The UAE's utility infrastructure - report

The Fujairah F2 power and desalination plant, the latest project in the UAE to come onstream delivering power and water to northern emirates.

With more than $39bn in power and water projects in the pipeline and under construction, it’s boom time for the UAE’s energy sector

The provision of power and water in the UAE is a big topic. There are more than $39bn worth of power and water projects currently planned or already under construction in the Emirates, and those are just the projects which have disclosed estimates.

Rapid development of both population and industry has seen the region struggling to stay ahead of demand for utilities, although for the most part the UAE has fared better than many Middle Eastern nations.

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Experts are confident that the utilities sector will be a key growth driver for engineering, procurement and construction spending in the UAE, especially with financier confidence in power purchase agreements with government and state-owned utilities.

Demand is only going one way, too. Industrial consumption is expected to increase in tandem with new activity, although some are predicting a decline in household demand for utilities in Dubai as highly-skilled expat workers leave the Emirate.

However new burdens, such as metro railways in Abu Dhabi and Dubai and the UAE’s new railways - which will eventually become part of the GCC railway – will strain the power sector in the future.

The UAE’s planned projects have introduced a series of major international players to the region, bringing technical expertise to lead the large-scale projects in the power and water industries.

Perhaps the most important is Braka, Abu Dhabi’s long-awaited nuclear facility. Despite many European countries searching for ways to drop nuclear power as part of their energy mix, all the GCC states are in various stages of planning a nuclear programme of some type.

However, the UAE is the first country to agree a nuclear cooperation accord, which will make Braka the first civil nuclear power plant in the Arab world to be sanctioned by the IAEA.

The UAE’s nuclear programme will be developed jointly with France, a nation that extracts the majority of its power from atomic energy. But despite an agreement signed with French President Nicholas Sarkozy during a visit in 2008, the UAE has awarded the construction contract for the first plant to a consortium of South Korean firms led by Kepco, which submitted a more competitive bid than the French rivals.

With Iran’s controversial Russian-built nuclear facility already connected to the national grid despite an international standoff over its intended purpose, Korean contractors – which have steadily been developing good strategic relations with Gulf governments – are perhaps a more discreet route than French or US options.

Originally tipped for commissioning in 2017 the quad-reactor plant, to be built at Braka on Abu Dhabi’s coastline, will develop 5,600 megawatts to the national grid. It seems reasonable however, to expect a delay of at least one year, following the introduction of a 12-month review into the plant’s design in the wake of Japan’s Fukushima disaster.

Aside from the obvious need to increase power generation for rising population and industry, depleting the region’s own gas supply by using it as feedstock
for traditional power plants will lessen potential financial gains through exports, and also increase reliance on imports.