Abu Dhabi Leads UAE Power Sector, with 35% Growth Targeted through 2015

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Over the last five years of the last decade, power generation in the United Arab Emirates (UAE) grew at a compounded rate of 12% per annum, in step with economic growth, according to a report from Markaz (Kuwait Financial Center). Power consumption grew at a lesser rate of 8% in those five years, and power generation capacity now stands at about 30,000 megawatts (MW).

In the power feed mix, natural gas fires about 98% of generation, liquid fuels about 2%, and solar power and other renewable source less than 0.1%. Gas fires 49% of power in Saudi Arabia and 29% in Kuwait. The comparison gives the UAE an advantage, as gas-fired plants are more efficient and the fuel is cheaper when compared to oil. Although the UAE's gas consumption exceeds domestic production, natural gas is imported from Qatar through the Dolphin gas pipeline.

From 2009, the power consumption growth rate in Dubai started to slow down and reached a meager 0.1% in 2011, with a major factor being the global financial crisis.

The power sector is going through a testing time. Plans for the first independent power project at Hassyan were shelved, even after the award of the engineering, procurement and construction contract. Dubai Electricity and Water Authority (DEWA) cited high reserve margins for the decision; the margins stood at 2,516 MW in 2011.

Net immigration into the region has not been decreasing, although local nationals are still a minority in the UAE. But with anticipated population growth, DEWA estimates that power demand will increase at 3.5% annually over the next 10 years, and at a reduced rate of 2.5% through 2030. This has brought renewable energy sources into play, and Dubai unveiled its landmark solar park project in January 2012.

But Abu Dhabi aims to increase power generation capacity 35% from 2011 to 2015. Abu Dhabi Water & Electricity Authority (ADWEA) is planning to launch its first IPP, Shuweihat 3, in 2014 with an investment of $2.5 billion and a capacity of 1,600 MW.

By 2014, Federal Electricity and Water Authority, which supplies power to the northern regions of the UAE is expected to stop its current power generation units. It will use power exported from ADWEA. Construction of a solar plant and wind farms has started, in line with Abu Dhabi's target of 7% of power sourced from renewables by 2020. Abu Dhabi accounts for 42% of the UAE's total generation capacity.

Emirates Nuclear Energy Corporation will start generating nuclear power by 2017 with the commissioning of the first of four proposed plants. With an investment of $20 billion, nuclear power will contribute 7% of total demand by 2020.

According to UAE government statistics, the total power consumption of the UAE will increase from the current 87 terawatt hours (tWh) to about 120 tWh by 2015, and to 180 tWh by 2020. The sector will see investments of about $25 billion in power generation by 2020 and $5 billion in transmission and distribution utilities by 2015.

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