Middle East & Africa District Cooling Market Research Report: Forecast (2024-2030)

Market Definition

A district cooling system is an energy-efficient, sustainable, and environmentally safe integrated cooling system that is responsible for circulating chilled water from a central cooling plant through a network of enveloped pipes to commercial offices, residential buildings, hospitals, and various other establishments that require indoor air conditioning. The DCS (“District-Cooling System”) is a single-source cooling system required to meet the cooling energy demands of multiple buildings altogether. It is built in such an effective way that it aims to eliminate harmful refrigerants, save energy and space, and also inhibit the mixing of pollutants in the atmosphere. Hence, DCSs have been proven to be advantageous in terms of both economy and environment.

Market Insights & Analysis: The Middle East & Africa District Cooling Market (2024-30):

The Middle East & Africa District Cooling Market size is valued at around USD 6.43 million in 2024 & is estimated to grow at a CAGR of around 7.98% during the forecast period, i.e., 2024-30.  Economic diversification, rapid urbanization, and supportive government policies are contributing to the growth of the District Cooling Industry. In the Middle East Region, the focus on economic diversification is being done to reduce the dependency on Oil Earnings. It is followed by an increase in economic growth through other industries like tourism, hospitality, healthcare, infrastructure development, and renewable energy. UAE (Dubai 2040 Urban Master Plan) is funding major developments in Dubai South and Masdar City. Saudi Arabia (Vision 2030) is developing cities like NEOM and King Abdullah Economic City. Qatar (National Vision 2030) made developments in the Lusail City. Other countries like Kuwait (New Vision 2035), Oman (Vision 2040), and Bahrain (Economic Vision 2030) are also majorly focusing on economic diversification. For instance,

• Projects worth around USD 177 Billion are currently in execution in the UAE on infrastructure development mainly in Abu Dhabi (USD 89 Billion) and Dubai (USD 64 Billion) for the growth of commercial towers, skyscrapers, hotels, commercial business parks, and financial districts, shopping malls, etc. requiring cooling solutions that will be managed by DCS.

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In the Africa Region, the adoption of economic diversification is currently lower as compared to the Middle East. The rapidly growing infrastructure projects and cities are creating an emerging market for DCS. New skyscrapers and airports are being formed with old buildings undergoing renovations including the retrofitting of the district cooling system. In West Africa, major investments are being seen in real estate in cities like Lagos & Accra. In Southern Africa, large-scale developments including the Green Building Initiative are becoming a major part of urbanization in cities like Johannesburg and Cape Town. Infrastructure projects in East African cities like Nairobi, and Addis Ababa are creating a growing market for DCS. For instance:

• In Nigeria Eko Atlantic City on Victoria Island, Lagos is developing residential, commercial, and financial districts comprising the development of 800,000 square meters with Arkland Properties & Eko Development being the major investors required to fulfill the growing demand for cooling solutions.
• In Egypt the development of a New Administrative Capital in Cario with government offices, commercial spaces, residential areas, and Egypt’s Largest Airport is being done. With investments of around USD 58 Billion in Phase 1 & around USD 20 billion entertainment district and other large-scale mega infrastructure projects are already under progress. District cooling is required to meet this demand.

Additionally, Continuous investments are being made by the various countries in the region to support the integration of district cooling into these projects and resolve the ongoing customer demand.  Over the last decade, the GCC countries have invested over USD 100 Billion in Africa boosting the infrastructure development. For instance;

• 73 Foreign Direct Investment Projects in Africa worth more than USD 53 Billion have been made for various infrastructure developments including skyscrapers, high-rise buildings, International Airports, commercial spaces, etc. requiring cooling solutions.

Moreover, during the forecast period of (2024-2030), the market is expected to expand, driven by its high demand in the region. Focus on rapid urbanization, sustainability, and advancement in technology will play a crucial role in shaping the market dynamics.

The Middle East & Africa District Cooling Market Driver:

Supportive Government Initiatives & Regulations – As the Middle East and Africa region is experiencing urbanization and population growth, the demand for district cooling systems will rise accordingly. Several government bodies of the region are focusing on executing effective methods, regulations, and subsidies to enhance and proliferate the district cooling systems worldwide. Governments in the MEA region are increasingly focusing on sustainability and energy efficiency. Moreover, supportive government policies will also help in the robust growth of the market as they focus on sustainability and reduction of the overall carbon footprint. Governments in various countries have started implementing strict building codes to encourage and regulate energy-efficient cooling solutions.

To promote sustainability in building practices and energy efficiency the governments in these regions have developed various policies and initiatives like Dubai Clean Energy Strategy 2050, Abu Dhabi’s Estidama Program, Saudi Arabia’s Vision 2030, Saudi Green Initiative, Qatar National Vision 2030, The Pearl-Qatar Green Building Regulations, South Africa’s National Energy Efficiency Strategy (NEES), South Africa Green Building Regulations, Egyptian Sustainable Development Strategy: Vision 2030, New Administrative Capital Regulations( Egypt), Morocco National Energy Strategy & Green Building Code, Kenya’s National Climate Change Action Plan (NCCAP) & Green Building Guidelines.

The enforcement of policies & incentives, including the creation of regulatory frameworks & financial benefits will drive the market to new heights. It will help to support both developers & consumers in embracing this technology. Also to achieve energy efficiency, the government is incorporating district cooling as a preferred mode of technology by promoting green building standards and certifications in the MEA region.

The Middle East & Africa District Cooling Market Opportunity:

Urbanization & Mega Projects to Offer New Growth Opportunities – With the growth of cities across the MEA region majorly in the African markets and the Gulf Cooperation Council (GCC) is cresting a growing demand for efficient cooling solutions. As the growth of the urban population is rising in cities like Dubai, Riyadh, and Cairo, there is a need for a large-scale cooling solution that can be provided by DCS. There are high-scale new developments such as smart cities, commercial hubs, and residential complexes driving cooling solutions from a singular plant. New developments of high-rise buildings in Africa can offer substantial opportunities for district cooling projects.

There are large-scale projects also being developed like Saudi Arabia’s NEOM, Qatar’s Lugsail City, and other extensive developments like Nigeria’s Eko Atlantic City in Lagos and Cairo’s New Administrative Capital which serves as potential areas for implementing the use of district cooling systems due to the requirement of large scale, efficient cooling solutions. DCS also aligns with the sustainability and Green Building goals in cities like Cape Town, Nairobi, Lagos, Dubai, Abu Dhabi, etc.

The Middle East & Africa District Cooling Market Challenge:

High Initial & Maintenance Costs – The initial cost of installation of the district cooling system is very high as it requires central cooling plants, a distribution network, and advanced cooling technologies. Africa is a developing country with limited access to financing, high capital expenditure can be a significant barrier. Moreover, complying with regulations and obtaining necessary permits may add up to the initial cost of investment.

Maintaining and operating the district cooling system requires technical experts and a highly skilled workforce. The lack of availability of trained professionals in the region can add to the overall cost-effectiveness of the system. Even after installation, the complexity of the system requires continuous maintenance to prevent breakdowns which need costly specialized services. This is making it a costlier solution for the ongoing cooling requirements in the Middle East and Africa region.  Extreme climate conditions such as heat and dust can cause heavy wear and tear which adds up to operational costs. Integration of district cooling systems in the additional infrastructure will increase both initial and ongoing costs.

The Middle East & Africa District Cooling Market Trend:

Green Building Practices Gaining Traction – The DCS are being designed & modified to meet the various Green Building Standards. These include Leadership in Energy and Environmental Design (LEED) & Building Research Establishment Environmental Assessment Method (BREEAM). DCS contributes to LEED certification and BEERAM credits by reducing overall energy consumption in the buildings and improving energy efficiency. Estidama, an Abu Dhabi Sustainability Group focuses on energy efficiency and environmental impact in the UAE which has aligned DSC with its Pearl Rating System by providing sustainable cooling solution.

Similarly, in South Africa, Green Star has implemented DCS into the Green Star Certification. Focusing on energy efficiency and reduced carbon footprint, multiple projects are being developed to attain the green building practices. Aqualia (South Africa), Majid Al Futtaim (UAE), Aldar Properties (UAE) and Empower (UAE) are some of the key projects involved in sustainable and green building practices, with others following the trend.

The Middle East & Africa District Cooling Market (2024-30): Segmentation Analysis

The Middle East & Africa District Cooling Market study of MarkNtel Advisors evaluates & highlights the major trends and influencing factors in each segment. It includes predictions for the period 2024–2030 at the regional level. Based on the analysis, the market has been further classified as:

Based on Production Techniques:

• Electric Chiller
• Free Cooling
• Absorption Cooling
• Others (Heat Pumps, etc.)

Electric Chiller currently dominates the industry due to their well-established technology and capacity to handle large-scale cooling needs. This makes them ideal solutions in densely populated urban areas like Riyadh, Cairo, Dubai, Lagos, Abu Dhabi, Qatar, etc. Electric chillers are suitable for both small and large-scale cooling solutions as they can be easily scaled to accommodate varying cooling loads. They can seamlessly integrate with modern building management systems. This compatibility ensures their effective use in conjunction with other advanced technologies which can be seen in high-profile commercial developments like Burj Khalifa. It reduces operational costs significantly, as they are designed to be energy efficient. To lower the energy bills, many commercial buildings in the UAE and Saudi Arabia leverage the energy efficiency of electric chillers.  The increasing adoption of electric chillers can be attributed to the scarcity of available free water, which further drives the demand for this technology in the Middle East & African region at an astonishing pace.

 Based on End User:

• Commercial & Retail
• Hospitality
• Healthcare
• Government & Transportation
• Industries
• Residential
• Others (Religious Institution, etc.)

The commercial & retail segment accounted for a major market share in the district cooling market. It is expected to show robust growth which is supported by multiple factors such as higher foot traffic in commercial spaces like shopping malls, and office towers that have large spaces which require extensive cooling solutions. Large-scale developments and many mega projects in MEA contain retail and commercial components in which DCS plays a major part in infrastructure like King Abdulla Financial District, etc. The supportive government policies encourage the use of DCS in retail and commercial buildings. Major high-profile commercial developments showcase DCS as part of their commitment to sustainability like Cairo’s City Stars (a large shopping mall), and Dubai’s Burj Khalifa.

The Middle East & Africa District Cooling Market (2024-30): Regional Projections

Geographically, the Middle East & Africa District Cooling Market expands across:

• The UAE
• Saudi Arabia
• Qatar
• Bahrain
• Kuwait
• Oman
• Egypt
• South Africa
• Rest of the Middle East & Africa

The UAE region marks its dominance in the district cooling industry. Strong growth is expected from major cities like Dubai and Abu Dhabi due to the early adoption of DCS which further established them as market leaders. The UAE government has implemented regulations and incentives to promote sustainability and energy efficiency goals like Dubai Clean Energy Strategy 2050, and Abu Dhabi’s Estidama Program. The country is home to various high-profile projects including commercial, residential, and tourist destinations such as Masdar City where district cooling systems are integral. The growth is supported by the hub of well-established DCS companies present in the UAE like Emirates Central Cooling Systems Corporation (Empower), Emicool, etc. The growth is further supported by government initiatives in promoting energy-efficient cooling solutions. Medical, Sports, and Adventure Tourism in this region have also boosted the market size & volume.

The Middle East & Africa District Cooling Industry Recent Development:

• August 2024: For the expansion of its cooling infrastructure Stellar Energy launched a new district cooling plant in Abu Dhabi. It would expand its service capabilities and support the growing demand in the region.
•  July 2024: PAL Cooling Holding introduced a new service model for district cooling setting a benchmark for the industry as it focuses on cost reductions on large-scale developments and increased energy efficiency.
•  April 2024: The Al Habtoor Group and Emirates Central Cooling System Corporation (Empower), the largest district cooling services provider globally, have reached an agreement for the supply of district cooling services to the Al Habtoor Tower.

Gain a Competitive Edge with Our Middle East & Africa District Cooling Market Report

1. The Middle East & Africa District Cooling Market Report by MarkNtel Advisors provides a detailed & thorough analysis of market size & share, growth rate, competitive landscape, and key players. This comprehensive analysis helps businesses gain a holistic understanding of the market dynamics & make informed decisions.
2. This report also highlights current market trends & future projections, allowing businesses to identify emerging opportunities & potential challenges. By understanding market forecasts, companies can align their strategies & stay ahead of the competition.
3. The Middle East & Africa District Cooling Market Report aids in assessing & mitigating risks associated with entering or operating in the market. By understanding market dynamics, regulatory frameworks, and potential challenges, businesses can develop strategies to minimize risks & optimize their operations.

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