The demand for electricity in the United Arab Emirates is accelerating. There are plans being put in place to raise the country’s capacity for electricity generation by as much as 60 per cent by 2010.

The United Arab Emirates (UAE) comprises seven emirates – Abu Dhabi, Dubai, Sharjah, Fujairah, Ajman, Umm al-Qaiawan and Ras al-Khaimah. Its estimated total capacity for electricity production is around 16 GW. However, the sheer scale of the commercial development currently taking place is having a profound effect on the demand for electricity, which grew by more than 12 per cent in 2006. Furthermore, UAE has the highest projected increase in demand in the Gulf Cooperation Council region, with an expected minimum yearly growth rate of ten per cent to 2010. To meet this growing demand there are plans to raise the federation’s capacity for electricity generation to almost 26 GW by 2010 – representing a 60 per cent increase.

Power sector structure

The electricity sector in the federation is controlled by each emirate rather than at the central federal level. The Abu Dhabi Water and Electricity Authority (ADWEA) is responsible for Abu Dhabi, Al Ain and the western region. The Dubai Electricity and Water Authority (DEWA) is responsible for Dubai, with the Sharjah Electricity and Water Authority (SEWA) and the Federal Electricity and Water Authority (FEWA) providing power to Sharjah and the northern emirates, respectively. ADWEA accounts for 53 per cent of federation’s total capacity, followed by DEWA, with 29 per cent. SEWA and FEWA own 11 per cent and seven per cent, respectively.

ADWEA private investment strategy

Estimates now put Abu Dhabi’s generation capacity around 7000 MW, and its peak demand over 4000 MW. Since its formation in 1997, ADWEA has significantly restructured Abu Dhabi’s electricity sector. As part of this strategy six independent water and power plants (IWPPs) have been introduced on a build, own and operate (BOO) basis via joint venture arrangements. ADWEA retains a 60 per cent shareholding in each independent water and power project (IWPP), with the remaining 40 per cent owned by overseas private investors.

The sixth IWPP was finalized last year when ADWEA signed a $1.35 billion contract with Semborp of Singapore for the privatization of Fujairah I, a 656 MW power and 454 000 m3 per day desalination plant, with an additional 225 MW of power generation to be added. Furthermore, its seventh IWPP is currently in progress. The Furaijah II project will have a capacity of 2000 MW of power and produce 454 600 m3 of water a day.

ADWEA recently completed a new electricity demand forecast up to 2020 (See Figure 1). It anticipates that peak demand will reach 7333 MW in 2009, 12 590 MW in 2015 and 14 226 MW in 2020. Abu Dhabi has sufficient existing capacity to cover demand up to and including 2008, but in 2009 will be in slight deficit, which will only worsen if no new capacity is added. ADWEA’s predictions for new capacity are for 239 MW of definite new projects in 2009, and more than 1500 MW of possible new projects from 2010 onwards.


Figure 1: Abu Dhabi’s electricity peak demand forecast (gross MW)
Source:ADWEA
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DEWA favours state-ownership

DEWA, in contrast to ADWEA, has retained full ownership of its power sector. Between 2008-2012, it plans to increase its installed electricity production capacity by 2.5 times. This will require up to $19.9 billion in capital expenditure, which according to DEWA will be largely funded by borrowing from banks or through capital markets. Furthermore, by 2017, DEWA plans to have a total installed capacity of close to 21 000 MW. The additional capacity is required to meet the surge in electricity demand, which has been growing at 15 per cent a year.

In 2006, DEWA began construction of the Phase III of Aweer power station (expansion of H station). $447 million project is scheduled for completion mid April 2008. The production capacity of Aweer Power station after the completion will be 1800 MW, bringing total production capacity to 7 200 MW by next summer.


IWPP vs Non-IWPP generation capacity ADWEA
Source: Adwea
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Jebel Ali M power and desalination plant is Dubai’s largest cogeneration project to date. It will increase power generation by 2000 MW. It is due to be completed in 2008 and commissioned in 2010. DEWA also signed a $926 million contract for phase II of the Jebel Ali L station. This phase will add 1333 MW of capacity.

SEWA investing in meeting its demand

SEWA’s current installed capacity is approximately 1800 MW. The construction of its gas fired power generation and desalination plant in Al Hamriyah is well underway, and will add a welcome contribution of 2000 MW to Sharjah’s installed capacity.

Although the demand for power in this emirate is much lower than in Adu Dhabi or Dubai, it is still growing at a significant rate.

Privatization route for FEWA

FEWA supplies electricity and water to small northern emirates that include Ras al-Khaimah, Ajman and Umm al-Qaiawan. Demand in the northern emirates is growing strongly because of an increasing population and flourishing commerce funded by the high oil prices. According to a five-year electricity demand forecast by Abu Dhabi Transmission & Dispatch Company (Transco), this region will require over 1300 MW of extra capacity by 2012.

In response to this need for additional installed capacity, the Federal National Council, which is UAE’s’ governing body, has recently approved a plan to privatize the assets of FEWA, providing a clear signal that, as was done with ADWEA, it wants to attract private power and water investment into its poorer northern regions.

National and international interconnection

In the middle of last year the power grids of Abu Dhabi and Dubai were connected, and marked the first step towards the creation of the Emirates National Grid (ENG), which will amalgamate the power generation, transmission and distribution networks of the seven emirates into a single national grid.

The $218 million ENG project’s main objective is to provide a flexible operation, enabling electric power trading between all the UAE electrical authorities leading to better network stability and reliable power supply to their customers. At launch, the estimated capacity savings for the whole of the UAE through the interconnection of the electrical networks was estimated at 1150 MW by 2010.

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The ENG is expected to eventually link up with the Gulf Cooperation Council (GCC) grid, the latter project costing over $1.1 billion. The first section of this interconnection project will link Qatar, Bahrain, Saudi Arabia and Kuwait and is due to be completed next year. The second section, connecting the UAE and Oman, is scheduled to come online in 2010.