Hassan Younes of UAE-based MEP firm, Griffin Consultants

A year ago, there was inertia in terms of banks showing a reluctance to finance building retrofit projects in the country in the absence of conventional collaterals. Do you see a shift in momentum?

The market is being driven by the government, which is a good thing. When we have the government behind it, everybody has to either follow this year or maybe the next year. As for banks, I believe they do not understand what is energy efficiency, what is an ESCO, how they can guarantee the money they lend is going to come back to them. In the last two years, there were a few hiccups, but now I see more and more banks are willing to make the investment.

There are other areas of concern, though. I am referring to areas that have remained untouched, such as the actual retrofit-related complications and energy audit-related complications. Okay, let’s assume that now, we have the buy-in from the client, and everybody is happy that we have got the investment. The questions remain, though: ‘How do we execute the project on site?’ and ‘What are the obstacles being found during an energy audit?’ Sometimes, you have an energy auditor, who is not very experienced. Which means, he will miss some opportunities on site; so instead of ending up with 50% savings, you might end up with 15% savings. These are the obstacles I see from a technical point of view.

Provided banking- and technical-related obstacles are addressed, do you see the retrofit momentum as a substantial market opportunity for the HVAC industry till a wave of New Construction projects materialise in the region, especially on the back of EXPO 2020- and FIFA World Cup 2022-related developments?

The retrofit market is there, but at this point in time, it cannot support everyone. It still is a small portion, in the sense that I don’t think contractors can live on executing retrofitting projects alone. More or less, a number of clients and potential clients are still studying the options. They are asking, ‘What do I do with the money? Do I invest in the utility bill, or should I open a new restaurant?’ The retrofitting market is still not very mature, I’d say, but certainly it has the potential to be in the coming years. I mean, prices are not dropping for the utilities, they are increasing. So once you know if you are paying AED 10 million a year, and the next year you are paying AED 20 million a year, you start thinking about it, and say to yourself, ‘Okay, maybe it’s time to look at the utilities, instead of opening a new restaurant.’ Once the tariff gets higher, the next day, people will start thinking more and more about retrofits.

(The writer is the Editor of Climate Control Middle East and the Editorial Director & Associate Publisher of CPI Industry.)