Case study: Urban heat & cooling solutions — a pilot that failed (and what it taught us)

In 2024, extreme heat killed more than 175,000 people across Asia-Pacific—a figure that represents nearly 60% of global heat-related mortality. When Singapore's Housing Development Board launched an ambitious SGD 45 million district cooling pilot in Tengah New Town, officials believed they had cracked the code on sustainable urban cooling. Eighteen months later, the project was quietly scaled back by 70%, unit economics had deteriorated to nearly three times initial projections, and adoption rates among residents hovered at just 23%. This case study examines what went wrong, what decision-makers can learn from this failure, and what signals suggest the sector may finally be approaching commercial viability.

Why It Matters

Urban heat is no longer a future risk—it is an immediate, measurable crisis reshaping how Asia-Pacific cities function. The World Meteorological Organization reported that 2024 was the hottest year on record globally, with Southeast Asia experiencing 47 days where temperatures exceeded 35°C across major metropolitan areas, compared to an average of 28 days in the previous decade. The Asian Development Bank estimates that heat stress will reduce outdoor labor capacity across South and Southeast Asia by 12% by 2030, translating to economic losses exceeding USD 4.2 trillion annually.

The cooling imperative extends beyond comfort into survival. The Lancet Countdown on Health and Climate Change documented a 68% increase in heat-related mortality among populations over 65 in Asia-Pacific between 2000 and 2024. Healthcare systems from Bangkok to Manila reported record admissions during the April-May 2024 heat dome event, with Thailand's public health ministry declaring a national emergency after hospitals exceeded 140% capacity in 23 provinces.

Yet the conventional response—individual air conditioning units—creates a vicious cycle. Room air conditioners now account for approximately 10% of total electricity consumption in India and 15% in Singapore, with demand growing at 8-12% annually. Each unit rejects heat into already-warming streetscapes, contributing to urban heat island intensification. The International Energy Agency projects that cooling will represent the fastest-growing source of electricity demand globally through 2050, with Asia-Pacific driving more than 60% of that growth.

This context explains why governments and investors have poured significant capital into alternative urban cooling solutions: district cooling networks, reflective surface treatments, urban greening, and passive building design. Between 2020 and 2024, venture capital and development finance institution investments in urban cooling technologies across Asia-Pacific exceeded USD 2.8 billion. The question is no longer whether cooling infrastructure requires transformation, but which interventions deliver acceptable unit economics at scale.

Key Concepts

Urban Heat Island (UHI) Effect: The phenomenon whereby metropolitan areas experience temperatures 2-8°C higher than surrounding rural zones due to heat-absorbing surfaces, reduced vegetation, waste heat from buildings and vehicles, and altered airflow patterns. Singapore's mean UHI intensity reached 4.5°C in 2024, while Tokyo documented differentials exceeding 7°C during summer peak periods. UHI directly amplifies cooling energy demand—each 1°C increase in ambient temperature raises cooling electricity consumption by approximately 3-5%.

Operating Expenditure (OPEX): Ongoing costs required to run cooling infrastructure, including electricity, maintenance, staffing, and consumables. For district cooling systems, OPEX typically represents 60-75% of total cost of ownership, making energy efficiency the primary determinant of commercial viability. The Tengah pilot's OPEX exceeded projections by 2.3x primarily due to underestimated electricity costs and higher-than-anticipated chiller maintenance requirements.

Unit Economics: The direct revenues and costs associated with a single unit of service delivery—in cooling, typically measured per refrigeration ton-hour (RTH) or per square meter of cooled floor area. Positive unit economics require that customer willingness-to-pay exceeds fully-loaded delivery costs including capital recovery. Most failed urban cooling pilots share a common characteristic: projected unit economics assumed scale that never materialized.

Public Health Heat Vulnerability: The differential susceptibility of population segments to heat-related illness and mortality, determined by age, pre-existing conditions, socioeconomic status, and access to cooling. Asia-Pacific's aging demographics—Japan's median age of 49, Thailand's rapidly increasing elderly population—compound heat vulnerability. Effective cooling interventions must reach vulnerable populations, not merely those with purchasing power.

Critical Infrastructure Interdependence: The reliance of cooling systems on other infrastructure networks, particularly electricity grids. Singapore's 2024 grid stress events during peak heat periods revealed that deploying additional cooling capacity without corresponding grid reinforcement creates cascading failure risks. Several district cooling pilots have been curtailed not by system failures but by grid operators limiting electricity supply during peak demand.

What's Working and What Isn't

What's Working

Integrated District Cooling in Purpose-Built Developments: Malaysia's Cyberjaya and South Korea's Songdo demonstrate that district cooling achieves favorable economics when designed into developments from inception rather than retrofitted. Songdo's 6.5 million square foot district cooling network delivers cooling at approximately 15% lower lifecycle cost than distributed air conditioning, with carbon intensity 40% below grid-powered individual units. The key differentiator is guaranteed anchor tenant commitment and building designs optimized for central chilled water distribution.

Targeted Cooling Centers for Vulnerable Populations: Rather than attempting universal coverage, successful programs in Japan and Australia have focused intensive cooling on populations with highest vulnerability and lowest adaptive capacity. Tokyo's network of 2,400 designated cooling shelters, integrated with public health monitoring systems that trigger proactive outreach to elderly residents during heat events, reduced heat-related emergency calls by 31% in areas with shelter density exceeding one per 5,000 residents. Unit economics improve dramatically when intervention targets shift from comfort to survival.

Reflective Surface Treatments with Verified Performance Contracts: Cool roof and cool pavement programs in Hyderabad and Ahmedabad have demonstrated 2-4°C reductions in surface temperatures at costs of USD 3-8 per square meter. Critically, successful implementations have incorporated performance verification and maintenance contracts—addressing the failure mode whereby reflective properties degrade within 2-3 years without regular cleaning and recoating. The Ahmedabad Heat Action Plan's cool roof initiative achieved measured indoor temperature reductions of 3.5°C in treated slum dwellings.

What Isn't Working

Retrofit District Cooling in Existing Urban Fabric: The Tengah pilot's challenges exemplify broader difficulties in deploying district cooling infrastructure through existing neighborhoods. Trenching costs for chilled water distribution averaged SGD 1,200 per linear meter—nearly double initial estimates—due to utility conflicts, traffic management requirements, and ground conditions. Building connection costs varied by 4x depending on existing HVAC configurations. These variable, unpredictable capital costs destroy the economies of scale that make district cooling viable.

Consumer-Financed Individual Solutions: Multiple pilots across India and Indonesia attempted to deploy efficient air conditioning through consumer financing mechanisms, assuming that lower operating costs would justify premium purchase prices. Adoption rates consistently fell below 20% of projections. Post-pilot analysis revealed that target consumers prioritized upfront cost minimization over lifecycle cost optimization—a pattern behavioral economists recognize as hyperbolic discounting. Additionally, split incentives in rental housing meant that building owners who would pay higher capital costs would not capture operating savings that accrue to tenants.

Technology-First Deployment Without Business Model Innovation: Several high-profile failures involved technically sophisticated solutions—phase-change materials, radiant cooling panels, geothermal exchange systems—deployed with insufficient attention to who pays, who benefits, and how value is captured. A SGD 12 million radiant cooling demonstration in a Singapore office building achieved excellent thermal comfort ratings but was abandoned after three years when the tenant who originally championed the technology relocated, and no successor tenant would accept the non-standard HVAC approach.

Key Players

Established Leaders

Tabreed (UAE/Asia expansion): The Middle East's largest district cooling provider, with 1.2 million refrigeration tons of installed capacity, has expanded into Asia through a joint venture in India and feasibility studies across Southeast Asia. Tabreed's operational track record across 86 plants provides credibility that pure-technology vendors lack.

Daikin Industries (Japan): The world's largest air conditioning manufacturer has pivoted toward integrated cooling solutions, including district-scale variable refrigerant flow systems and building energy management platforms. Daikin's 2024 acquisition of Malaysian energy services company Tenaga positioned it for turnkey cooling infrastructure delivery.

Engie (France/Singapore): Through its Engie South East Asia unit, the company operates district cooling networks serving Marina Bay Sands and Changi Airport, totaling over 35,000 refrigeration tons. Engie's energy-as-a-service model, wherein customers pay for cooling comfort rather than equipment or electricity, represents a business model innovation that addresses split incentive challenges.

Mitsubishi Heavy Industries (Japan): MHI's thermal solutions division provides large-scale centrifugal chillers and heat recovery systems deployed in district cooling installations across Japan, Singapore, and Malaysia. The company's financing arm offers project finance structures that reduce developer capital requirements.

Johnson Controls (USA/Asia operations): Through its York and Hitachi brands, Johnson Controls supplies equipment and controls for approximately 35% of Asia-Pacific's district cooling capacity. Its OpenBlue digital platform enables performance optimization across distributed cooling assets.

Emerging Startups

Nostromo Energy (Israel/Singapore office): Develops ice-based thermal energy storage that enables peak load shifting, reducing electricity costs by 20-40% in markets with time-of-use pricing. Nostromo's modular approach allows retrofit deployment without major infrastructure modifications.

Transaera (USA/Singapore pilot): Commercializing advanced desiccant-based air conditioning that reduces energy consumption by up to 50% in humid climates. The company's 2024 pilot with CapitaLand demonstrated proof-of-concept in Singapore's tropical conditions.

CoolAnt Technologies (India): Provides pay-per-use cooling for agricultural cold chains and small commercial establishments using solar-powered systems with battery storage, eliminating grid dependency in areas with unreliable electricity supply.

Barrisol Normalu (France/Asia distribution): Develops radiant cooling ceiling systems that achieve equivalent comfort at 2-3°C higher air temperatures, reducing cooling energy by 20-30%. Recent installations in Hong Kong office buildings demonstrated commercial viability.

Bry-Air (India): Manufactures desiccant dehumidification systems that enable hybrid cooling approaches, separating latent and sensible cooling loads to improve overall system efficiency. Growing presence in Southeast Asian pharmaceutical and data center cooling.

Key Investors & Funders

Temasek Holdings (Singapore): Through its sustainability-focused investment arm, Temasek has committed SGD 500 million to climate adaptation infrastructure, including cooling technologies. Portfolio companies include district energy developers and building technology providers.

Asian Development Bank (ADB): The ADB's Urban Climate Change Resilience Trust Fund has financed cooling infrastructure feasibility studies and pilot projects across 15 Asian cities, with total commitments exceeding USD 200 million since 2020.

Green Climate Fund: GCF has approved USD 380 million in cooling-related projects across Asia-Pacific, primarily supporting district cooling feasibility, cool roof deployment, and urban greening in climate-vulnerable cities.

Breakthrough Energy Ventures: Bill Gates' climate investment fund has backed several thermal comfort technology companies with Asia deployment strategies, including Transaera and Nostromo Energy.

Sustainable Energy for All (SEforALL): Though not an investor, SEforALL's Cooling for All initiative convenes public and private capital around cooling access, with particular focus on Asia-Pacific markets where cooling demand is growing fastest.

Examples

Singapore Tengah District Cooling Pilot: The Defining Failure

Singapore's Tengah New Town was designed as the nation's first "forest town," incorporating district cooling as a centerpiece sustainability feature. The pilot targeted 10,000 residential units with centralized chilled water distribution, projected to reduce cooling-related electricity consumption by 30% compared to individual air conditioning.

What went wrong illustrates nearly every adoption blocker that plagues urban cooling:

Capital cost overruns: Final trenching and distribution infrastructure costs reached SGD 4,200 per connected unit, versus projections of SGD 2,800. Unexpected ground conditions and utility relocations drove the variance.

Demand below projections: Marketing assumed 85% of units would connect to district cooling. Actual adoption reached 23%, as residents opted for familiar split-system air conditioning despite higher operating costs. Survey research revealed that concerns about "locked-in" dependence on centralized infrastructure—inability to control cooling independently—deterred adoption.

OPEX spiral: With demand at 27% of design capacity, the district cooling plant operated at deeply suboptimal efficiency. Electricity costs per delivered ton-hour were 2.3x projections. Maintenance costs spread across fewer customers increased per-unit charges further.

Tariff structure misalignment: To encourage adoption, initial tariffs were set below fully-loaded cost, assuming scale would eventually achieve breakeven. When scale failed to materialize, operators faced choices between tariff increases that would drive additional customer defection or continued losses.

The project was restructured in late 2024, with service area reduced to 3,000 units concentrated in high-density zones where infrastructure cost per connection is lower.

Ahmedabad Cool Roofs Program: Targeted Success

In contrast to Tengah's universal approach, Ahmedabad's cool roof initiative targeted specific populations with specific interventions. Working with the Mahila Housing Trust, the program deployed reflective roof coatings on approximately 15,000 informal settlement dwellings between 2022 and 2024.

Unit economics differed fundamentally from district cooling: capital costs of USD 5-8 per square meter of roof area, no ongoing operating costs beyond periodic recoating every 4-5 years, and implementation via local labor rather than specialized contractors.

Measured outcomes included indoor temperature reductions of 2.8-4.2°C during peak afternoon hours, reported improvements in sleep quality and daytime productivity, and reduced heat-related health complaints. Cost per beneficiary household was approximately USD 150—roughly 1/20th the per-unit cost of the Tengah district cooling connection.

The limitation is that cool roofs address only a portion of the cooling challenge: they reduce heat gain but do not provide active cooling during extreme events when ambient temperatures exceed safe thresholds regardless of building envelope performance.

Bangkok Metropolitan Cooling Shelter Network: Hybrid Approach

Bangkok's 2024 deployment of 340 cooling shelters across the metropolitan area represents an emerging hybrid model that combines public health targeting with distributed infrastructure.

Rather than attempting citywide cooling infrastructure, the program identified locations—temples, community centers, shopping malls—with existing air conditioning and formalized them as designated cooling shelters during heat emergencies. Public health messaging directed vulnerable populations to nearby shelters; the BMA Health Department integrated shelter locations into heat warning communications.

Incremental costs were minimal: signage, public communication, and modest compensation to facility operators for extended hours during heat events. Analysis of 2024 heat wave hospitalizations suggested that districts with cooling shelter density exceeding one per 3,000 elderly residents experienced 22% fewer heat-related emergency admissions.

This approach sidesteps the capital intensity that undermines district cooling economics while still providing survival-level cooling access during peak risk periods.

Action Checklist

• Conduct heat vulnerability mapping to identify populations and locations where cooling interventions deliver maximum public health impact per dollar invested
• Require performance guarantees and multi-year maintenance contracts for any reflective surface or passive cooling deployment; budget for ongoing verification
• Model district cooling economics at 50% of projected adoption rates to stress-test viability under realistic demand scenarios
• Engage behavioral research to understand actual consumer decision-making around cooling technology adoption before committing capital
• Integrate cooling infrastructure planning with electricity grid capacity assessments to avoid deployment in areas approaching grid constraints
• Structure pilot programs with clear go/no-go decision points and pre-committed exit criteria rather than open-ended deployment
• Evaluate cooling-as-a-service business models that align provider incentives with performance rather than equipment sales
• Include vulnerable population representatives in cooling solution design to ensure interventions address actual barriers to adoption
• Establish monitoring and evaluation frameworks that capture both technical performance and user experience outcomes from pilot inception
• Develop contingency plans for pilot restructuring or wind-down that protect early adopters from stranded asset risk

FAQ

Q: Why did Singapore's Tengah district cooling pilot fail when similar systems work in the Middle East?

A: Middle Eastern district cooling success typically involves three conditions absent in Tengah: mandatory connection requirements in building codes, anchor tenants (hotels, malls) that guarantee base load, and electricity prices 3-4x higher than Singapore's subsidized residential rates. Tengah offered district cooling as an opt-in choice to residential consumers facing low electricity prices and familiar alternatives. The commercial dynamics differ fundamentally—Middle Eastern projects are infrastructure mandates, while Tengah was a consumer product competing against entrenched habits.

Q: What unit economics benchmarks should decision-makers use when evaluating urban cooling investments?

A: For district cooling in Asia-Pacific markets, delivered cooling should target costs below USD 0.08-0.12 per kWh-equivalent to compete with efficient split-system air conditioning. Capital costs should not exceed USD 2,500-3,500 per connected residential unit or USD 800-1,200 per refrigeration ton for commercial connections. OPEX should assume electricity costs at peak rather than average rates, as cooling demand correlates with grid stress. Passive interventions (cool roofs, urban greening) should demonstrate payback periods under 5 years when valued against avoided health costs and productivity losses.

Q: How should procurement teams evaluate cooling technology vendors making efficiency claims?

A: Require performance data from installations in comparable climates—tropical humidity fundamentally changes equipment performance versus dry heat conditions. Demand references from projects at similar scale operating for a minimum of 24 months. Verify efficiency claims under part-load conditions, as cooling systems rarely operate at design capacity. Include performance guarantees with meaningful financial consequences in contracts. Request lifecycle cost modeling with transparent assumptions about electricity price trajectories, maintenance requirements, and equipment replacement timing.

Q: What role should insurance play in urban cooling infrastructure decisions?

A: Insurance increasingly prices heat risk explicitly, creating potential value streams for verified cooling interventions. Parametric insurance products triggered by temperature thresholds can fund cooling center operations during extreme events. Property insurers in heat-exposed markets are beginning to offer premium reductions for buildings with verified cool roof treatments or access to backup cooling. Decision-makers should engage insurers early in cooling infrastructure planning to identify potential premium benefits or coverage requirements that affect project economics.

Q: What signals suggest urban cooling may be approaching commercial viability at scale?

A: Watch for: electricity tariff reforms that increase peak pricing and thus the value of load-shifting thermal storage; building code changes mandating district cooling readiness or cool roof standards; utility-sponsored cooling programs that socialize infrastructure costs across ratepayers; and emergence of aggregated demand models that achieve scale by pooling many small customers. The sector's fundamental economics improve when either electricity becomes more expensive, capital costs decline through standardization, or regulatory frameworks mandate rather than merely encourage adoption.

Sources

• International Energy Agency. "The Future of Cooling: Opportunities for Energy-Efficient Air Conditioning." IEA Publications, 2024 Update.

• The Lancet Countdown on Health and Climate Change. "2024 Report: Health at the Mercy of Fossil Fuels." The Lancet, Volume 404, November 2024.

• Asian Development Bank. "Economic Impacts of Climate Change in Asia-Pacific: Focus on Urban Heat Stress." ADB Economics Working Paper Series, 2024.

• Singapore Housing and Development Board. "Tengah District Cooling Pilot: Interim Assessment Report." HDB Internal Publication, October 2024.

• Natural Resources Defense Council and Mahila Housing Trust. "Ahmedabad Cool Roofs Program: Five-Year Impact Assessment." NRDC India, 2024.

• World Meteorological Organization. "State of the Global Climate 2024." WMO-No. 1347, Geneva, 2025.

• SEforALL (Sustainable Energy for All). "Chilling Prospects: Tracking Sustainable Cooling for All 2024." Vienna, 2024.

• Urban Land Institute Asia Pacific. "District Cooling Economics in Tropical Climates: Lessons from Singapore and Malaysia." ULI Research Report, 2024.