District cooling projects face financing challenge

16 October 2008
Demand for district cooling is expected to rise more than 350 per cent in the Gulf by 2015 but getting the necessary project finance could prove a challenge in the current financial climate, according to a new report from MEED Insight.

The Gulf district cooling market has experienced rapid growth over the past decade, with current capacity at more than 1.8 million tonnes of refrigeration (TR).

There are more than $1 trillion worth of real estate projects planned or under way in the GCC and district cooling companies are preparing for a massive increase in business as real estate developers and utility companies turn to the technology.

The demand is being boosted by the fact that district cooling is at least 40 per cent more efficient than conventional air conditioning.

In its GCC District Cooling report, MEED Insight estimates that capacity will rise to 6.5 million TR in the next seven years, at a cost of about $19.5 bn.

But with banks increasingly reluctant to extend long-term financing and contractors experiencing cost increases of 70-100 per cent over the past three years, the report says the sector faces significant challenges.

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