◼ TECHNOLOGY Bloomberg Businessweek October 7, 2019
23THEBOTTOMLINE Aspolicymakerslookforwaysto
decarbonizeairconditioning,a technologythat’smorethan
100 yearsoldis makinga comeback.world’selectricityconsumption, accordingto
BloombergNEF.It’sa dangerousfeedbackloopthat
threatenstoaccelerateglobalwarming.“Ashuman
beings,wecan’tkeepinstallingairconditioning
systemsthataren’tefficientforthisdemand,”says
OlivierRacle,directorofdistrictheatingandcool-
ingfortheFrenchutilityEngieSA.
Whatmakesdistrictcoolingmoreefficientis
centralizingthesourceofthechill.Insteadofusing
individualairconditioners,it drawscoldwater
froma singleplaceandpumpsit todifferentbuild-
ings.Minesaren’ttheonlysource:Thesystemscan
alsotakewaterfromlakesorriverswherethewater
temperatureis naturallycoolerthantheair.
Itmakesmostsenseincities,wherepeople
andbusinessesarepackedtogether.Somesys-
temshavebeenaroundformorethana century.
ConsolidatedEdisonInc.operatesthebiggest
U.S.steamsystem,withheatingandcoolingfor
1,650customersacrossManhattan.It’seasytosee
howthingscanbeimproved.Projectsandnet-
worksthatcometorelyonpowerfromwindand
solarwillhavenocarbonfootprintatall.
Nowthetechnologyisgettingfreshimpetus
frompolicymakersseekingtoslashthecontribu-
tionbuildingsmaketogreenhousegasemissions.
There’sa lotofroomtogrow:Districtcoolingproj-
ectsaccountforlessthan3%oftheaircondition-
ingmarketinEurope,accordingtoestimatesfrom
coolingandheatingconsultantDevcco.
AtMijnwater,theEuropeanInvestmentBankis
supportinga plantospendasmuchas€150mil-
lion($166million)toextendtheHeerlensystem.
AndEngie,whichrunsanimmensedistrictcooling
networkinParis,planstospendabout€3.7billion
onthecoolingandheatingtechnologyworldwide
overthenextfiveyears.TheEIBsignedoffona
€260millionloantohelpEngiefinancea redevel-
opmentofa systeminParis.Abouthalfthecom-
pany’sexpansionwillcomeinNorthAmerica,
whereit hasa 35-yearprojecttoexpandandoper-
ateOttawa’sdistrictheatingandcoolingsystem.
Noteverysystemneedsa source ofconve-
nientlycoolwateronhand.TheUnitedArab
Emirates,oneofthelargestrecentadopters,is
toohottorelyonambientwater.Instead,projects
userefrigerationplantstocoolwater.Engiehasa
40%stakeintheAbuDhabi-basedNationalCentral
CoolingCo.,knownasTabreed,whichit bought
in 2017 for$775million. Earlier this year, Tabreed
signed a 30-year agreement to build a district cool-
ing system for the new capital of the Indian state
of Andhra Pradesh.
District heating and cooling systems can be
expensive and complicated to start because they
involve miles of pipes. But the savings on energy
and emissions can be significant. Even with the
use of conventional power generation to lower the
water temperature, the citywide scale of district
cooling allows the system to use half as much elec-
tricity as conventional air conditioners. For heat-
ing systems, waste heat from industrial plants or
from renewable power can be used. That’s a good
option, says Meredith Annex, an analyst at BNEF,
“if you’re having trouble with the power grid
already and you’re looking to have a reliable source
of cooling.”
While players such as Engie can back projects
with their own balance sheets, financing remains
a hurdle to wider adoption. Projects take years
to build before customers enjoy any benefit, so a
developer must find someone to shoulder upfront
costs. There are also few regulations encourag-
ing more efficient cooling networks, which limits
banks’ appetites to make loans. “The banks aren’t
willing to take the risk on an uncertain revenue,”
says Lambert Teuwen, senior banker at the EIB.Thenthere’spublicawareness.Inplaceswhere
governmentsormunicipalitiesaren’tmandating
thedevelopmentofdistrictcooling or heating
systems, companies need to get a large number
of consumers to agree to switch off conventional
cooling and heating if a large-scale project is to
make financial sense. “There are always money
people around saying, ‘Look, the money is there,
what we need is feasible, realistic projects that are
of a certain size,’ ” says Birger Lauersen, an official
at the Danish District Heating Association. “It is a
good idea, but selling good ideas can be difficult.”
�Will Mathis▲ Pumps for Engie’s
district heating and
cooling system in
Marseille