District Cooling In

Practice, Challenges & Regulatory Interventions

Presented by Engineer: Ibrahim Mohammed A Al Sada Manager: District Cooling Services Department Qatar General Electricity & Water Corporation - KAHRAMAA Key Points

▪ District Cooling Practice in Qatar. ▪ District Cooling Benefits to Qatar. ▪ District Cooling Suitable Areas in Qatar. ▪ District Cooling Challenges in Qatar. ▪ District Cooling Regulation In Qatar . ▪ Advice for countries with scarcity of Water. Water & District Cooling

Water is life

In gulf region the fresh water is precious

District cooling is consuming large quantity of water Air Conditioning Electricity Bill

Conventional Air- Conditioning Electricity Bill is High

District Cooling Can Cut Air Conditioning Electricity Bills by Half District Cooling Practice in Qatar Qatar District Cooling Market

District Cooling in Qatar served by two major District Cooling services providers

Qatar Cool • Established & Operated In 2003. • 3 Central Plants in area(107,000 TR) & 1 in Pearl Qatar(130,000TR)

Marafeq Qatar • Established & Operated in 2012 • Central Plants in Lusail City (to be 300,000 TR by 2022) and Barwa City (37,000 TR).

Number of Private District Cooling Systems • Like Qatar Foundation ,Cultural Village (Katara),Al Gassar Development, four season hotel, Qatar University etc

6

Operational District Cooling Projects

Installed Cooling SN Operational District Cooling Projects Capacity (TR) 1 Qatar Foundation Central Plants 142,000 2 The Pearl Qatar 130,000 3 Hamad International Airport 45,000 4 Barwa Village & Commercial Avenue 37,600 5 Qatar Cool - West Bay 2 37,000 6 Qatar Cool - West Bay 1 30,000 7 Qatar Cool - West Bay 3 40,000 8 20,000 9 Msheireb project 16,700 10 The Sports Club -Aspire Logistics 14,200 11 Qatar University Central Plants 24,000 12 Al Gassar Development - St Regis Hotel 10,000 13 Cultural Village – Katara 10,000 14 Villagio Mall 7,500 15 Sheraton Hotel 6,250 16 ALWakrah Hospital 6,000 17 Doha Convention Center 10,000 18 Ritz Calton Doha 2,600 19 Hamad General Hospital 2,000 20 Doha Festival City & IKEA 21,800 21 Four Seasons Hotel 5,000 22 Mall of Qatar 30,000 23 Sidra Hospital & Research Center (Qatar Foundation) 18,000 Total 665,650 Under Construction District Cooling Projects

Under Construction District Cooling Expected Cooling Capacity Under Construction District Cooling Expected Cooling Capacity SN SN Projects (TR) - 2022 Projects (TR) - 2022 1 Lusail City - Marafeq 336,600 23 Al Mall (Tawar Mall) 6,250 2 Internal Security Forces (ISF) Camp 30,000 24 Sports Hall & Al Sadd Multi Purpose Hall 6,700 3 QP District Project 30,000 25 Lusail Multipurpose Hall 4,600 4 Doha Oasis Mixed Use Development 20,000 26 Arab center For Reserch & policy stuides 2,000 5 Al Arabi sports Club 15,000 27 Al Gharaffa Sports Club 2,000 6 North Gate Mall 11,750 28 QPMC Bulk Handling Terminial 1,000 7 New Doha Zoo 13,000 8 ALWatania Steel Company 13,000 29 Naufer Project 3,000 9 Salwa Beach Resort Hotel 12,000 30 FIFA World Cup Stadium 16,000 10 Chlorinated Paraffin Waxes 10,000 31 FIFA World Cup Stadium 16,400 11 AL Gharafa Mall(Ezdan Mall) 10,000 32 ALKhor FIFA World Cup Stadium (AL Bayt) 27,720 12 The Cost Guard Base Project 10,000 33 Khalifa FIFA World Cup Stadium 70,000 13 City Center Mall 8,000 34 Lusail FIFA World Cup Stadium 55,000 14 Al Khessa Mall (Boulverad Mall) 8,000 35 Precinct 4-FIFA World Cup 16,000 15 Qatar Academy at Al wakrah 7,000 36 Precinct 5-FIFA World Cup 14,500 16 Utility Building & Car Park (Diwan Amiri) 7,000 37 Qatar Foundation FIFA World Cup Stadium 21,800 17 Kamal Mixed Use Development 6,000 38 Qatar Foundation Central Plant 9 20,000 18 Gulf Chlorine 5,000 39 Qatar University Central Plant (CUS 4) 25,000 19 Supreme Education Council Headquarters 5,000 40 Al Wajbah Palace 4,500 20 World Trade Center 3,290 41 Milaha Logistics City 1028 21 QNM 3,000 42 Katara Hills Phase 1 ,2 and 3 22 Sidra Staff Housing at Qatar Foundation 2,000 Total From Sl no 1 to 42 879,138 Under Design District Cooling Projects

Expected Cooling SN Under Design Cooling Projects Capacity (TR) 1 Qatar Cultural Sports Hub - DCP 1 30,000 2 Qatar Cultural Sports Hub - DCP 2 13,000 3 Qatar Cultural Sports Hub - DCP 3 18,000 4 Qatar Cultural Sports Hub - DCP 4 40,000 5 Qatar Rail Vent City Technical Bldg _Musheirib Stn 4,300 6 Qatar Economic Zone 3 (4 DC Plants) 120,000 7 Four Season hotel & Tower 50,000 8 Hamad Bin Khalifa Medical City 31,000 9 Lusail Hotel & Resort Client IDCC 25,000 10 Qatar Economic Zone 1 17,000 11 Al Maha Hospital ( Al wakrah ) 2,000 12 Hospital 7,500 13 General Head Quarters & Military Police Camp 14 city project 30,000 15 Lusail Palaces 20,000 16 City center Mall Najma District Cooling Capacity

In 2016, Qatar DC capacity reached ~655 kTR (or 14% of the total cooling capacity) with a major potential for growth Total Cooling Capacity Forecast Current Cooling Capacity and DC Penetration Based on 50% DC Penetration – In Million TR, 2016-2030 In kTR, 2016 ~4,4001) 8.3 7.5 19% 6.8 21% 6.0 5.4 23% 21% DC Capacity in 3740 4.4 15% 2030 = 1.6 Million TR (85%) 14% 81% 79% 77% 85% 79% 655 85% (14%)

Total Conventional District 2016 2018 2021 2024 2027 2030 Cooling Capacity Cooling Cooling

DC Conventional Real Estate Developer DC Provider

Note: 1) Total Cooling Capacity of 4,400 kTR is calculated based on the 2016 peak electricity demand. District Cooling Benefits to Qatar District Cooling Benefits to Qatar

10% Saving in Potable Water Capital Demand & 30% in Electrical Power Generation by 2030

Contributing to Water Resources Sustainability by Cutting the District Cooling utilizing TSE & Recycling DC Bill by utilizing TSE as Blow Down to STWP District alternative to potable water Cooling

Potential Financial Cumulative Savings to State of Qatar ~ 15 Billion QR by 2030 Water Savings due to District Cooling

Yearly Savings in Potable Water Based on 50% DC Penetration – In Mm3, 2015-2023

All DC plants using TSE

34 34 33 33 30 31 31 27 26 24 22 22

13 9 8 7 3 1

2015 2016 2017 2018 2019 2020 2021 2022 2023 7 6 15 11 5 4 No consumption of Potable Water Actual Potable Water Consumption for Cooling (Mm3)

Actual - Based on DC plants using TSE1) If all DC Plants used TSE

1) Potable water demand for cooling if DC plants using TSE switched to potable water Source: KM Consultant (Strategy& ) Analysis Qatar Financial Savings due to DC

District Cooling could save QAR 15 Billion by 2030 Potential Cumulative Savings for the State of Qatar Based on 50% DC Penetration, In Bln QAR - 2015-2030 4.1 ~15 16% 23% 20% 3.5 61% 17% 26% 29% 2.8 57% 20% 30% 2.1 50% 20% 29% 51% 2.1 51% 35% 29% 52% 43% 13% 0.3 28%

2015 2018 2021 2024 2027 2030 Total

Generation Capacity Distribution Capacity Natural Gas Consumption

Note: Potential savings do not include the monetary saving from the reduced CO2 emissions since there is no carbon emission credit system in Qatar or the region Source: KM Consultant (Strategy&) Analysis Advice for Countries with Scarcity of Water

Once decided to use TSE for DC ,What are the requirements to Succeed .

1) TSE Polishing Plant 2) TSE Network Availability 3) A Place/Network for cooling plant discharge disposal District Cooling Challenges in Qatar DC End user Complaints

Selected End User Complaints in Qatar

“People have moved out from DC building “Utility bills for district cooling because of the high cost of cooling” are very high”

“Even when we have everything shut off it still "cools" and we end up paying for it” “Resident … have seen price hikes of in their monthly bills”

“Even when we are not there it still costs us 800QAR a month” “The surface of our open air large terrace is included in the “Residence in low occupancy buildings contractual cooling area” suffer most as fixed costs of running the plant is spread across fewer bill payers”

Source: Press Material, Interviews District Cooling Challenges

DC growth is hindered by several challenges that the DC regulatory framework aims to address Main Challenges Description

Lack of Consumer • Unclear consumer rights and obligations Protection • Inconsistent tariff schemes & limited transparency Mechanisms • No uniform service standards

Scarcity of Potable • Scarcity in renewable water resources Water in the • Energy-intensive desalinization process that has high burden on economy and environment Region • Lack of TSE water quantity/Quality coupled with unclear constraints in discharge

Issues in Planning • Misalignment in capacity planning and real estate occupancy and Project Phasing • Inefficient DC construction phasing that leads to substantial up-front CAPEX burden

• Gap between actual & perceived benefits of DC impacting its wider adoption Misalignment in Benefit Allocation • Distortions in the perceived benefits of DC between end-users, real estate developers, DC providers and Government mainly due to Utility subsidies

Source: Strategy& Analysis District Cooling Regulation In Qatar District Cooling Suitable Areas

A DC Plan Assessment Map was developed in coordination with Qatar National Development Projects to define the suitable DC served areas

DC Plan Assessment Map Draft DC Assessment Map – Doha Area DC Stakeholders

DC Player Categories Entities

▪ Qatar Cool DC Providers ▪ Marafeq Qatar

▪ Qatar Foundation ▪ Msheireb Properties ▪ Hamad Medical Corporation Developers ▪ Supreme committee for delivery and legacy ▪ Other Major Developers

▪ Kahramaa ▪ Ashghal ▪ Ministry of Municipality and Government Environment Entities ▪ Ministry of Public Health ▪ Ministry of Economy and Commerce Regulatory Framework: Dimensions & Key Questions

A DC regulatory framework needs clarity around 8 dimensions

Dimension Question A Mandating Should DC be mandated in certain areas and to what extent? B Should specific incentives be provided to DC providers in order to address the market Incentives distortions? C Water Supply & Discharge What water supply to use and how to manage the discharge?

D How tariffs should be structured and set? What allocation of payments is needed to align with Billing and Tariffs risks? E Market Competition What rules are needed to ensure a competitive and open market for DC projects?

F Technical & Service What technical standards and guidelines are needed to ensure delivery efficiency and Performance sustainability?

G Licensing What type of licensing are required and what are the terms?

H Contractual Frameworks What type of contractual framework should bind different stakeholders in the market? Organization Design Principles for Effective Regulation

The DC Regulator’s organization designed to meet a set of below key principles(benchmarked with Int. DC Regulators.) Design Principles Description

1 Ensure Coverage of all ▪ Introduce functions able to cover all regulatory activities foreseen by the DC Regulatory Activities proposed regulatory framework 2 ▪ Minimize the complexity of the organization by clustering separate sections Enable Efficient Regulatory Processes with clear accountabilities and streamlined processes, resulting in short lead time and reduced number of headcounts 3 Facilitate Skills ▪ Consolidate functions requiring similar skill sets and functional knowledge Development & within the same section to create synergies of competences Qatarization ▪ Grant access of Qatari nationals to key roles in the organization 4 ▪ Facilitate ability to introduce new functions or increase/decrease headcounts Maximize Flexibility to to react to emerging conditions in DC market and emerging national needs Changes in Cooling Market ▪ Accommodate development and potential changes to the DC regulations and eventually the regulation of the Conventional Cooling market

5 Ensure Ease of ▪ Minimize implementation effort by limiting changes to current organization Implementation Proposed Strategic Objectives and DC Regulatory Actions

To reach the strategic objectives, the DC Regulator takes regulatory actions and assesses them with several KPIs

Strategic Objective DC Regulatory Actions KPIs 1 • Define clear Environmental policies in the form of • # of yearly inspected DC plant Environmental guidelines, standards and KPIs • # of plants not complying with • Ensure compliance to Environmental policies with Protection & Health Environmental Law 30/2002 regular checks 2 Customers’ • Regulate DC tariffs to promote transparency and • # of complaints processed on DC tariffs fairness • # of DC tariffs reviewed Protection • Ensure reliability of service to consumers • # of yearly inspected DC plants • # of DC-mandated developments 3 • Mandate DC to maximize DC penetration • Potable water consumption for cooling • Establish standards and guidelines to ensure the Energy Efficiency (Mm3/year) minimum DC plants requirements • # of yearly inspected DC plants • Ensure capabilities’ development of employees through • % of employees with at least 1 training per 4 periodical trainings year Human Capital • Retain capabilities with an appropriate team • % of employees satisfaction management • Ensure a competitive market that enhances service • # of DC promotion campaigns 5 New Technologies quality and technology innovation • # of workshop sessions with DC and Innovation • Promote innovation in DC solutions and foster energy stakeholders efficiency (e.g campaigns, workshops) • # of R&D activities/ initiatives

Regulatory • Ensure a positive impact of the regulation along the • % of Regulatory Effectiveness* Effectiveness different Strategic Objectives

*) Regulatory Effectiveness: 20% * (% of plants complying with Environmental Law 30/2002) + 20%*(% of complaints processed on DC plants)+20%*(% of inspected DC plants out of planned DC plants to inspect)+20%*(% of employees' satisfaction)+20%*(new technologies introduced out of planned technologies to introduce). Source:Strategy& Analysis Pillars of Price Regulations

Proposed DC price regulation consists of 4 key pillars Key Pillars of DC Price Regulation Description Tariff Structure • Description of the 3-tier tariff structure (connection, capacity and 1 consumption charges) that will be adopted by DC Providers and DC Retailers

Payment Schemes • Definition of payment schemes (who pays what and to whom) 2 according to all the different types of contractual agreements between Real Estate stakeholders

Price Control Mechanism • Development of the price control mechanism that will be adopted by 3 the DC Regulator to control the DC Providers and DC Retailers’ tariffs in the market

Ownership Structures • Overview and assessment of the different Government ownership 4 structures that can be adopted in the future (from no asset ownership to full asset ownership) DC Operations Stakeholders

DC sector potentially involves stakeholders and entities that may exchange services and monetary transactions An entity that generates and distributes Cooling Energy by means of Chilled Water using a DC System to DC Provider one or more DC Retailers and/or one or more Customers (who may be Developers, Unit Owners, Occupants or Tenants)

An entity that acquires cooling energy by means of Chilled Water from a DC Provider or DC Retailer for DC Retailer the purpose of selling to one or more DC Retailers and/or one or more Customers. A DC Retailer may also be a DC Provider

An entity that is involved in encompassing activities that range from the purchase of raw land, Developer construction of real estate properties to the sale and/or lease of built developments or parcels to others (can be a master developer, developer, sub-developer or building owner)

An individual or entity that purchases a Unit from a Developer and owns the Unit. The Unit Owner is Unit Owner also the Occupant in case he uses the Unit (Unit can be a dwelling or a property for commercial use)

Occupant or An individual or entity that uses the Unit, either owning it (in the case of Occupant) or renting it from Tenant either a Unit Owner or from the Developer (in the case of Tenant) District Cooling Department Mission & Achievements District Cooling Department Mandate

The District Cooling Services Department came into existence with the resolution from council of ministry vide reference 825 dated 2nd May 2012.

Duties & Responsibilities

1. Suggest general policies for District Cooling. 2. Set up rules and regulations for DC and ensuring that they are being complied with. 3. Set up DC standards and specifications and ensure that they are being complied with. 4. Decide on areas to be served by DC as per priorities and visibility (economically) in coordination with Concerned Authorities in the country. 5. Suggest tariff structures for customers. 6. Approve DC activities. 7. Develop Integrated Programs of whatever related to District Cooling. 8. Coordinate with the concerned authorities with regards to District Cooling. District Cooling Department – Accomplishment Milestones

• (May 2012): District Cooling Services Department (DC) Established as Corporate Regulatory Body of Qatar General Electricity and Water Corporation – KAHRAMAA • (May 2013): District Cooling Department (DC) Suggested Prohibition of Potable Water For Cooling Purposes and to utilize Treated Sewage Effluent (TSE) as suitable alternative cooling makeup (to Qatar Permanent Water Resources Committee- PWRC) • (March 2013): Qatar Council Of Ministers Approved the Directive Of Prohibition of Potable Water For Cooling Purposes. • (May 2013): KAHRAMAA notified over 53 District Cooling Operators on the Prohibition Directive and to utilize TSE for Cooling. • (June 2014) Established effective District Cooling Stakeholders coordination and Conducted DC Workshop. • (Oct 2015): District Cooling Department Developed the Regulatory Frame Work structure for District Cooling Services in Qatar by International Consultants Consortium. • (May 2017): District Cooling Department Published the District Cooling Code as part of KAHRAMAA Published Contractual regulations. GCC District Cooling Committee

اقترحت كهرماء بتاريخ ) 2017/04/10( استحداث لجنة ضمن لجان األمانة العامة لدول مجلس التعاون للخليج العربي تختص بنظام تبريد المناطق

Kahramaa proposed by ( 10th April 2017) introducing District Cooling Committee within GCC Committees District Cooling Law

KAHRAMAA Is currently developing Qatar District Cooling Law. Anticipate to publish the 1st Version of Qatar DC Law by 2018. Thank you Questions

Engineer :Ibrahim Mohammed A Al Sada Manager: District Cooling Services Department Qatar General Electricity & Water Corporation - KAHRAMAA