Emirates District Cooling Company – otherwise known as Emicool – was established in 2003 as one of the first district cooling providers in the Middle East and North Africa (MENA) region. It operates 16 district cooling plants in the United Arab Emirates (UAE), primarily in Dubai. Emicool has a total connected load of approximately 300,000 Refrigeration Tons (equivalent to c. 1 GW), serving more than 22,000 residential, commercial, retail, hospitality and industrial customers. In 2022, an Actis-led consortium acquired a 50% stake in the operation, and is now co-owner, alongside Dubai Investments.
The United Arab Emirates is warm all-year round, and there is therefore a constant need for cool air in workplaces and homes. Demand, especially in large cities in areas such as the Middle East, is very consistent, essentially tracking the outside air temperature, making supplying cooling a very stable form of core infrastructure.
However, traditional air conditioning units can consume up to twice as much power as district cooling plants. The UAE has set ambitious targets to implement a 40% improvement in energy efficiency by 2050, as well as a 70% reduction in its carbon footprint. Operations like Emicool – which offer far more efficient energy consumption – are therefore critical to meeting the country’s goals.
The UAE meanwhile offers a compelling investment case. It has an investment grade sovereign credit rating, is ranked number one in the World Bank’s Enforcing Contracts Indicator in the MEA region, and is also in first place in the region when it comes to ease of doing business.
Meanwhile for investors, district cooling offers many of the same benefits as other forms of decarbonisation or clean energy technologies. It is characterised by long-term, stable contracts that offer secure returns, while also contributing to meeting the United Nations’ Sustainable Development Goals.
What we did
Actis had been evaluating the district energy sector for several years, given its strong fit with ALLIF’s target risk/return profile and the important role it plays in supporting the energy transition. After becoming an active participant in the sector through other asset sale processes, Actis identified an opportunity to acquire a 50% stake in Emicool, one of the largest companies in the sector. Actis, therefore, moved swiftly to take up the opportunity to become a joint owner, alongside the existing investor, and brought in one of ALLIF’s investors as a partner in the investment.
Our investment is still in its early stages, and we are currently concentrating on ensuring that the company continues to focus on operational excellence and capturing organic growth within its existing exclusive service territories. In fact, a number of changes have already been made to improve performance. For example, Emicool has recently begun to implement energy efficiency projects across the portfolio, and the company is using treated sewage effluent in lieu of potable water to help preserve critical water resources. The company is also augmenting its data analytics to support enhanced operational efficiencies.
The UAE has set ambitious targets to implement a 40% improvement in energy efficiency by 2050, as well as a 70% reduction in its carbon footprint. Operations like Emicool – which offer far more efficient operations – are therefore critical to meeting the Emirate’s goals.
Centralised cooling systems are essential for societies across the Middle East to adapt and build resiliency against the impact of climate change. Such systems drive reductions in energy usage and are up to 50% more efficient than conventional cooling.
Actis’ sustainability team has worked with the operations team at Emicool, as well as with an international expert, to establish best practice guidelines in health and safety which will support the drive for continuous improvement in the business. Meanwhile, through its operations, Emicool will continue to support employment opportunities for the local population in skilled operations and maintenance roles. These will support the livelihoods of employees, as well as of their dependents. Emicool will also provide training for female engineers and local Emiratis, with the possibility of employment thereafter, contributing to gender equality initiatives in the region.
Emicool is an excellent case study of the benefits district cooling can bring to a country. Other countries, particularly in warm, sunny areas of the world such as Asia, Latin America and Africa are also potential markets in which the technology can be rolled out. While Emicool will continue to make operational improvements and increase the number of customers it supplies from its existing plants, the company has an opportunity to leverage Actis’ global presence to capture additional growth opportunities.