The ongoing European energy crisis should be a wake-up call to the world to prioritise the resilience of energy supply systems. For world leaders, the challenge is advancing energy independence while abiding by their commitments to curb carbon emissions.
Renewable energy sources offer a viable alternative to traditional fossil fuels that are difficult and expensive to extract and transport while causing severe environmental harm.
Wind and solar, for instance, are affordable, inexhaustible, and local, contributing to energy sovereignty and decarbonisation goals. Meanwhile, green hydrogen is an increasingly attractive fuel for the energy transition.
As countries consider energy transition models to create this resilience, numerous use cases by companies offer ready templates that can scale nationally.
Take data centres. As our demand for online services surges, so does the burden on the data centres that power our digital lives. In the Middle East, the data centre market size is projected to grow 12.4 per cent annually during 2021-2027, driven by increased investment in IoT, big data analytics, and AI combined with the deployment of 5G technology across the Middle East. Since data centres are responsible for 3 per cent of all global emissions, there are fears that this rapid digitisation could pressure the world’s already precarious environmental situation. But the latest innovations in data centre design, power, and cooling offer viable opportunities to reduce energy consumption by these facilities. Powering data centres with clean, renewable energy sources, such as solar and wind, significantly cut CO2 emissions associated with the ICT industry. Further, modern data centre design practices prioritise energy conservation by using air containment and liquid cooling, while modular builds save energy by reducing assembly time and optimizsng for specific needs. There are further gains to be achieved through Combined Cooling, Heat, and Power (CCHP) — or tri-generation — where the heat produced by a Combined Heat and Power (CHP) unit is used to power an absorption chiller or a direct-fired chiller, which generates chilled water for uses such as air conditioning or refrigeration, in addition to electricity and heat production.
Large manufacturing plants or campuses can deploy their own energy source on-site. On-site generation is generally more efficient by eliminating transmission losses, estimated at 5 per cent of generated power. In addition to efficiency gains, on-site generation also helps to reduce dependency on grid supply and lessens the burden on the original boiler plant. Also, off-grid industrial power supply solutions often rely on Diesel and Heavy Fuel Oil (HFO) machines. These systems come with high energy costs as well as high CO2 emissions. Solar power, combined with a battery system, can reduce fuel consumption by 30 per cent to 50 per cent while maintaining and improving energy supply security. The cost savings are also substantial: solar PV pays off within 4 to 5 years in such a system.
For homeowners or developers, switching to district cooling is much more efficient than cooling individual units. A cooling network includes centralised chilled water production and distribution facilities to offer cooling services to all connected buildings. Compared with a traditional air conditioning system, such a network consumes 35 per cent less electricity, emits 50 per cent less CO2, and generates over 50 per cent energy efficiency.
Green hydrogen could be a game-changer in transitioning to a low-carbon economy, providing a sustainable and versatile energy source for multiple applications, including transport, power generation and industry. Created by electrolysers that pass electricity — generated by renewable energy — through water, green hydrogen gas is entirely carbon-free. According to a recent report from the International Renewable Energy Agency (IRENA), hydrogen could make up to 12 per cent of global energy use by 2050. Green hydrogen has featured in several emission reduction pledges announced at the UN Climate Conference, COP26, to help decarbonise heavy industry, long-haul freight, shipping, and aviation.
Middle Eastern countries are taking the right steps in renewable energy. The UAE hosts some of the biggest solar plants in the world in Dubai and Abu Dhabi, while the upcoming mega city of NEOM in Saudi Arabia will be powered entirely by renewable energy. Equally important, renewable energy allows the region to reduce CO2 emissions in line with global commitments. The WEF estimates that countries in the Middle East will need to reduce per capita emissions by as much as 7 per cent over the next eight years to meet their commitments to reduce annual GHG emissions in 2030 by 13 per cent to 21 per cent.
Technology is a key factor in accelerating the global energy transition. Digital O&M (operations and maintenance) platforms and smart building technology monitor the operation, asset performance and energy efficiency of all client assets remotely and proactively. This allows for predictive maintenance before assets fail, thereby making data-driven decisions about asset lifecycle and replacement. Meanwhile, advanced IoT sensors calculate temperature, humidity, vibration, lux, motion, and air quality to collect and analyse engineering and environment data that traditional building services systems do not measure. Artificial Intelligence (AI) and Machine Learning tools are also increasingly being deployed to proactively analyse client assets’ efficiency, automatically identifying issues and extending asset life. All these elements are then monitored at a central facility. A smart O&M platform can leverage digital and data to offer asset monitoring capabilities to enable conditioned-based maintenance and energy performance to steer clients’ consumption and production across their portfolios. It allows us to optimise equipment performance and maximise energy savings/ production without additional costs or impact on users, reducing clients’ global carbon footprint. Ultimately, enhancing operations and improvements through a smart O&M platform make the decarbonisation journey more accessible to the clients.
The relatively high cost of implementing renewable energy projects is a significant barrier for organisations, considering that energy production is not their core business. But innovative financing solutions have emerged, transferring the burden of implementing these projects to Energy Development Companies (EDC).
The Build-Own-Operate-Transfer (BOOT) is one of the most popular financing models for energy projects. The EDC will finance, design, construct, own, and operate the project before transferring it to the client at the end of the concession period. The EDC is also responsible for O&M and the asset lifecycle cost throughout the contract period, providing risk-free operations to clients.
Another popular model is Cooling-as-a-Service, a financing model for cooling networks. By aggregating the cooling need of a network of buildings, CaaS creates an economy of scale that drives efficiency, balances electric loads, and reduces fuel costs. With cooling demand in the GCC expected to nearly triple by 2030, CaaS offers a modern, efficient way to provide air conditioning to a network of buildings in cities or campuses.
Organisations can also adopt the Utilities-as-a-Service model, which integrates on-site renewable energy production, where energy solutions companies manage the design, build, finance, and O&M to allow clients to meet clients’ decarbonisation goals. Energy production is through various sources, for instance, heat recovered from waste, industrial heat reclamation, biomass, combined cycle power generation, solar PV, etc. Payments are service-based over the life of the contract, with no CAPEX or debt.