UAE District Cooling Market Research Report: Forecast (2023-2028)

Market Definition

District cooling system delivers chilled water and space conditioning to consumers. Such systems are used in various locations, including homes, shopping centers, lodging facilities, dining establishments, cold storage warehouses, workplaces, companies, campuses, and military sites.

Market Insights & Analysis: The UAE District Cooling Market (2023-28)

The UAE District Cooling Market is projected to grow at a CAGR of around 10.12% during the forecast period, i.e., 2023-28. The UAE is taking the lead in the development of district cooling as a significant energy-efficient utility sector chosen by the governments of the Gulf nations. The Middle East and Africa region is crucial to reversing climate change and advancing global efforts to cut carbon emissions. In arid climates, cooling is a constant and energy-intensive operation, hence district cooling offers significant energy savings.

In the region's new and developing megacities, where district cooling has established a firm footing, this benefit is being realized. Since, 70% of the total electricity consumption goes into air conditioning in Dubai, the government is planning to meet its 40% cooling needs from district cooling by 2030. The use of district cooling in Dubai alone has been found to save close to 650GWh of electricity in 2020.

Moreover, due to a robust project pipeline sector, the UAE district cooling industry saw little to no operating delays, in contrast to other markets that experienced adverse effects or delays due to government restrictions and lockdowns enforced to stop the spread of COVID-19. The market is expected to be further boosted by robust construction activities, projects, and company partnerships for technical progress across the nation. Moreover, with the new set of rules to be introduced, the district cooling industry wiould likely become more effective & customer-focused as it would promote transparency & establish stakeholder accountability. Additionally, it would enable consumers to understand the cost-effectiveness of district cooling, in turn, instigating demand, further impacting the UAE District Cooling Market size.

Market Dynamics

Key Driver:

• Associated Cost-Efficiency and Long-Term Service

Due to the accompanying cost-efficiency and long-term service, many businesses in the country are implementing district cooling systems. As a result of using 50% less energy than air conditioners, district cooling systems require less initial expenditure and ongoing maintenance. Airports, business buildings, university campuses, and residential towers are examples of large-scale establishments in the UAE that benefit significantly from district cooling. The system is based on a central cooling plant that cools its grid using a network of insulated underground pipes transporting chilled water. In addition, the equipment's ability to run without issue for up to 30 years encourages the adoption of new technologies, thereby propelling industry growth further.

Growth Opportunity:

• Technological Enhancements Upgrading the Overall Capacity of Prevailing Cooling Plants

Further, the overall capacity of the existing cooling plants and ongoing development projects is expected to witness an upgradation with technological advancements. For instance, Empower has awarded contracts totaling $51.73 million (AED190 million) for developing its fourth district cooling plant in Dubai's Business Bay. Upon completion, the Business Bay project, which consists of six district cooling plants, will be the largest district cooling project in the world, with a total cooling capacity of 350,000RT thanks to the new plant's 50,000RT output.

In addition, key market participants in the UAE collect cold water for use in their operations from oceans, seas, rivers, lakes, and other waste-cooling energy sources and then distribute it via DC system networks to urban companies. Therefore, easy cooling production techniques, cheap operating costs, and a favorable client base made possible by the technology will increase demand for it.

Key Trend:

• Ease of Remote Installations Resulting in Increased Real Estate Value

Another factor contributing to the growing popularity of these cooling systems in the UAE is their ability to be installed remotely, which boosts real estate value by freeing up additional space for other operational needs, increases business operational efficiency, and fuels the expansion of the district cooling market. Moreover, due to the expanding use of cooling systems in oil and gas refineries, production facilities, and manufacturing plants, the market is anticipated to expand across the industrial sector. These systems will enhance the outlook for the industry as temperatures rise and sustainability becomes more of a priority in the UAE.

Market Segmentation

Based on Application:

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

The Residential segment captured a significant market share in the historical period. The growth can be attributed to the escalating population across the country, increasing the demand for high-class infrastructure projects along with extensive government initiatives toward the construction of housing projects, thus propelling the need for efficient cooling systems in the UAE. Additionally, since energy consumption in the country is largely driven by the residential sector, the demand for energy-efficient district cooling systems is swiftly augmenting across the UAE. Thus, large-scale residential projects are imposing a considerable impact on the district cooling market.

Based on Production Technique:

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

Electric chillers will likely gain traction in the coming years owing to their dependable coefficient. Large-scale projects can be finished quickly and effectively by organizations with the usage of a variety of DC technologies. Among the well-known technologies are electric and absorption chillers. However, because of their superior coefficient performance, electric chillers are recommended. These chillers are more widely accepted because they use up 50% less floor space than absorption chillers. Conversely, using absorption chillers in the energy system helps reduce the amount of cooling powered by electricity while also lowering carbon dioxide emissions.

Regulatory Landscape

As the grace period for businesses expired on September 30, 2022, the Dubai government gave a hint to the new district cooling regulations in June 2022. According to the new rules, district cooling permit holders are required to create and publish a customer charter and evaluate performance against it, as well as to deliver chilled water, return deposits promptly, reduce the occurrence of excess contract capacity estimates, and implement penalties for poor energy performance. In addition, they are also responsible for monitoring and reporting health and safety, among other obligations.

Gain a Competitive Edge with Our UAE District Cooling Market Report

1. The UAE 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 UAE 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.

Frequently Asked Questions