By Ian Harfield, Managing Director, ENGIE Solutions – GCC
The ongoing European energy crisis should be a wake-up call to the world to prioritize 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 decarbonization 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 such as ENGIE Solutions offer ready templates that can scale nationally.
Take data centers. As our demand for online services surges, so does the burden on the data centers that power our digital lives. In the Middle East, the data center market size is projected to grow 12.4% 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 centers are responsible for 3% of all global emissions, there are fears that this rapid digitization could pressure the world’s already precarious environmental situation. But the latest innovations in data center design, power, and cooling offer viable opportunities to reduce energy consumption by these facilities. Powering data centers with clean, renewable energy sources, such as solar and wind, significantly cut CO2 emissions associated with the ICT industry. Further, modern data center design practices prioritize energy conservation by using air containment and liquid cooling, while modular builds save energy by reducing assembly time and optimizing 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% 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% to 50% 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 centralized 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% less electricity, emits 50 % less CO2, and generates over 50% 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 electrolyzers 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% of global energy use by 2050. Green hydrogen has featured in several emission reduction pledges announced at the UN Climate Conference, COP26, to help decarbonize heavy industry, long-haul freight, shipping, and aviation. ENGIE has deep experience in large-scale renewable hydrogen production. Currently, it is working towards assisting clients in eliminating around 45Mt CO2 per year by 2030.
Middle Eastern countries are taking the right steps in renewable energy. 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 percent over the next eight years to meet their commitments to reduce annual GHG emissions in 2030 by 13 percent to 21 percent.
Technology is a key factor in accelerating the global energy transition. Digital O&M 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 analyze 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 analyze client assets’ efficiency, automatically identifying issues and extending asset life. All these elements are then monitored at a central facility. ENGIE Solutions has deployed the Smart O&M platform as part of its digitalization strategy, allowing us to manage various assets, processes and business segments seamlessly. Smart O&M leverages 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. Smart O&M allows us to optimize equipment performance and maximize energy savings/ production without additional costs or impact on users, reducing our clients’ global carbon footprint. Ultimately, enhancing operations and improvements through Smart O&M make the decarbonization journey more accessible to our clients.
The relatively high cost of implementing renewable energy projects is a significant barrier for organizations, 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) such as ENGIE.
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.
Organizations can also adopt the Utilities-as-a-Service model, which integrates on-site renewable energy production, where energy solutions companies, such as ENGIE Solutions, manage the design, build, finance, and O&M to allow clients to meet clients’ decarbonization 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.