The other day I attended the launch of a new energy efficiency initiative in Dubai. The Government of Dubai has ambitions to achieve substantial savings in the consumption of energy and water over the next 15 years. It aims to encourage the retrofitting of some 30,000 government and private sector buildings and public areas with energy efficient appliances, equipment and materials covering lighting, cooling, water, industrial processes and building insulation. It is also targeting efficiencies in district cooling through regulation and greater system connectivity. To this end a new “ESCO” (Energy Service Company) industry is being created under the regulatory oversight of the Dubai Regulatory & Supervisory Bureau. As a catalyst for the evolution of this new market, Dubai Electricity & Water Authority (DEWA) has established Etihad ESCO, an ESCO that will help promote energy efficiency projects for government departments and agencies. I understand that public sector projects will operate on a Public-Private Partnership basis under which the ESCOs will design, install and manage energy efficiency schemes for government departments/agencies. ESCOs will provide services under one of two models – for an agreed contract price payable by the customer (with penalties for underperformance and incentive payments for better performance) or under a contractor financing arrangement with the ESCOs funding some or all of the capital expenditure and operating costs in return for a percentage share of the energy savings made by the customer.
A system of ESCO accreditation has been established allowing full accreditation lasting three years for companies already operating in Dubai who have relevant technical experience and a temporary annual accreditation for companies not currently active in Dubai but who have relevant technical experience from other jurisdictions. Joint ventures and other forms of collaboration will be encouraged.
The first two public sector projects are being procured now.