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Company Profile: National Central Cooling Company – Tabreed

Here is a full company profile of the National Central Cooling Company PJSC, more commonly known as Tabreed. It is the leading UAE-based international provider of efficient and sustainable district cooling solutions. It has grown from commissioning one district cooling plant in Sweihan, Abu Dhabi, in 1998, to amassing a broad portfolio of 78 plants across the GCC. Tabreed now delivers over 1.16 refrigeration tons (RT) annually to key developments in the region, with a focus on the UAE, KSA, Bahrain and Oman.

Tabreed was incorporated in 1998 and is a publicly listed district cooling provider with its equity shares listed on the Dubai Financial Market (DFM). It also has investment grade ratings from Moody’s and Fitch of Baa3 and BBB respectively. Since its inception over 20 years ago, Tabreed has become the leading GCC district cooling company and is the partner of choice for organizations across the region, providing reliable, efficient and environmentally friendly cooling services.

Tabreed’s local customers

Tabreed is the partner of choice for governments and corporations in providing environmentally friendly cooling solutions. It has long-term contracts with high-profile customers, including Aldar Properties, the Roads and Transport Authority (RTA), Dubai Parks & Resorts, Miral, and Abu Dhabi National Exhibition Company (ADNEC). Tabreed services sectors of tourism, medical, infrastructure and entertainment; which includes iconic developments such as Sheikh Zayed Grand Mosque, Qasr Al Hosn, Cleveland Clinic Abu Dhabi, all Yas Island leisure attractions, Legoland Dubai, Motion Gate Dubai and Dubai Metro.

District Cooling

District cooling is an environmentally friendly cooling operation that delivers efficient and cost effective solutions. It increases efficiencies through lower maintenance costs and high reliability; this is due to the use of specialized industry equipment. For instance, equipment is required to be replaced every 30 years (compared to 15 years for traditional air conditioning), meaning annual maintenance costs are substantially lower and initial capital investment is spread over a longer period.

Also, removing roof top chillers provides developers with greater flexibility when designing buildings, which also results in a more aesthetically pleasing environment. In addition, there are many environmental benefits – district cooling is up to 50% more efficient in consuming electricity than conventional cooling, which in turn reduces energy consumption, carbon footprint and state subsidies.

 

In 2019, Tabreed is proud that its technology and innovative solutions saved over 2.02 billion kilowatt/hours across the GCC – enough energy to power approximately 115,000 homes in the UAE annually. These power savings prevented the release into the atmosphere of over 1,209,000 tons of carbon dioxide – the equivalent of eliminating the emissions from 260,000 vehicles annually

Traditional air cooled or water-cooled chillers are typically placed on the roof or around the base of a building, supplying chilled air to individual air conditioning units via an internal network. District cooling plants, on the other hand, centralizes the production and distribution of cooling energy, supplying chilled water via insulated underground piping networks to a cluster of buildings in a service area, or district. Energy Transfer Stations (ETS) then utilizes the chilled water to force cold air inside the buildings to produce an air-conditioned environment with warm water then returning to the plant to be re-chilled and redistributed. In some cases, plants use nearby sea water instead of potable water, leading to further environmental benefits and water savings.

 

District cooling is a critical part of the GCC infrastructure, serving some of the most iconic projects across the region.  For example, Tabreed cools the Sheikh Zayed Grand Mosque, Qasr Al Hosn, Cleveland Clinic Abu Dhabi, Yas island theme parks, Dubai Parks & Resorts and Dubai Metro, as well as numerous developments around the GCC such as Jabal Omar Development in Mecca, ARAMCO in Dahran, King Abdullah Financial District and the King Khalid International Airport in Riyadh . In Bahrain and Oman, Tabreed’s plants service the Bahrain Financial Harbor, Bahrain World Trade Centre, and the Avenues Mall.

 

Given its low energy requirement, peak cooling time saving potential, sustainability and cost efficiency, district cooling plays a vital role in enabling the region to meet its Sustainable Development Goals and Paris Agreement Commitments. There is no doubt that demand for cooling is surging around the world. District cooling offers a win-win solution for government and end-users alike, generating sustainable and cost-efficient cooling solutions for the growing needs of our region.

Demand for district cooling in the Middle East

Tabreed aims to leverage the region’s increasing need for cooling, which is expected to triple by 2030, according to a report by strategy& (formerly Booz and Company). Drivers of district cooling include:

  • Population growth
  • Economic diversification
  • Organic urbanization
  • Year-round warm climate
  • Smart Cities
  • Preservation of natural resources (power and water highly subsidised)
  • Reduced power costs

Global Market Insights predicts the Middle East’s district cooling market is likely to exceed AED 51 billion (US$14 billion) by 2025, doubling its estimated value of AED 22 billion (US$6 billion) in 2016. Cities are key expansion areas due to growing urbanization – cities now consume 78% of global energy according to the UN. The concentration of buildings in a compact area means using water can cool whole neighborhoods rather than individual apartments/houses using conventional cooling systems.

 

The UAE and Saudi Arabia jointly account for more than 75 percent of the total district cooling installed capacity in the Middle East and Africa (MEA), and the region is rapidly becoming a leader in district cooling.

 

Tabreed’s Shareholders

Tabreed’s shareholders include Mubadala Investment Company (Mubadala) who owns 42% of the shares, and ENGIE, the global energy and services company, who owns 40% of its shares. Other institutions hold 11% and retail shareholders hold the balance 7% of the shares. Tabreed, since its inception has been listed on the Dubai Financial Market (DFM). Tabreed’s stock is also Shari’a compliant, which expands its investor pool.

Sustainability Goals 

Energy efficiency is one of the key benefits of district cooling, which is well aligned with the country’s energy strategies to achieve sustainability.

 

While delivering growth, Tabreed continues its commitment to environmental protection and sustainability across the region. In 2019, Tabreed is proud that its technology and innovative solutions saved over 2.02 billion kilowatt/hours across the GCC – enough energy to power approximately 115,000 homes in the UAE annually. These power savings prevented the release into the atmosphere of over 1,209,000 tons of carbon dioxide – the equivalent of eliminating the emissions from 260,000 vehicles annually.

 

Tabreed continually strives to incorporate new environmentally friendly practices and innovative technology solutions, which include thermal energy storage, treated sewage effluent (which can result in up to 35% saving over conventional potable water systems) and the use of seawater instead of potable water (Tabreed’s plant in Bahrain saves approximately 126 million imperial gallons of potable water annually).

 

Tabreed is also one of the pioneers in the use of treated sewage effluent (TSE) in its plants, which is globally recognized as a model for saving on water resources in energy efficient practices, enhancing the sustainability of resources by recycling sewage water to replace potable water.

 

Tabreed’s Growth Strategy?

To focus on district cooling – Tabreed’s chilled water business – in the GCC, through owning and growing its own operations and/or venture into new partnerships that will in turn grow the business. There are three primary elements to Tabreed’s strategy:

  1. Grow existing business in existing geographies, through our own operations and through existing joint ventures and/or partners.
  2. Deliver operational excellence – reliability, efficiency, safety, resulting in Tabreed being a partner of choice, with good relationships with all of our customers.
  3. Expand outside our current market – Tabreed continues to explore opportunities beyond its current markets.

In the first nine months of 2019, the total connected capacity from Tabreed’s plants increased to 1,161,227 Refrigeration Tons (RT) of which 29,848 RT came from new customer connections.

Tabreed expansion plans

Tabreed is well positioned to capture the region’s growing demand for district cooling through three specific areas. These are:

  1. Adding connections to existing plants, such as At Raha Beach and Yas Island in Abu Dhabi, SZR in Dubai, and Jabal Omar in the Holy City of Mecca, Saudi Arabia.
  2. Seeking opportunities to build new District Cooling plants for new real estate developments across the GCC
  3. Acquiring existing DC plants. Recent examples of this include the acquisition of the Al Maryah Island and Nation Towers plants in Abu Dhabi.

International Growth Markets

While remaining fully invested in meeting our regional partners’ cooling needs with reliable, high quality and cost-efficient solutions, Tabreed is now looking at new geographies such as Egypt and India, leveraging its 22-year successful track record, coupled with the support of major shareholders, Mubadala and ENGIE, to expand operations. This provides new impetus for optimism that continue to progress our strategy of providing world-class district cooling services to the GCC and beyond.

 

Financial performance

 

Overview of Tabreed’s financial performance

 

Tabreed is a publicly listed company that is financially sound, with supportive shareholders and many years of consecutive growth. Reflecting its stable outlook, Tabreed is rated investment grade by both Moody’s and Fitch (Baa3 and BBB respectively).

 

 

9 Months 2019 Performance Highlights:

Tabreed’s long-term contracts with customers contribute to predictable, sustained revenue, and have expanded its geographical footprint.

In October 2018 Tabreed successfully raised a USD500 million (AED 1.8 billion) fixed rate senior unsecured US dollar denominated sukuk with a seven-year tenor, listed on the London Stock Exchange (LSE). The issue was 50% oversubscribed and saw strong institutional demand both locally and in Asia and Europe. Tabreed also arranged new bank facilities of up to AED 1.5 billion which, along with the sukuk, which were used to refinance AED 2.8 billion of current corporate debt and provide a committed revolving credit facility which is available to fund the business as needed. The sukuk issue enabled Tabreed to access public debt capital markets to broaden its investor base and access longer term debt. It also enabled the company move away from secured debt structures to introduce simpler and more flexible terms. These features together deliver a capital structure in line with mature utility companies.

 

Operations

 

Tabreed has a proven operations track record, with less than 0.01% unscheduled downtime and no major outages in over 20 years of operation. It has comprehensive maintenance plans and critical equipment redundancy, as well as operators present at its plants 24/7.

 

Pilot Project with Masdar

The three-year research and development (R&D) pilot project was designed to see how Tabreed and Masdar could work together to enhance operational performance in district cooling plants, which in turn would deliver energy efficiency.

Tabreed successfully developed a prototype for a next-generation digital ‘smart controller’, capable of intelligently managing district cooling plants. This pilot project was implemented at Tabreed’s plant in Mohammed bin Zayed City, Abu Dhabi, following various testing phases.

The ‘Optimal Chiller Plant Control’, as it is known, aims to develop and operate a proprietary next-generation digital smart controller, capable of intelligently managing district cooling plants to improve operational performance by decreasing energy consumption. This innovative, smart model is setting new standards in performance, energy and operational efficiency to deliver energy reductions for the region’s sustainable development.

Tabreed was delighted with the results of the pilot project as it truly believes that breakthrough innovation such as this smart model will have a tangible impact for the UAE’s energy demands. Tabreed also believes it will set new standards in performance and energy and operational efficiency. It aims to design, build, operate and maintain efficient and reliable district cooling systems to customers across the region, whilst enhancing the real estate value for customers.

 

Tabreed’s commitment to efficiency and sustainability

District cooling offers highly reliable operations that deliver efficient and cost effective solution.

In 2019, Tabreed is proud that its technology and innovative solutions saved over 2.02 billion kilowatt/hours across the GCC – enough energy to power approximately 115,000 homes in the UAE annually. These power savings prevented the release into the atmosphere of over 1,209,000 tons of carbon dioxide – the equivalent of eliminating the emissions from 260,000 vehicles annually.

Due to the use of specialized industry equipment, district cooling has lower maintenance costs and is highly reliable. Equipment only needs to be replaced every 30 years (compared to 15 years for traditional air conditioning), annual maintenance costs are substantially lower and initial capital investment spreads costs over longer period of time.

Tabreed uses advanced technology and processes, including thermal energy storage technology, in many of its plants to help achieve efficiencies and larger savings in electricity consumption. District cooling is a more reliable solution for citizens – it cuts the demand for electricity from air conditioners and increases energy security by reducing interruptions and electricity infrastructure upgrades.

District cooling has a key role to play in supporting our achievement of the 40 percent plus promise in the Paris Agreement, alongside a variety of other energy efficient solutions.

Through its participation in the UN Climate Action Summit 2019, membership in the Cool Coalition, and dedication to enhancing sustainability across every aspect of our operations, Tabreed is doing its part to ensure that nations across the region and internationally have the ability to meet their Paris Agreement commitments.

Tabreed participated in the “We Will: Efficient, Clean Cooling for All” event and a panel discussion on energy efficiency at the Energy Action Forum in late 2019, and Tabreed is a member of the Cool Coalition, which is dedicated to inspiring ambition, mobilizing action, and accelerating progress toward UN Climate Action Summit 2019 and includes the leaders of civil society, research, academia and intergovernmental institutions.

In September 2019, Tabreed received the International Organization for Standardization (ISO) 50001:2018 certification for the successful implementation of its Energy Management System. This certificate is testament to Tabreed’s commitment of more than 20 years to increasing energy efficiency through district cooling solutions.

 

 

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