Buildings require a lot of energy and significantly contribute to global CO2 emissions. According to the International Energy Agency (IEA), the built environment accounts for approximately 30% of the world's energy consumption and 15% of direct CO2 emissions. As our planet continues to heat up, the demand for air conditioning will surge, further challenging global decarbonization efforts.
GCC countries have set ambitious decarbonization targets aligned with national visions. The upcoming COP28, being hosted in the region in the UAE, has given fresh impetus to these aspirations. Considering the size of the building and construction sector in all the GCC countries, rethinking how buildings are designed, operated, and refurbished presents a tremendous opportunity to propel the region towards net zero.
Over the years, I have spoken to numerous developers on how the sector can shift to eco-friendly, resilient constructions. An often-cited barrier to sustainability-focused upgrades is cost. But that obstacle has been eliminated thanks to innovative Energy Service Companies (ESCOs) that have introduced various Energy Performance Contracting models to finance costly energy transition projects. Guaranteed Savings Agreements (GSA), Shared Savings Agreements (SSA), and other Build-Own-Operate-Transfer (BOOT) options enable shifting financial, operational and performance risk to ESCOs, allowing building owners to enhance sustainability without substantial upfront investments.
Energy Performance Contracting (EPC) is a contract between a building owner and an Energy Performance Management Company/Energy Service Company (ESCO) such as ENGIE Solutions. A Shared Savings Agreement (SSA) defines an agreement between a building owner and an ESCO where the ESCO provides the upfront capital for the retrofitting project and shares the energy savings with the building owner. A Guaranteed Savings Agreement (GSA) defines an agreement between a building owner and an ESCO where the building owner provides the upfront capital for the retrofitting project and requests the ESCO to offer guarantees of energy savings to the building owner.
Meanwhile, the Build-Own-Operate-Transfer (BOOT), one of the most popular financing options, defines a process where the ESCO builds, owns, operates, and transfers the retrofitted project to the building owner after an agreed period of time.
By passing the financial risk to Energy Performance Management Companies/Energy Service Companies (ESCOs), building owners benefit from more comfortable surroundings while contributing to corporate and national sustainability goals with no CAPEX enabling them to focus on their core business.
Among the various energy savings solutions implemented is a portfolio-wide guaranteed savings energy efficiency program by one of UAE’s largest property developers to reduce energy consumption by 20%. ENGIE Solutions was one of the few companies selected by the developer for the UAE's largest hospitality energy retrofit project, which included optimizing lighting, VSD, pumps and fans, heat recovery, digital solutions, water heating, ventilation and HVAC across various hotel properties.
Ras Al Khaimah Economic Zone (RAKEZ) also appointed ENGIE Solutions to retrofit the region's first-of-its-kind environment-friendly water treatment technology in its district cooling plant. This 'cooling tower' water treatment system holistically controls scaling, corrosion and biological growth in water, using ultra-low frequency (ULF) electromagnetic waves without chemicals. ULF treatment is electronic and fully controlled via microprocessors; therefore, it does not require any human intervention.
RAKEZ also chose ENGIE Solutions to identify and implement comprehensive energy conservation measures mainly based on HVAC optimization. The 5-year EPC-based project will lead to capital improvement and energy savings under a guaranteed savings approach.
In Saudi Arabia, ENGIE Solutions successfully developed and closed the first corporate power purchase agreement (PPA) project in the Middle East, the NADEC solar photovoltaic IPP. This project was launched by one of the largest agricultural and food-processing companies in the GCC to procure electricity from a 30 MWp solar PV facility in NADEC City, Haradh, Saudi Arabia. As an alternative to the company's fossil fuel consumption (1.4 TWh/year), ENGIE established what constitutes the first utility-scale corporate PPA in the region between a developer and an end-customer. This project initiates a shift in energy consumer procurement strategies and sets the path for IPP developers to put their expertise at the disposal of private and public energy consumers to reach their sustainability objectives. Effectively, this project will reduce NADEC's fuel consumption by 124,000 barrels/year, resulting in a decline of 53,000 tons of annual carbon emissions, thus fully embracing Saudi Vision 2030.
The above projects demonstrate the numerous opportunities for enhancing the sustainability of both new and existing facilities. Utilizing more efficient appliances and lighting, such as LED bulbs, smart thermostats, and Energy Star-rated devices, can result in substantial energy savings. Likewise, upgrading insulation and adopting renewable energy sources can significantly decarbonize the construction and building sector. This is all integrated through digital, smart and innovative solutions that ENGIE includes as one of the basic and mandatory Energy Conservations Measure (ECM).
To date, our energy solutions have led to 342,944,449 kWh in Accumulated Energy Reduction, 201,293,964 kg in Accumulated C02 Abatement and $38,863,425 in Accumulated Cost Savings across the GCC region, delivering real value to our customers while driving the region's decarbonization goals.
Energy conservation in buildings goes beyond supporting low-carbon cities; it reduces operating costs, boosts building value, improves occupants' comfort, health, and productivity, creates jobs, and stimulates economic activity. Additionally, it expands the supply chain of energy-efficient materials and equipment.
These examples underscore the potency of energy performance management in reducing carbon emissions. Initiatives like the portfolio-wide building retrofit project, RAKEZ water treatment and energy efficiency projects demonstrate that transforming existing buildings can be a highly effective strategy for combating climate change, reducing energy waste, saving money, and fostering renewable energy adoption sustainably.