which includes 32 luxury villas. We are doing 100 outdoors there. And 56 villas under supply in ADNOC Ruwais Housing Complex; it is 224 outdoors in that project,” he adds, and further claims, “It is the first time in history that ADNOC is going for VRVs, owing to power and noise reduction. The outdoor unit noise is 65dB at 46 ambient and one metre. In the case of a chiller, if you are standing next to a centrifugal, the noise is 85 to 90dB (some chillers emit even 100dB at one metre). To quantify, every 3dB is twice the noise. So 3dB less is half the noise.” Pakale also adds to the list three schools in Musanada, which are currently being fitted with VRVs. “It will be completed by the time the new semester starts in September. That is 200 outdoors, three schools put together,” says Pakale.
The long-term plan, he explains, is to revamp the system in 400 schools in the coming years by fitting them with VRVs. This, he claims, is just the tip of the iceberg. “We are yet to meet all the consultants,” he says, and adds, “The biggest order in VRV for Daikin McQuay is in Qatar, though – at the Samariya Tower in Doha. It is a 60-storey building, and we are supplying 6,000 TR worth of cooling.”
Does this translate into a bigger wedge of the market pie? Is the magic number 65 that Daikin McQuay wants to reach immeasurably near? And more important, will standalone units eventually elbow out district cooling giants? The jury is still out on this one. It might hand in a split verdict – a ‘multi-split’ verdict, perhaps!
On September 23, Trane hosted and conducted a seminar, titled ‘A closer look at chiller ratings’, at the Grand Hyatt, Dubai. W Ryan Geister, Global Portfolio Leader, Centrifugal Chillers, Trane, Ingersoll Rand, was the key presenter in the first session, while Mike Thompson, Director of Environmental Affairs, Trane, Ingersoll Rand, was the key presenter in the second session.
