Exclusive Manufacturing Gulf switches to more energy efficient cooling solutions By Megha Merani December 15, 2022 Daikin Rising temperatures are a business opportunity for air conditioning giant Daikin, but it also faces the task of achieving carbon neutrality AC units using inverter technology Growing global demand for ACs is ‘blind spot’ in energy debateCooling systems account for 80% of UAE buildings’ energy consumptionDaikin AC firm opens second factory in Middle East in Saudi Arabia The UAE’s replacement market for air conditioning (AC) is growing fast as energy consumption concerns continue to rise. Global consumption of electricity for household ACs is increasing rapidly, creating urgent demand for more efficient cooling systems. Energy demand for space cooling will more than treble by 2050 unless there is action to address energy efficiency, according to the International Energy Agency (IEA). Blame White House and Wall Street for global energy crunchDubai utility provider gets 29 bids for Hassyan reverse osmosis plantMena investment community is moving to fund climate action “The replacement market for ACs is growing much faster than the new building market,” said Tuna Gulenc, vice president at Daikin MEA, one of the largest heating, ventilation and air conditioning vendors in the world. “Replacement demand is double the new build demand – and this will only grow. An inverter unit consumes 40 to 50 percent less energy compared to a fixed unit.” An AC unit that uses inverter technology maintains a space’s set temperature by cooling when room temperature rises above the set temperature and heating when the room temperature falls below the set temperature. “If there are 20 people in a room and then another 20 people come in, the speed of the AC should increase,” Gulenc said. “But if 10 people leave the room it should decrease. Inverter technology adjusts. “Non-inverter air conditioners may cost less, but inverter air conditioners provide consistent energy efficient cooling that provides better value in the long run.” The IEA estimates that around two thirds of the world’s households could have an AC unit by 2050. “Growing demand for air conditioners is one of the most critical blind spots in today’s energy debate,” Fatih Birol, IEA executive director, said in a 2018 report. “Setting higher efficiency standards for cooling is one of the easiest steps governments can take to reduce the need for new power plants, cut emissions and reduce costs at the same time.” The problem is today’s consumers are not buying the most efficient ACs, the report stated. Increasing temperatures and economic growth are continuing to drive electricity consumption for household air conditioning globally. Tuna Gulenc, vice president at Daikin MEA (second right) as the air conditioning firms opened a factory in Saudi Arabia last month The average temperature of the planet in July 2019 was about 1°C above the 20th century average, according to the National Oceanic and Atmospheric Administration in the US, making it the warmest month on record. Heatwaves have become common even in Europe, where air conditioners have not been used as commonly. Summer temperatures have broken record highs, reaching up to 45 Celsius. This has a direct impact on electricity consumption for air conditioning: a 1°C increase results in energy demand rising by around 15 percent to power cooling units, according to the European energy consulting firm Enerdata. Enerdata’s research shows that air conditioning consumption of the 20 most prosperous countries in the world increased by around 400 Terawatt-hours between 2015-2018. The excess usage is equivalent to the present yearly consumption of buildings in Africa. Cooling accounts for a large proportion of the residential electricity used in the Middle East and North Africa region: above 60 percent in Saudi Arabia and the UAE, compared to around 25 percent in the US. “There are regulations in certain countries [like Japan and Europe] that you have to use inverter air conditioning, but not everywhere in the world,” Gulenc said. “We are sharing our knowledge with government bodies about how inverter air conditioning can reduce energy consumption in the region. “In China, which is one of the largest air conditioning markets in the world, inverter air conditioning was just 20 percent of the market 10 years ago. Today, it is more than 60 percent.” Daikin’s Middle East and Africa HQ is in Dubai, and its regional growth continues with the opening of a factory in Saudi Arabia Cooling systems in the UAE account for 80 to 85 percent of a building’s total energy usage due its extreme climate conditions. “We see initiatives from the government and the awareness is increasing,” Gulenc said. “In the UAE, Etihad Energy Services Company, the wholly-owned subsidiary of Dubai Electricity and Water Authority, are supporting retrofit projects for energy efficiency and we [Daikin] have participated in many of them. “Up to five to six years ago, in this territory the subject was only about reliability of air conditioning. Is it strong? Can it cool enough? But now all the discussions are about energy efficiency.” Daikin is conducting a replacement campaign for villas, Gulenc said, as more individual consumers are looking to reduce their energy consumption and costs. But financing remains a challenge to accelerate the transition to more efficient cooling. “The UAE is becoming less transient, with government initiatives like Golden Visas,” said Gulenc. “People are buying houses and settling here. The challenge now is between capital expenditures and operating expenses. “If there are green funds or loans that can help someone replace their air conditioners, this can help accelerate the shift. It’s already happening in the commercial market.” The IEA said that efficient ACs could reduce global investment and running costs by $3 trillion by 2050. Average cooling energy costs would be almost halved and, combined with cleaner power sources, can radically reduce overall emissions. Four out of the six Gulf states have pledged to be net zero by at least 2060, investing billions towards greatly reducing carbon emissions. The global air conditioning systems market size was valued at $106.6 billion in 2020 and is expected to expand at a compound annual growth rate of 6.2 percent from 2021 to 2028, according to a Grandview Research report. According to 6Wresearch, the Middle East air conditioner market size is projected to grow at a compound annual growth rate of 3.8 percent during 2021-2027. “Our sales have more than tripled in the last 10 years,” Gulenc said.“And we would like to more than double our sales [again] by 2025.” Daikin opened a new factory in Saudi Arabia last month as part of the company’s five-year growth plan for the Middle East region and to contribute to energy efficiency and sustainability in the region through the provision of energy-efficient products. The factory is the company’s first in Saudi Arabia and its second in the Middle East after Dubai.