District Cooling Is A Sustainable, Cost-effective Solution For Growing Cooling Demand: Sudheer Perla, MD, Tabreed Asia

Majority owned by Mubadala, Abu Dhabi government’s sovereign fund, and French energy giant Engie, this Dubai-listed company, with over 26 years of expertise, stands as a global leader in innovative cooling solutions.

In cities such as Abu Dhabi and Dubai, which underwent large-scale development, Tabreed was the first to introduce district cooling to address the region's critical need for efficient thermal comfort. Cooling, a necessity in the Gulf Cooperation Council (GCC) countries due to extreme heat, was revolutionised by adapting Europe’s district heating models.

In India and Asia, operations are strengthened through a joint venture with the International Finance Corporation (IFC), part of the World Bank Group. This strategic collaboration has established a solid foundation in regions experiencing rapid urbanisation and growing cooling needs.

In an interview with Responsible us, Sudheer Perla, Managing Director of Tabreed Asia, discussed how India’s built environment can achieve cost efficiency and sustainability while addressing the growing cooling demand and more.

Read Interview Excerpts:

How did district cooling come into being and how does it address some cooling related challenges? 
The concept of district cooling or cooling as a service was inspired by district heating systems already prevalent in Europe, particularly in Scandinavian countries and other parts of the continent. These models were adapted to provide efficient cooling solutions. Similar initiatives exist in the US, but they remain relatively limited in scale.

In the Indian context, cooling demand has grown significantly, especially over the last seven-eight-year. While cooling was once considered optional—particularly for residential use—this is no longer the case. Even now, the penetration of air conditioners in Indian households is relatively low, at about 7-8 per cent. However, due to rising heat stress, the demand for air conditioning is increasing rapidly. Thermal comfort has become essential during the summer months, regardless of socio-economic background.

India is already one of the largest cooling markets in the world, and this demand is expected to grow further. Currently, people either invest in their own window or split AC units, often opting for 5-star rated models for energy efficiency. These units require regular maintenance, operation, and eventual replacement.

For commercial buildings, cooling plants—either water-cooled or air-cooled—are commonly installed in basements. These systems are slightly more energy-efficient than individual AC units. However, most developers of new projects still handle cooling requirements independently, which can lead to inefficiencies.

District cooling offers a more sustainable and cost-effective alternative, enabling developers and organisations to meet growing cooling demands while optimising energy use and reducing capital expenditure.

How can district cooling systems help address India's growing energy demand and cooling requirements in a more sustainable and efficient manner?
District cooling systems can play a crucial role in addressing India's growing energy demand and cooling requirements by offering a more sustainable and efficient approach. Currently, the cooling systems in India are individualised, with each building or developer choosing their own system. While so far this has been manageable due to relatively low market penetration, the situation is changing rapidly. Due to extreme heat stress, nearly a fifth of India’s peak power demand is already going toward air conditioning. Additionally, the increasing number of data centres, driven by digitalisation and data localisation rules, further contributes to the energy demand for cooling.

In the past seven years, cooling demand has grown faster than the renewable energy generation capacity India has added, particularly in solar and wind. Over the next 20 years, it's projected that nearly 45 per cent of India's peak energy demand will be driven by air conditioning, meaning that much of the energy generation capacity added on the supply side will be consumed by cooling.

To address this, cooling needs to be approached more holistically, from the urban planning stage itself. Rather than relying on individual cooling systems for each building, district cooling systems can be implemented across entire clusters or development area to meet the cooling demand from residential to commercial buildings. District Cooling is essentially a centralised plant which produces chilled water and circulates it through a network of pre-insulated pipes to multiple buildings connected to the network. By aggregating cooling demand from multiple buildings centrally and taking advantage of diverse usage patterns across buildings, district cooling systems can reduce power load and energy consumption by up to 50% compared to conventional methods, making it a cornerstone of India's sustainable cooling strategy.

What are the key benefits of the company's district cooling approach in reducing energy demand and improving efficiency?
Since Tabreed is a developer and not a technology manufacturer, we work across the spectrum with all OEMs (Original equipment manufacturer) and solutions from around the world. Based on the characteristics of each project, we identify the most energy-efficient, optimal, and sustainable cooling solutions that are fit for purpose, while also being mindful of cost efficiency.

Once we determine the likely cooling demand for a master plan, we design a system that separates the components within the buildings (the low side) from those in the plant room (the high side).

We then plan large central cooling plants, install chillers, balance of plant equipment, and set up networks that connect the plant to the buildings, delivering thermal energy from the plant to the buildings. This eliminates the need for individual cooling systems in each building, significantly reducing power demand by as much as 50 per cent. Additionally, the use of large industrial grade chillers and equipment ensures a far better efficiency.

Even with the growing use of renewable energy, the country still relies heavily on fossil fuels, which means the carbon footprint per unit of energy consumed remains high. By reducing power demand, we improve energy efficiency and lower the carbon footprint.

Additionally, this approach eliminates the need for extensive infrastructure, such as generation capacity, transmission, distribution, electrical cabling, backup power and generators.

Furthermore, we know renewable energy generation is  sporadic, which means we need energy storage solutions for round the clock electricity generation through RE. Battery storage at both the grid and building levels while improving over time, is still expensive. Cooling demand in India typically sees double peaks - one during the hottest part of the afternoon and another in the evening when people return home and turn on their air conditioners, creating a significant strain on the power grid due to the increased demand at both times.  To address this, we use thermal energy storage. During off-peak hours, the central plant produces and stores cooling as thermal energy in the chilled water tank, which is then used to meet demand during peak hours. By shifting the peak load, the system not only reduces power demand but also shaves peak loads through thermal energy storage. This is achieved by shifting demand from peak to off-peak hours, benefiting from time-of-day tariffs and enhancing efficiency, sustainability, and cost-effectiveness. This is the core functionality of the system.

How does the company’s approach to designing, investing, and operating cooling systems differ from traditional models?
Unlike traditional models, where technical consultants propose solutions for developers to implement, the company operates as both an investor and developer. It designs, invests, builds, owns, operates the district cooling plant, and provides a metered service through a Cooling-as-a-Service (CaaS) model, similar to utility connections for gas, power, or water. Pre-agreed rates for consumption and investment are set, making the system transparent, more cost-effective and sustainable over its lifecycle.

CaaS allows apartment owners, commercial buildings, airports, and data centres to avoid upfront investments and transfer the risk to the District cooling provider. Cooling is provided as a service, typically through 25- to 30-year contracts, ensuring efficiency, replacements, and cost benefits over time. Shorter contracts would require faster investment recovery, making them more expensive. The company’s long-term approach is akin to a 30-year loan, offering a more energy-efficient and sustainable solution.

Could you provide an estimate of the cost involved in implementing this system for residential projects?
The cost of implementing a district cooling system for residential projects can vary depending on the scale and specific requirements of the development. For instance, in a case study from Hyderabad, the My Home Abhra project, which is a large residential complex, the developer planned a central cooling plant to serve multiple units. In this scenario, instead of each apartment having its own air conditioning units, the central plant reduced the total cooling demand by 60 per cent.

For an apartment owner, the upfront cost was comparable to what they would typically spend on purchasing and installing individual air conditioning units, which could range from Rs 3 to Rs 5 lakh for a 5-star rated unit in each room. The developer then recouped this investment through a one-time charge to the residents, ensuring that they didn’t have to pay more than they would have for individual AC units.

Additionally, the operational costs for cooling were reduced by 50%, leading to significant savings on electricity bills, particularly during summer months. For example, the cooling costs for a 3BHK apartment could be reduced from around Rs 15,000 to a lower range, with savings of 30-40 per cent on ongoing costs. Furthermore, the central system has a much longer lifespan of 15-20 years, unlike individual window units which last only a few years. 

Unlike residential projects, developers of commercial projects typically do not pay upfront for cooling infrastructure; instead, the cooling provider invests in the system and constructs it alongside the project. Once the building is ready, cooling services are activated, and from that point onward, the client pays a metered charge as per a pre-agreed contract, ensuring a sustainable and efficient cooling solution throughout the building’s life cycle.

From the environmental cost standpoint, in both commercial and residential projects,  refrigerant leaks which are harmful to the environment, are not commonly measured or quantified, and their negative impact is often overlooked. While there are macro-level commitments for the country to phase out certain types of refrigerants under international protocols, there is no consistent monitoring of refrigerant leaks on an ongoing basis. Similarly, when air conditioners are disposed of, the remaining refrigerant is rarely tracked. Is it being released into the atmosphere, or is it being properly recovered and reused? This is a significant environmental concern, contributing to urban heat hazards and other negative impacts.

In contrast, a central cooling plant, especially one managed by a company with a focus on sustainability, is designed to prevent leaks. These systems include leak detection and refrigerant recovery mechanisms, ensuring proper management. However, such systems require investment and additional costs, which consumers are not accustomed to paying for. Instead, many simply call a technician to top up the refrigerant, paying a small fee without considering the long-term environmental consequences.

As part of the operation and maintenance philosophy, central cooling systems prioritize sustainability, and these practices are essential for minimising environmental damage. Consumers need to become more aware of these issues, as it is crucial for all of us to adopt a more climate-conscious approach.

Who are the key suppliers for the insulated pipes used in the district cooling system? Also, how environmentally friendly are the sustainable materials used for these pipes?
If you are responsible for making the cooling system sustainable, you must also be responsible for the products and materials you are using. There are two aspects here: embodied carbon and operational carbon. On the embodied carbon side, which refers to the environmental footprint of the equipment in our plant rooms and so on, it's important to consider what happens during the manufacturing process. Even if we are not involved, when someone plans their own cooling system, whether it's window units or central plants, they procure equipment like chillers, pumps, cooling towers, or unitary ACs. But nobody measures or calculates the carbon footprint of these products, or what happens at the end of their life. Most people only focus on the energy efficiency of their equipment, but they don't consider the full lifecycle, including the circularity aspect.

For us, we aim to be more aware of these factors. While we still use the same industrial-grade equipment and chillers as others, the asset life is much longer—20 to 30 years compared to typical systems. We aim to minimise the extraction and utilisation of resources, but we haven't yet fully pushed down the value chain to ensure our suppliers are also reducing their carbon footprint.

As for pipes, we primarily use carbon steel, with installations featuring a HDPE (High Density Poly Ethylene) jacket and plastic. Given that pipes have a lifespan of over 50 years, they are built to last, and once installed, they don't rust or degrade. For example, the water network in London still uses Victorian-era pipelines. While the embodied carbon of pipes is present, their long lifespan means they don't create additional environmental impact beyond their initial installation.

Could you tell us more about your collaboration with Plaksha University and other academic institutions, and how you are working together to advance cooling technology and innovation?
Beyond our core business, we are a global player with a strong focus on Research and development and innovation. While we don't build our own products, we encourage manufacturers, start-ups, and others worldwide to push the boundaries of innovation. If we find a technology that is innovative enough to take to market, we can be one of the largest investors due to our scale.

We follow a platform approach, integrating the latest solutions in artificial intelligence (AI), internet of things (IoT) and more, and bring them to market. In India, two years ago, we launched the Cooling Innovation Lab in partnership with IFC's Tech Emerge programme. This matchmaking programme aims to accelerate market adoption of innovative technologies in the cooling space. We identified key areas of disruptive innovation, such as heat exchange, heat rejection, solar cooling, and AI/IoT, and ran global calls for proposals from start-ups and large companies. The goal was to build a repository of solutions and implement them in existing plant rooms to improve energy efficiency and decarbonisation. Through this program, we provided grants and support to implement pilot projects. Over time, we aim to scale these solutions across multiple properties. 

As for university partnerships, we currently work with Plaksha University and Indian Insititute of Technology, Jammu. The idea behind these collaborations is to test innovative technologies in university environments before introducing them to live environments, like hotel properties. Universities are more willing to take risks, allowing us to test new technologies in a controlled setting. At IIT Jammu, we set up four cooling test beds with various technologies. At Plaksha, the goal is to address the growing residential cooling demand, which puts pressure on the energy grid, especially at night when solar energy is not available. We aim to explore solutions that can help manage this demand effectively.

Can we consider thermal storage instead of battery storage, especially since space is often limited?
Testing phase-change material (PCM) technology, which is an evolving solution for storage, could be an option. There are some promising start-ups in India working on this. It is imperative to note here that this storage is for cooling/heating, and not necessarily in the form of electricity as done through battery storage. However, given most peaks are seen due to surge in cooling demand, thermal storage, be it based on PCM or chilled water, addresses the issue at hand of variability in RE generation quite effectively.

If successful, we could create knowledge products and papers to make it applicable across India. For example, a hostel building with 300 students, all having air-conditioned rooms, could benefit from this approach.

The second aspect is that universities typically charge a flat rent for hostel air conditioning, without splitting costs based on usage. So, as a part of the pilot at Plaksha, they want to measure each room's consumption and charge students separately for cooling. This could help bring about behavioural changes by making students more conscious of their energy consumption.

So, the pilot project has two components: testing energy storage using phase-change materials for reducing grid reliance of residential cooling demand and encouraging behavioural changes by raising awareness of environmental footprints. The goal is to scale these solutions across India.

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