Interview: Sudheer Perla

Country Manager at Tabreed India

This is right time for India to invest in & adopt cooling as utility to meet its climate goals

November 01, 2022. By Manu Tayal

This is the right time for India to invest in and adopt cooling as a utility to meet its climate goals as well as combat climate change effectively and building a more resilient and greener country, believes Sudheer Perla, Country Manager, Tabreed India, in an exclusive interaction with Manu Tayal, Associate Editor, Energetica India. Mr. Sudheer also discussed about his company’s business expansion plans and investments in the Indian market, CaaS model, energy-efficient cooling solutions, etc. Here’re the edited excerpts from that interaction:

Que: Give us an overview of the services that Tabreed provides in GCC and India?

Ans: Tabreed is an international developer of district cooling with headquarters in Abu Dhabi, UAE. We offer cooling solutions that are energy-efficient, cost-effective, and environmentally friendly. Since its founding 24 years ago, Tabreed has become the Middle East’s go-to partner for dependable outsourced cooling. We currently provide year-round sustainable cooling of over 1.23 million refrigeration tons (RT) to over 400 million square feet of air-conditioned space in major residential, commercial, government, and private developments from 86 district cooling plants, thereby achieving significant cost and operational efficiencies in meeting thermal comfort needs.

Tabreed designs, invests, develops, and manages centralized cooling infrastructure in building masterplans to provide dependable and uninterrupted cooling through the distribution of chilled water under long-term concessions, while performing comprehensive Operations & Maintenance (O&M) to ensure the continuity of service delivery. We are the first global district cooling developer (providing cooling as a service) to launch operations in India in 2019 with the establishment of a country office. Tabreed with IFC is seeking to provide more energy-efficient, end-to-end cooling as a service through an outsourced utility model for real estate developments across target cities in India.

Que: You recently partnered with IFC. What does this mean for the Indian real estate sector?

Ans: Through our partnership with IFC, we are initially looking to invest up to USD 400 million over the next five years. We will be targeting a portfolio of approximately 100,000 refrigeration tonnes (RT) or 50 million square feet of the built-up area being served across industrial, commercial, retail, or mixed-use developments in the country. With regard to real estate, we are in discussion with a number of top-tier developers to evaluate project opportunities and are currently focusing on specific micro-markets in 6 key cities (Hyderabad, Bangalore, Gurgaon, Mumbai, Chennai, Pune) with a view to providing more energy-efficient, end-to-end cooling solutions through an outsourced utility model for real estate developments, new urban masterplans, and ongoing redevelopment.

In order to address sustainability concerns through movements towards clean refrigerants, modular designs, digitalization to optimize consumption, preventive maintenance procedures, etc., Tabreed has a philosophy of deploying world-class HSE (Health, Safety, and Environment), EMS (Emergency Medical Services), QMS (Quality Management System) standards and O&M (Operations & Maintenance) procedures in its cooling plants. The company has always been at the forefront of adopting high-end innovation in its plants, constantly improving operational efficiency while enhancing district cooling plant life and reliability. Tabreed and IFC, through a robust framework, drawing on the deep experience of both organizations will be able to support a greener and more sustainable real estate sector. The real estate sector has a significant role to play in developing greener cities resilient to climate change. Hence, the adaptation of district cooling as a utility-based model is the much-needed sustainable boost needed by real estate in order to reduce carbon emissions and be more energy-efficient.

Que: What is Tabreed’s growth plan in India in terms of providing energy-efficient cooling solutions?

Ans: Space Cooling demand continues to be a significant contributor to India’s rapidly growing energy demand. While unitary air conditioners account for a majority of the country’s cooling unit stock, a United States Agency for International Development (USAID) study in 2019 estimates up to 4.3 million refrigeration tons (RT) of chiller stock worth $1.5 billion due for replacement by 2030. There is also likely to be new chiller demand of up to 7 million RT ($2.5 billion) with over 80% of all this being self-financed by real estate developers or asset owners. Beyond financing, current market practices in India are mostly siloed with a variety of service providers across the value chain for design, procurement, project management, commissioning, operations or maintenance of chillers and HVAC assets for space cooling.

As such, there is significant headroom for a cooling utility or a cooling as a service (CaaS) provider in the market to address the growing demand for space cooling and solve for challenges related to financing and investment, in addition to sustainability and energy efficiency. Since Tabreed takes a long-term service approach by designing, financing, owning and operating cooling assets either at a building level or at a much larger scale through district cooling, it can deliver life cycle costs savings, energy efficiency improvements and better cooling service delivery through enhanced operations, maintenance and health and safety norms being adopted. In terms of our growth plans, as mentioned earlier, we are looking to deploy USD 400 million over next 3-5 years, targeting 100,000 refrigeration tonnes (RT) or 50 million square feet of area.

Que: With Cooling-as-a-service still in an embryonic stage in India, how do you plan on expanding your business in India?

Ans: Tabreed is currently approaching the Indian market from multiple angles as an asset owner, developer, and operator with more than 24 years of experience. Our value proposition for urban master plans or smart city developments is to optimize cooling demand while avoiding incorrect design or technology selection and duplicative capex and meeting the energy demand for our cooling assets through a variety of environmentally friendly options. In addition, Tabreed is evaluating opportunities in India involving the acquisition of existing HVAC infrastructure in buildings, followed by investments in retrofits and energy efficiency optimizations. This will ensure that the asset owner receives up-front liquidity in exchange for a commitment to longer-term cooling services that are more energy-efficient and smoother. This goes beyond the conventional Energy Saving Companies (ESCO) model, promising savings to end-users from the beginning. Since, Tabreed fully finances and recovers investment and operating costs over an extended period, there will be risk-sharing with the building or asset owner, balancing low costs with sustainability, dependability, and system resilience.

Que: With data centres now given urban infrastructure status. How can they become more energy efficient since they consume excess energy?

Ans: According to a report by McKinsey, data centres contribute 2% of the world’s total electricity consumption. The Indian data centre market is anticipated to double by 2023, as India accelerates its digitization initiatives. It is of the utmost importance for India to adopt and utilize greener methods for the operation of these data centres without impeding the sector’s growth in light of rising environmental concerns. Since India is a tropical nation, there is a high likelihood that the overheating caused by the excessive use of energy to operate these centres will exacerbate the climate crisis. Roughly 30-40% of the energy used in data centres is consumed by air conditioning systems used to cool IT equipment, cooling costs are, thus, one of the major contributors to the total electricity bill of large data centers. Hence, it is essential to find an innovative solution that safeguards the environment while preserving the rate of digitization and economic expansion. District Cooling is one such ideal solution; its exemplary design is a perfect match for densely populated infrastructure, such as data centres, that require a concentrated cooling facility that is distributed via a robust pipe network. Not only do these systems reduce operational costs in comparison to conventional cooling methods, but they also significantly reduce electricity bills. These solutions are customizable and easier to control, giving them a competitive advantage over conventional cooling methods as they help reduce wastage of valuable resources. Another significant advantage of district cooling systems is that they can be used in conjunction with renewable sources of power allowing energy to be stored for later use, thereby reducing carbon footprint. In addition, the adoption of district cooling in data centres would be consistent with India’s Industry 4.0 goals, as it would represent the intersection of two megatrends, namely district cooling and digitization.

Que: Many countries have identified cooling as a utility; do you believe India should do the same, and what are your thoughts on it?

Ans: Cooling accounts for 10% of global electricity consumption, also the demand for the same is expected to increase three-fold by 2050. Cooling services are utilized by multiple businesses that are key for surviving in a modern world like retail food chains and real estate players, amongst others. Hence, there exists a golden opportunity to revolutionize the industry by helping them transit towards adopting more sustainable ways of functioning that would contribute towards a greener planet significantly, if adopted on a massive scale. CaaS (Cooling as a service) is a pay-per-model service for clean cooling systems that enable customers to base their investment decision on the lifecycle cost rather than the purchase price of the equipment. It is gradually gaining popularity across the globe with countries like USA, Japan, UAE leading the way. The Energy Conversation (Amendment) bill recently passed in the Lok Sabha is truly an active step undertaken by the government to reach its climate goals under the Paris Agreement. Carbon trading will encourage businesses to decarbonize their operations in a bid to earn more revenues while mandating the use of renewable resources for industries will significantly contribute towards a greener environment. This is the right time for India to invest in and adopt cooling as a utility to meet its climate goals as well as combat climate change effectively and building a more resilient and greener country.

Que: Given the extreme heat spurring across the nation this year and the demand for cooling contributing to the climate crisis, how can district cooling provide sustainable cooling in urban areas?

Ans: According to the Indian Meteorological Department, India experienced a severe heatwave last summer, with temperatures ranging from 45 to 50 degrees Celsius. These heatwaves led to a steep surge in demand for electricity. According to the Ministry of Power, the demand for electricity was at its peak during the heatwaves in April, touching a whopping 210,793 MW. With rising ambient temperatures, rapid population growth, and an increasingly affluent middle class, air-conditioning demand already accounts for between 40 and 60 percent of peak load in some Indian cities, a number that is projected to increase 15-fold by 2050.

The rising demand for space cooling places a tremendous strain on the electricity systems of many countries, in addition to contributing to an increase in greenhouse gas emissions. In this regard, district cooling systems can be advantageous by reducing peak power demand by lowering the required installed capacity and reducing costs by incorporating thermal energy storage tanks that can take advantage of preferential electricity tariffs. District cooling is significantly more efficient and effective in terms of sustainability, as it reduces GHG (Greenhouse) emissions by up to 100 percent, thereby making the area eco-friendly and operating with a significantly reduced carbon footprint.

Que: How can district cooling play a role in improving energy efficiency in India’s cooling infrastructure?

Ans: The Ministry of Environment, Forest, and Climate Change of India launched India’s National Cooling Action Plan (ICAP) in 2019 with the intention of providing the much-needed policy push to stimulate the demand for sustainable cooling in the country. One of the primary objectives of the policy is to reduce the demand for refrigerants by 25-30% across all sectors and 25-40% by 2037. To achieve its objectives, India must reduce its reliance on conventional, high-energy-consuming, greenhouse-gas-emitting High Voltage Air Conditioners and transition to more sustainable solutions, such as District cooling systems.

District cooling systems can indeed play a significant role in helping India’s cooling infrastructure become more energy efficient. As the nation accelerates its efforts to increase the proportion of renewable energy sources in all sectors, district cooling can be an important tool for achieving the objective. District cooling can not only help reduce cooling energy consumption by 50%, but also reduce electricity consumption during peak demand by leveraging benefits of load diversity and using thermal storage systems storing energy during off-peak hours.. All of these factors contribute to India’s efforts to combat the challenges posed by its rising cooling demand, heatwaves, and growing carbon footprint. In addition, the recent development by the government to incentivize the carbon emission reductions by businesses appears to be at an ideal time for the national adoption of district cooling to strengthen India’s cooling infrastructure.

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