Dubai electricity costs have doubled in 3 years

35,000sqm tower now pays 2.6m dirhams more a year after 15% DEWA hike

Power costs from the grid have risen in tandem with demand in Dubai.
Power costs from the grid have risen in tandem with demand in Dubai.

Commercial and industrial businesses are in for a shock later this month when they receive their electricity bills. Many who failed to take any sort of energy saving measures will calculate that their bill has now roughly doubled, according to a survey by leading energy conservation specialist and total facilities management company Farnek Avireal.

A new tariff structure or slab system was first introduced on March 1 2008 by Dubai Electricity and Water Authority (DEWA) - aimed at encouraging consumers to conserve energy. Effective 1st January 2011, DEWA once again increased their tariff, due to the escalating gas and oil prices. Thermal power stations produce 93% of the UAE’s the total energy supply and they are primarily powered by 70% gas and 30% oil.

“Consumers, particularly commercial, that did nothing to arrest consumption or waste after the first slab tariff increase in March 2008, will have electricity bills that in some cases will have soared by an additional AED1.1 million during the past twelve months,” said Markus Oberlin, General Manager, Farnek Avireal.

On the 1st January 2011, DEWA increased electricity charges from 20 fils per kilowatt (KWh) to 23 fils for monthly consumption below 2000 KWh and from 33 fils to 38 fils per KWh for consumption of more than 6000 KWh per month.
Average individual electricity usage is said by DEWA to be 20,000 KWh hours per annum and 130 gallons of water daily, putting Dubai among the cities with the highest consumption per person in the world, with one of the highest carbon footprints per capita.

The Farnek Avireal survey, based on actual buildings, shows a Dubai office tower of around 35,000 square metres on Sheikh Zayed Road, which for the calendar year 2007 had an annual electricity bill of AED2.5 million. In 2011 electricity charges for the same building will have doubled to AED5.14 million.

Similarly, a hotel of around 20,000 square metres in the New Dubai area which had annual energy costs of AED1.5 million will now be paying over AED3 million in 2011.

Homeowners are not spared either. A typical villa in Jumeirah with a previous annual energy bill of AED23,850 in Jan 2008 will see a rise of up to 70% from Jan 2011 to around AED40,500.

Farnek Avireal believes its intelligent energy and cost-saving solutions, already in widespread use throughout the United Arab Emirates, could substantially reduce the impact of the latest DEWA tariffs especially on commercial and industrial businesses.

“It is critical that businesses plug in these increased expenses into their profit and loss accounts, because it will have an adverse effect on the bottom line. Moving forward, there is an undeniable business case to reduce energy demands and, therefore, utility bills," said Oberlin.

"Dubai is already looking at coal fired power stations, a cheaper alternative to oil and gas in the short term, while plans to introduce solar power plants within the next 2-3 years and nuclear reactors by 2020 take shape. Sustainable, clean, renewable energy is the future. We must reduce our carbon emissions before we damage the environment irreparably,” added Oberlin.

Before the slab tariff was introduced in March 2008, the investment cost of Farnek Avireal's own Energy Saving Module – which reduces electricity consumption from air conditioning and refrigeration systems by up to 20% – could be paid back in utility costs savings within 22 months.

"Having had two price increases inside three years our Energy Saving Devices could now in some instances have pay back periods of less than 12 months – that makes good business sense and environmentally it’s absolute common sense,” said Oberlin.



Most Popular