What have been Qatar Cool's main achievements, and how have you contributed to the 2030 Qatar National Vision?
Our main contributions are in the field of energy efficiency; in a fossil fuel-dependent country like Qatar, this is extremely relevant. We have addressed district cooling needs in 100% of the Pearl and 90% of the buildings in West Bay. The entire Pearl is supplied by the largest district cooling plant in the world (130,000 tons of refrigeration). We are amongst the top five largest district cooling companies in the world. Some 70% of the electricity that is generated in the country goes into air conditioning; conventional cooling consumes 1.8kW/TR per tons of refrigerants, whereas district cooling just 0.8kW/TR. However, the challenges we face to increase our market share include the distortion of electricity prices caused by subsidies. Additionally, not being considered a utility brings up many issues, such as high CAPEX and OPEX costs. Being in a country that has not done its share of planning for district cooling makes the installation of the network three to four times more expensive. If we had been considered at the initial urban planning stage as an essential utility, it would have reduced costs quite substantially, which would be reflected in our tariffs. Another challenge is the zoning perspective of district cooling, where consumers must understand and accept us as a mature monopoly. No one can invest in a district cooling area without a guarantee of demand. We are advocating for these concepts in Qatar because we know how beneficial district cooling can be for the country.
What are the current regulations governing district cooling in Qatar?
There is a lack of understanding regarding how our tariff structure works. Due to the electricity price distortion, we are perceived as expensive. If people were paying genuine prices for electricity, our business would be more viable and seen as moderately rated. There is a regulation on the business' commercial dimension being prepared by a division of Kahramaa. The regulation first came to light a couple of years ago, but we do not know exactly what it entails as of yet. It is said that it balances consumer protection and the viability and profitability of the business. Meanwhile, the technical code has already been enacted in Qatar, which supports the operational function of the business.
How have your 2018 expansion plans crystalized during 2019 and 1Q2020?
We are battling to keep our expansion plans into Asia and Europe alive; however, headwinds have prevented us from materializing them so far. We are even looking to tap into the US, which has some interesting local markets for us. On the other hand, locally we have increased our presence even more than expected. We added 8,000 tons of refrigeration to our local capacity in 2019, and we have 28 developments becoming operational. We are growing organically within the country's borders, but we still aspire to go beyond Qatar. The COVID-19 outbreak put a momentary halt to our discussions, as, despite the digital tools that we have today, M&A transactions and negotiations still require the physical component.
How are your environmentally friendly and energy-efficient attributes perceived in Qatar and how do they support your organic growth in the country?
Those values form the foundation of the district cooling business. As such, we are almost exactly aligned with the Qatar National Vision 2030, which includes a whole pillar on Environmental Development. Energy efficiency is going to be subject to the most substantial discussion in Qatar's energy mix development and diversification strategy. District cooling is destined to play a role of paramount importance in the future of Qatar, which is becoming greener and more efficient. When it comes to environmental protection, we are exemplars, not only in terms of energy efficiency but also in GHG emission reduction.