1. GCC Countries or State by State
Draft District Cooling Utility Acts & Regulations
Setting Fair Business Relations Among
The State, Customers, Developers & Utility Providers
Special Presentation for
Kuwait District Cooling Summit 2011
Organized by ProMedia
Held in Kuwait City 25- 26 Jan 2011
By
egr. Fadhel alKazemi
29 Dec ’10. Rev0
Tekneen District Cooling & Utilities KSCC
Kuwait
2. Table of Content
Description Slide Number
National Destiny & Purpose 3
Create National Will 5
District Cooling Network 6
State’s Investment Options 7
Decision Matrix To Choose Suitable Investment Alternative 8
Economic Development Matrix 9
Recommended Common Driver 10
District Cooling benefits & saving, if applied in Kuwait 2008-15 11
Kuwait Electricity Consumption Sector Wise – 2006 12
Proposed Fees & Tariffs Guidelines for District Cooling 13
Maximizing Competency Using Fossil Energy &
Alternative Renewable Energy 14
Action Plan to develop GCC Acts & Regulations 15
Salient feature of developing regulated policies & legislations 16
Note : In the slides where indicated will be shown in the presentation.
2
3. National Destiny & Purpose set by
Their Majesties & Royal Highness , the leaders of GCC Countries
1 • To reduce Electrical Power Demand, CO2 Emission & Domestic Fossil Fuel Consumption.
2 • To increase use of Alternative Renewable Energy in both demand side & supply side.
3 • All GCC countries ratified KYOTO Protocol & signed Montreal & Copenhagen Protocols.
4 • Effect Mass transit through train & undergrounds to reduce usage of private cars.
5 • Transfer GCC to be one of the world’s financial center.
6 • Transfer GCC countries as world hub for passenger airlines, freight airlines & marine logistic.
7 • GCC countries to provide global industrial & commercial Free Zone Areas.
8 • Transfer GCC cities to be home for global companies for offices, conferences & exhibitions.
9 • Transfer GCC cities to be touristic area for culture, medical, shopping, recreation & sports.
10 • Increase pilgrimage to Mecca & Madina as well as Umraa year around.
11 • Transfer many areas in GCC countries to be economic cities & industrial areas.
12 • Encourage research & development local & global by universities &research institutions.
13 • Contribute world prosperities of developing countries by setting special funds.
3
4. National Destiny & Purpose set by
Their Majesties & Royal Highness , the leaders of GCC Countries
1 • To reduce Electrical Power Demand, CO2 Emission & Domestic Fossil Fuel Consumption.
2 • To increase use of Alternative Renewable Energy in both demand side & supply side.
3 • All GCC countries ratified KYOTO Protocol & signed Montreal & Copenhagen Protocols.
4 • Effect Mass transit through train & undergrounds to reduce usage of private cars.
5 • Transfer GCC to be one of the world’s financial center.
6 • Transfer GCC countries as world hub for passenger airlines, freight airlines & marine logistic.
7 • GCC countries to provide global industrial & commercial Free Zone Areas.
8 • Transfer GCC cities to be home for global companies for offices, conferences & exhibitions.
9 • Transfer GCC cities to be touristic area for culture, medical, shopping, recreation & sports.
10 • Increase pilgrimage to Mecca & Madina as well as Umraa year around.
11 • Transfer many areas in GCC countries to be economic cities & industrial areas.
12 • Encourage research & development local & global by universities &research institutions.
13 • Contribute world prosperities of developing countries by setting special funds.
Above conclusions been observed by speaker reviewing books, articles, interviews & Summits Communiqués 4
5. National Destiny & Purpose
Create National Will
to achieve
National Purpose set by
Their Majesties & Royal Highness ,
leaders of GCC Countries
Source: Presentation 2nd Middle East District Cooling 2010, Doha 28 Nov 2010 5
6. District cooling is linked to area cooling of buildings mix & usage sectors
Referred to as 3rd Party Investors, Utility Provider regulated by legislations
Villa
Residential
Commercial
Governmental
Educational
Health Care
Entertainment & Cultural
Industrial
Agricultural
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 6
7. State’s Investment Options for Executing the District Cooling projects
State’s Direct Investment
Acquisition by Acquisition by
3rd Party investment Direct Investment
Contracting BOOT Method DBO System
20 – 25 Years 5 – 10 Years
Brain Storming Decision or Decision Making Matrix
Private Public Partnership
PPP
Private Public
Sector Sector
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 7
8. Decision Matrix To Choose the Suitable Investment Alternative
Acquisition through third Relative
State’s
party investment BOOT direct
weight
# Factor investment in
M.E.W. The State points
1 The effect of economic multiplier
20 10 5 20
2 Lesser financial risks on the State 15 10 10 20
3 Lesser paid capital and higher finance 10 5 5 15
4 Performance incentives and the 10 5 5 15
employees profits participation
5 Investment in researches & development 10 5 0 10
6 Purchasing franchises or patents 10 5 2 10
7 Work outside the State of Kuwait 10 5 0 10
Total 85 45 27 100
The Suitable Investment alternative based on the decision matrix
Working under the umbrella of Private Public Partnership
Acquisition by 3rd Party Investment BOOT Method
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 8
9. National Purpose
Economic Centered
Developments
Develop Competency & Global
Competition capabilities
Attractive Investment opportunities for local and
foreign funds
Entities & Domestic competition
companies capable and reducing Effect government
planning role and
of planning & speculation and
monitoring the plans
execution monopoly
Modern, supportive Provide information Develop Effects Laws with
and attractive & economical Acts& sovereign court
infrastructure indicators Regulation system
Empower national workforce to be competitive, performance & economically.
Competency based in Education & Training and encourage national human
resources availability
ECONOMIC DEVELOPMENT MATRIX
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 9
10. Recommended common driver to be agreed on by ministries within each GCC
state to circulate the application of District Cooling in their respective states
Economic Driver
1
Reduce State’s initial capital project investments
2 3
Reduce substantially electricity Lower domestic oil consumption
subsidies by respective states as fuel substantially
Environmental Driver
4
Reduce CO2 emission & gases affecting the Ozone
Social Driver
5
Enhance work opportunities for the nationals and reduce substantially
demand on expatriate workers for building maintenance
6
Possibilities of using Thermal Storage Tanks for state of emergency &
backup for fire fighting services
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 10
11. District Cooling benefits & saving, if applied in Kuwait 2008-15
70% Of peak electrical load produced in Kuwait is used for comfort cooling
Reduce peak electrical loads at peak hour by 20%
1
Of the new reduced DC peak electric load as per Point 3 & Point 5
Reduce initial investments to generate, transmit & distribute electricity
2
USD 7,565 million for the period
3
Reduce total electricity consumption by 32%
13 million megawatts/hour for the period
Reduce state electricity subsidy
4
by USD 1,196million for the period
5 Reduce peak electrical load for comfort cooling by 46%
i.e. 3542 megawatts for the period
6
Reduce electrical consumption for comfort cooling by 44%
i.e. 7,028,013 megawatts/hour for the period
Reduce oil consumption as fuel by 35 million barrels
7
For the period i.e. saving USD 5,304 million for the period *
Reduce CO2 Emission 12.34 Million Tons
8
for same period
Preserve about 3.4 million KG of cooling gases affecting
9
Ozone Layer by 2016
Note - * The barrel price was calculated at USD 60
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 11
12. Kuwait as sample for Electricity Consumption Sector Wise – 2006
Note :-
Villa & Residential sector constitute 60%
of electricity consumptions and must be
incorporated in District Cooling area of
coverage & also should satisfy demand Source: Dr. Najy Al Motairi – KISR, Kuwait
of KYOTO Protocol.
12
13. Proposed Fees & Tariffs Guidelines for District Cooling
sector wise in GCC Countries
1 2
Annual subsidy will be effected for residential Least financial burden on nationals entitled for
sector only housing welfare
3 4
Financial incentives based on performance Financial incentive will be given to customers
will be paid to investor year by year not receiving any subsidy
Tariffs & fees based on Residential Commercial Govt. Agri. Industrial
Globally practiced 3-Tier Sector Sector Sector Sector Sector
Connection tariff
KD/Ton (Paid Once)
Annual consumption tariff
KD/Ton/Hour
Annual service charge KD/Ton
Govt. No No No
With 15% internal rate of Owner 50%
Subsidy 70% Support Support Support
return
Note: The State will do the pipe distribution for villa/housing area & charge Utility Provider 1.5%
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 13
14. Maximizing competency in using fossil energy &
alternative renewable energy
• Maximize competency in generation & utilization of energy. Minimize fossil fuel &
maximize alternative renewable energy in both demand side & supply side of
energy.
• Implementation of integration of infrastructure to include productions of
electricity in new cities, allowing exchange of power between the city energy
production & the national power grid to be utilized incase of emergency on both
side.
• Where possible to provide oil or natural gas fuel, recommend in industrial
complexes, oil facilities or commercial projects will produce their own
electricity integrated with own infrastructure services, where possible give
incentives to use renewable energy & provide exchange with national grids through
buy & sell protocol or for emergency requirement.
Source: Study of Methods of Energy Saving By Using the District Cooling in The State of Kuwait 2007-08 14
15. IDEA International District Energy Association
Goals
• Facilitate networking and exchange of information among members.
• Enhance educational opportunities for district energy professionals.
• Assist members in marketing the benefits of district energy services.
• Secure favorable policies, legislation and regulations for district energy.
Propose action plan to develop GCC Acts & Regulations
For District Cooling & District Energy
GCC District Cooling companies, members of IDEA to agree on a meeting to
be held in one of the GCC cities, form a committee to select a capable
reputable consultant well experienced in District Cooling to draft proposal :
GCC Acts & Regulations
For District Cooling & District Energy
The proposed draft will be sent to IDEA for review as well as will be sent to
state by state to government departments likely to be of interests to
regulate District Cooling application in the state & would be potentially
active in the regulation committee in local state level or national GCC level.
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16. Salient feature of developing regulated policies & legislations
1. Any regulating policies & legislations such as Acts, Regulations & Statutories or
any contracts shall be based on fair contract fundamental between the parties
and at no circumstances to be developed on partial or one sided.
2. The policies & legislations to encourage use of thermal storage system &
alternative renewable energy and to allow integration of infrastructures and
power generation on district or city basis.
3. Regulations to include reference to reputable codes such as ASHRAE , latest
technology & up to-date best technical & business practices relating to District
Cooling or District Energy systems.
4. Encourage research & developments. Encourage District Cooling or District
Energy Utility Provider to invest in new technologies & systems which will
lower kw/Ton.
5. Possibly the States will issue legislation from time to time to set up tariff &
fees per sectors by which it will be a criteria for bidders or concession
seekers to invest in District Cooling systems.
6. In the study made for Kuwait, the consortium highly recommended to use
thermal storage tanks to support fire fighting efforts & in case of national
emergency or god forbidden natural disasters.
16
17. Acknowledgement
Energy Saving Study by using
District Cooling Methodology
in The State of Kuwait
Sponsored and Financed By: Kharafi National Company KSCC and Kazema Engineering Projects WLL
Study consortium: SSH, Kuwait University, KISR, Wataniya Environmental Services Company
Thank You
Participants & Organizer
Kuwait District Cooling Summit 2011
FADHEL ALKAZEMI
CEO, Tekneen District Cooling & Utilities KSCC
Tekneen District Cooling & Utilities KSCC
P.O. Box 26528 Safat, 13126 Kuwait
Tel: 24721155 Ext: 2304 Fax: 24721199
E-mail: info@tekneen.com 17
