DUBAI: The market for energy performance contracting in the UAE is poised for grow 17 per cent in the next four to five years, thanks to a major push in the region for developent of both renewable energy and energy efficient policies, said a report. Energy Performance Contracting is a form of ‘creative financing’ for capital improvement. It is a self-funding financing mechanism that provides infrastructure improvements, energy and water savings, monitoring and verification of effectiveness, training, maintenance and environmental benefits. The sector, which was worth $80 to 100 million in 2015 is expected to register a CAGR (compound annual growth rate) of 15-17 per cent by 2021-22, according to an analysis by Frost & Sullivan, a global growth consulting firm.
The GCC is at an interesting juncture as the economic and social initiatives driving the transition towards energy efficiency have never been stronger, stated Frost & Sullivan in its recent White Paper titled “Innovations and Disruptions in Building Energy Efficiency in the GCC.” The report highlights a number of technologies and services that will become more relevant as a result of greater adoption of renewable energies and energy efficient policies in the GCC as compared to other regions. Frost & Sullivan pointed out that high economic growth and diversification from oil and gas have significantly increased demand for electricity and energy. Furthermore, the region’s policies on fuel and electricity subsidies have led to wastefulness, and to inefficient buildings and industrial infrastructure, making these countries some of the most energy-intensive globally, it stated. The current economic growth path is unsustainable; hence, there is a push to develop both renewable energy and energy efficient policies to meet the increasing energy demand, to diversify the electricity mix and to reduce dependence on fossil fuels, it added.
“With the penetration of information and communication technology, buildings are expected to become smarter, intelligent, environmentally friendly, and energy efficient,” remarked Sasidhar Chidanamarri, the associate director, Energy & Environment Practice at Middle East and North Africa (Mena) and South Asia, Frost & Sullivan. Potential products that are likely to gain traction in the GCC energy efficiency industry are LED lighting, building management systems, district cooling, building insulation, variable frequency drives, energy recovery devices, trigeneration plant systems, solar thermal air conditioning, non-electric chillers, low-emissivity glass, and building integrated photovoltaics.
Besides these products, the services market such as energy performance contracting is also expected to gain significant opportunities in the GCC, stated the report. If adopted, the energy efficiency policies will provide a financial boost to governments as there is an opportunity cost associated with reducing wasteful consumption of oil/electricity, it stated. They will also eliminate the need for massive investments in power generation. Reforms related to fuel and electricity tariffs by GCC governments are also improving prospects for energy and environment technologies, besides improving the financial situation in an era marked by falling revenues due to low oil prices, it added. According to Sasidhar, the market for energy efficiency products and solutions as well as energy service companies are bound to grow, driven by government initiatives and a shift in opinion and attitude towards viewing energy expenditure as a strategic cost centre. “With buildings becoming fully integrated and networked using wireless, web-based automation systems, owners seek to maximise the real benefits,” he stated. “Hence, energy management will lead to improvement in operational efficiency, optimisation of energy, and demand management,” he added.
