In November 2017, Saudi Arabia announced plans for Neom, a new city in the north-western coast of the country, to be built at an estimated cost of USD 500 billion and, once fully completed, expected to be more than 30 times the size of New York City.

Mohamed Ashok

The news had HVACR stakeholders buzzing. Mohamed Ashok, Regional Product Manager – MEA, VTS, was one of them. He describes the announcement as a “big boost”, given that at least 40% of the investment will go into HVAC. “Traditionally Saudi Arabia has been a slow- paced market, unlike the UAE,” he says. “But recent events surely point to a potential boom in the construction sector, and specifically for HVAC, as every building needs it.” Neom, he says, has the potential for causing a ripple effect, and VTS is anticipating more project announcements in other parts of the country. Lamis Jawhari, Operations In-Charge, Safid Engineered Air Solutions, echoes Ashok. “Saudi right now is booming,” she says. “The new initiatives are really pushing Riyadh forward.”

Roni El Haddad

Roni El Haddad, Event Director – HVACR Expo Saudi 2018, also echoes Ashok. Neom, he says, is just one of several projects emerging in line with Saudi Vision 2030, all of which are spurring interest in HVACR and new technologies related to the sector in the development of smart and advanced cities. Already, he says, stakeholders are moving to invest in the industry. He makes a case for this in the context of HVACR Expo Saudi 2018, to be held in mid-January, which he says, has had an “18% increase in total exhibitors and over 33% increase in the number of pre-registered professional visitors from different Saudi cities”.

Dr Anwar Hassan

On the systems and equipment front

Prior to Neom, Saudi Vision 2030 and resulting initiatives had already set the wheels towards economic diversification in motion. Dr Anwar Hassan, Vice President, Field Sales & Operations, Johnson Controls, summarises three notable trends in the systems and equipment front within the HVACR industry that have been enhanced and accelerated by Saudi Vision 2030. The first, he says, is the drive for higher energy performance through adopting classes of design that inherently lead to superior energy performance. As an example, he points to District Cooling systems versus individual plants, and water-cooled heat rejection versus air-cooled systems. “The second is the adoption of higher energy performance units and components in a progressive manner, in order to meet the minimum energy performance standards created by SASO/SEEK,” he says. “The third trend is a strong anticipation of growth in residential units’ sales due to activation of housing programmes.”

In view of the energy-efficiency drive influencing the sector, Dr Hassan shares insights on the penetration of District Cooling in Saudi Arabia.

The cooling approach, he says, has gained wide acceptance among consultants and owners as a favourable concept and practice, though adoption remains “elusive”. Dr Hassan says the royal decree mandating District Cooling for projects above 10,000 TR “has ignited multiple debates on multiple fronts”. “Many existing chiller plants are being investigated for potentially spinning them off as commercial District Cooling plants, with the original owner being a primary off-taker.” Dr Hassan says that many private developments, especially in the Makkah and Riyadh areas, are large enough to make District Cooling attractive. “Concerns and lack of clarity on infrastructural utilities (TSE), mandating participation by tenants and developers as well as getting potential customers to feel comfortable with charge rates for services now, and in the future, are concerns that are impeding adoption,” he adds.

Speaking on the uptake of VRF technology in the country in the same context, Dr Hassan says that while there is growth, it is not exceptional. “It has to compete with many options in the market,” he says, “and, as such, it will be in direct competition with other inverter-driven unitary products as well as the lower tier of chilled water systems”. He adds that cost and installation of the technology are also issues of concern among local stakeholders.

The concerted drive towards energy-efficient solutions has also urged stakeholders in Saudi Arabia to utilise smart systems to optimise consumption. Dr Hassan says that Johnson Controls is seeing good success with smart systems in the mid-market; he believes it is a trend that will continue. “The demographics of Saudi Arabia make such systems very appealing in the mid-market,” he says. “In larger systems, there is a lot of talk, but only very little is translated to actual business in the market.” Dr Hassan adds that he believes all parties are trying to solve the puzzle of how to contract a desired performance outcome “in an environment and purchasing tradition that is almost entirely Bill of Materials focused”.

Overall, El Haddad says he has seen interest from new and mid-range companies for exploring and entering the Saudi market by aligning themselves with the trends. Additionally, he says, after the success and development of local manufacturers, the Saudi government is offering its full support to help businesses move forward and enhance market strength.

Providing a local manufacturer’s perspective, Jawhari says that with every new project, there are also new standards and safety procedures being

implemented. She adds that in view of increasing standards, there is a steady move among manufacturers to invest in quality certifications, putting them at an advantage even against international players. “For the huge projects, there might be some competition in terms of internationalising their suppliers,” she says, “but mainly local projects always prefer to go to local suppliers, which is in our favour.” She says this is owing to faster delivery time, familiarity and compliance with certifications.

On the road to renewables

Khalid Al Mulhim

Beyond mitigating energy consumption through more efficient equipment and solutions, Saudi Arabia is briskly moving towards renewable energy, which will have its own set of implications for the sector, in terms of design requirements and operational practices. Khalid Al Mulhim, Business Development Director, Suhaimi Design – Protecooling, says that Saudi Arabia has been primarily focusing on diverting its dependence from hydrocarbon to solar, biomass and wind energy. “These are the three areas Saudi is looking at new opportunities for technology to be adopted,” he says, largely owing to consumption and demand for power increasing year after year.

Dr Floris Hendrikus Schulze

Dr Floris Hendrikus Schulze, Managing Director, CESI, agrees: “Saudi Arabia has embarked on a fast track mode for Renewable Energy Systems (RES) and interconnection developments, also supported and boosted by low oil pricing to find alternative sources of income, new business opportunities and reduce dependency on oil and gas.” As such, he says the country has emerged as an attractive market for renewables. Dr Schulze believes that the country’s strategic location amidst Africa, Asia and Europe will further boost the development of RES, since once properly interconnected it will allow energy trading between countries and regions. “Saudi Arabia can become a regional powerhouse and energy marketplace, owning one of the world’s largest reserves in gas and oil but also benefiting from ample space and high quality of solar radiation for a vast amount of RES energy generation,” he says.

Recently, Dr Schulze shares, CESI finalised a joint venture with GCC Electrical Testing Laboratory (GCCETL) to design, establish and operate a state-of-the-art testing laboratory in the Eastern province “confirming the importance of new interconnection and RES developments”. “The objective is to support the development of the electric power sector,” he says.

Dr Schulze highlights the advantages of exploiting the abundant solar renewable resource beyond simply reducing dependence on fossil fuels. From political and environmental perspectives, he says, it will help the country meet its goals and put it on a global stage in terms of sustainability and the battle against climate change. From a business perspective, Dr Schulze emphasises that it provides a new source of income. Such programmes, he says, boost the development of new businesses related to PV, such as local manufacturing, suppliers, consultancy and inspection services, all stimulating “knowledge-based development”, in the same trend as in Europe and in the UAE.

Dr Hassan believes the uptake of renewable energy in power generation is a necessary first step before HVACR solutions utilising it emerge and it significantly impacts the industry, which, he says, take a naturally longer cycle. “We have seen an admirable effort by K. A. CARE (King Abdullah City for Atomic and Renewable Energy) [in terms of] promoting and offering financial grants for the development, research and commercialisation of products and solutions supporting the use of renewable energy in HVACR.” Dr Hassan says that the best of sustainable development efforts and renewable energy are energy-saving measures, and there has been an emergence of solid programmes “heralded by the creation of a government super ESCO and several commercial ESCOs”. “We are taking an active part in the discussions as well as taking actions in the field in all those areas, including the creation of an ESCO on the back of the pioneering position our parent company, Johnson Controls has in this area,” he says.

Al Mulhim says his interest in renewables is mainly in relation to reducing energy consumption in new and existing projects and in utilising RES, particularly solar, in the HVACR and utilities sector. There are many possibilities, he says, such as a hybrid system of an absorption chiller with solar power. While it would utilise more water, he says, recycled water can be a possible solution. He also points to potential hybrid systems that can generate heat to operate the chiller and using thermal storage.

Al Mulhim also touches on the use of geothermal energy, in light of the country’s increasing move in this direction. Geothermal, he says, is an old source that has been used in Canada and the United States for heating, where essentially the earth below ground level is used as a heat sink. Applications in the region, he says, can tap into below-ground heat sink, which has lower temperature than ambient conditions, to improve the performance of air conditioning systems.

Citing benefits of a geothermal-based system, Al Mulhim says that it eliminates the need for an outdoor unit and makes it possible for HVAC equipment to perform more efficiently. The system, he adds, requires less maintenance; is less prone to damages from vandals, as there is no outdoor unit; and could be more reliable than conventional HVAC systems. “Of course, geothermal is new in our area,” he says. “Because of that, the cost for small-scale installation of geothermal is higher than conventional [systems]. For big-scale applications, geothermal could be cheaper, but not cheaper than conventional [systems].” Additionally, he says, geothermal has a host of other requirements, in terms of initial operation and space allotment. “It’s a learning curve,” he says. “I think the government is trying to put some subsidies to encourage new systems through so many initiatives that they can put incentives [for the people] to utilise renewable energy and geothermal energy.”

Communication gaps 

Al Mulhim comments that while energy-efficient technologies and solutions are widely available, the issue is proper training with regard to their implementation. Dr Hassan echoes this: “Awareness has increased a lot in the last couple of years, and everyone hears the message advocated by Vision 2030 loud and clear. But those hearing the message are the consultants/owners and not the contractors.” Contractors, he says, remain bound by the contracts and cannot be expected to advocate more energy-efficient solutions, unless they are financially incentivised to do so. “What we need to focus on is whether this awareness is leading to adoption of energy-efficient solutions. Adoption of high-efficiency solutions is hampered by higher costs but, more profoundly, by poor understanding of value, which in turn, is caused by uncertainty over essential cost elements such as water and power.”

Asked whether government regulation and initiatives help place greater emphasis on life-cycle cost over initial cost, Dr Hassan says adoption and implementation is impeded by the lack of clarity on a number of practical considerations.

“Since utilities are basically monopolies – partial or full – clarity on availability of utilities and their cost is needed for investors to be confident of the correctness of their choices,” he says. “Clear answers are needed to questions from providers of such a utility regarding what assurance they have that future tenants and property developers will sign up to use their utility; and by the same token, tenants and property developers will need assurances on what prices they will be charged by the utility providers.” Arbitration and standards bodies, in addition to mandatory procedures and processes for setting rates and arbitrating differences, are needed to boost the rate of adoption, he adds. “All these are issues where government can take the lead. It has an important role to play in setting up finance rules that get such socially progressive practices off the ground at the initial stages,” he says.

Dr Schulze echoes this in relation to solar integration. CESI, he says, provides training to ensure that in the future, distribution and transmission companies can carry out projects independently, gleaning from the company’s experience across the GCC region. Dr Schulze says that the company is helping define the requirements for those consultants and contractors who want to be certified for the installation of solar PV systems, and provide support for the economic, regulatory and technical frameworks to support a change in management and the mind-set of the public.

“Once people start seeing the benefits [of solar PV], it will almost automatically boost such a development,” he says. “This will hopefully result in a positive spiral of increased participation of people, developers, manufacturers and suppliers. The same happened in Europe.”

The stage has been set, the agenda determined, the technology and expertise, readily available. Indeed, there is no shortage of determination or imagination among local stakeholders eager to make Saudi Arabia’s vision into a reality.