Special report: utilities in the UAE

[More Images]

The UAE has been witness to the biggest boom in industry in the Middle East over the past few years. Dubai and Abu Dhabi in particular have seen rapid growth in both population and economy. Generating the necessary power to service this boom has been a tough task for the country, although with the current slowdown, the time is right to address any shortfalls.

Power in the UAE relies mainly on natural gas. Nearly all of the natural gas produced by the country is consumed domestically, while Business Monitor International (BMI) is predicting that gas-fired power generation will climb to 83.1TWh by 2012. Approximately 9 billion m3 of gas is also imported through the Dolphin gas pipeline from Qatar.

Phil Burns, managing director, Aggreko Middle East says: “The UAE has undergone a phase of incredibly rapid growth during the past decade. Due to the increased power demands of the construction, manufacturing, oil and gas and industrial sectors, the utility companies in the region have had the exceedingly difficult task of having to increase power capacity and infrastructure in order to keep up with demand.”

The major development in the UAE energy mix is the adoption of nuclear power. Talks have been underway with the International Atomic Energy Agency (IAEA) for several years now and it is predicted that a nuclear power programme will be possible in the UAE within ten years.

Advertisement

FEATURED COMMENT Please click here to comment on this article

Aside from the nuclear option, there is belief that natural gas will play an increasingly important role in the country’s energy policy.

Burns states: “I believe that natural gas will become an increasingly important fuel source in the coming years. We diversified into natural gas power in 2005 and we have seen demand for this project continue to grow in the region.”

The UAE has also been a significant part of the plans to set up a power grid for the entire GCC. The total cost of this project has been estimated at over US$3 billion. The second phase of the operation involves linking the UAE with Oman before the final phase will see all of the other grids linked up.

Research from Proleads has estimated that the value of investment in water projects in the UAE has increased from US$11.62 billion in 2007 to US$14 billion in 2008.

BMI has predicted that the utilities industry value in the UAE will see growth of 86% between 2008 and 2013. The company has forecasted no reversal in plans to develop IWPP projects in the Gulf due to this nominal increase. The growth also highlights the scope for the participation of private companies in the country.

Burns believes that the economic climate has affected the utilities sector, and it has also proved to be a major boost for the power rental market.

“By renting equipment, companies can ensure that they will not be left with equipment which will sit unused; if a company which has purchased large amounts of equipment decides that an exploration project must be put on hold, the financial damage incurred can be a major blow,” he says.

A major oil pipeline is to be installed in the UAE, which will stretch 400km from the Habshan oil field in Abu Dhabi to the Fujeirah port. It is expected to be trialed in 2010 and will have a maximum capacity of 1.5 million barrels per day. China National Petroleum Corporation has been awarded the contract to build the pipeline.

Dubai

Dubai is the Emirate which has seen the largest growth at the fastest pace. It has been the frontrunner of all of the Emirates and for that reason has faced the most challenges. Nearly US$7 billion is currently being spent on projects. Dubai Electricity and Water Authority (DEWA) is spending US$357 million on water projects alone, with more expected by the end of the decade.

In 2006 the installed generating capacity in Dubai was 4.6GW, which came from six power stations meeting a peak demand of 4.11GW. There are 1,180km of overhead cables in the Emirate and a total of 1,935km of underground cables.

It has been reported that the Dubai government has approved plans for DEWA to sell all of its electricity and water plants through an IPO or private sales. This would provide investors with a huge number of opportunities.

Contract awards in Dubai are still ongoing in both power and water projects. It was reported in March that Ibedrola, a Spanish firm, had been pre selected for the concession to build the largest solar thermal power plant in the world, to be based in Dubai. In the same month two transmission stations were announced by DEWA. One is to be located in the Gardens and the other at Warsan, they will have a combined capacity of 400kV.

---