Opinion Piece: Higher Utility Tariff Rates Help Owners Choose To Go Green
By Hassan Younes

Accounting for more than 60 per cent of annual electricity consumption in Gulf countries, and more than 70 per cent of peak electrical power demand, HVAC systems take centre stage when discussing how cities in the Middle East can reduce their environmental footprint.

Hassan Younes, partner at GRFN Consultants and President at ASHRAE Falcon Chapter, insists that improving technologies and developing more environmentally friendly HVAC systems are helping owners and developers reduce operating costs, and environmental footprint, while cities and countries are seeing a wide reduction in electricity demand.

He notes that there are three core reasons driving owners into adoption of environmentally friendly HVAC systems. Firstly, government or municipal regulations now often require them. Secondly, there is an element of corporate social responsibility; you see this with large developers in particular, where they may have set guidelines, criteria and KPIs for their HVAC and MEP systems.

The final driver is clients who are interested in a long-term investment. Clients who own and operate their buildings will look for reduced utility costs over the asset’s life. With utility tariffs on the rise in the GCC, more clients are looking to using more efficient HVAC equipment, which are typically more environmentally friendly than less efficient HVAC systems.

Looking at where most demand is coming from, Hassan points to the retrofit market. He says: “Where tariffs are high enough in the GCC, the retrofit market is seeing major growth and the potential for energy savings from technological improvements is great. The retrofit focus on changing old equipment, or adding technologies such advanced sensors and controls, can drive both energy consumption and demand lower.”

On the topic of utility tariff rates, Younes says increasing them is essential to drive demand for energy effecting HVAC systems. It might be the case that the capital and initial costs are higher for more environmentally friendly HVAC systems, however, the payback period relies on the utility tariff rates the system is subject too. For example, a seven-year simple payback period in Dubai could take 11 years in Abu Dhabi, or 20-plus years in Kuwait, because of their comparatively lower tariff rates.

Hassan points to a few more ways in which the sector can be primed for pushing more environmentally conscious decision making. At a legislative level, the sector would benefit from the widespread implementation of policies banning harmful refrigerants, continuously updated regulation in the sector could target minimum energy performance standards for air conditioners, and even regulation on building envelope and lighting would help to reduce the cooling load demanded of HVAC systems.

About the author: Hassan Younes is the partner at GRFN Consultants and President at ASHRAE Falcon Chapter.