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Powering Expo 2020

Dubai needs and additional 250,000Mwh for EXPO 2020

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Ashish Saraf, Dubai, Energy demand, Expo 2020, Mesia, Power, Power consumption, Vahid Fotuhi, ANALYSIS

The year 2013 ended on a high note for the UAE and especially Dubai, with the emirate bagging the prestigious World Expo 2020. It became the first Middle Eastern city to win a bid to host the 162-year old event - a matter of pride for the region.

Organisers anticipate that as many as 182 countries will participate in the event, which will welcome 25 million visitors - over 10 times the current population of Dubai.

And to welcome these delegates, a vast complex stretching over 438 hectares, equivalent to more than 900 football pitches will be constructed with state of the art facilities. Thus, undoubtedly, the World Expo 2020 will have wide ranging implications for Dubai and its 2.2 million residents, the most important one of them being energy.

How Dubai will power this ‘mega event’ and the infrastructure associated with it becomes a paramount question. With Dubai already importing 99 per cent of its fuel requirement, will Expo 2020 accentuate this energy and financial imbalance?

Energy demand growth
Much before Dubai secured the Expo 2020 in December 2013, the emirate was already on the path of rapid growth. In May last year, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, announced that the emirate will draw 20 million visitors by 2020, almost double the 11 million visitors that graced the streets of Dubai in 2012.

In order to accommodate these many visitors the emirate will require a significant expansion in infrastructure. To achieve this, Dubai has earmarked an estimated US $7 billion in infrastructure spending as part of its overall capital investment programme worth US $20 billion over the next seven years. This expanding infrastructure results in a corresponding jump in electricity consumption.

According to energy advisory firm Access, the expansion of Dubai’s economic activity over the next seven years will result in a growth in electricity demand of 4-6 per cent per annum. This means that by 2020 Dubai’s electricity consumption will reach 9.6 GW, a 50 per cent jump from 2012 levels. Although this increase may appear high, it is still modest compared to the past 10-year period when demand grew by 224 per cent.

Dubai’s Electricity and Water Authority (DEWA) has already increased its annual budget for 2014 to $5.6 billion, up 49 per cent from 2013. Of this amount, $1.9 billion is expected to be invested in new projects in areas of clean coal, solar and smart grids.

There will also be additional investments made in the years ahead to increase power generation capacity, improve power transmission and distribution networks, and expand smart meters across the 600,000 residential units in Dubai.

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Capacity expansion
DEWA has already built a very strong power generation network. According to official figures, Dubai’s total power generation capacity stands at 9.65 GW. This gives the emirate a spare capacity of approximately 3 GW over Dubai’s 2013 peak demand levels of 6.67 GW. This implied 31 per cent spare capacity ratio is among the highest in the world.

To satisfy the projected 3 GW growth in peak demand by 2020, DEWA will need to bring online an additional 1.15 GW of new capacity in order to maintain a minimum spare capacity of 11 per cent. This capacity expansion would be equivalent to an increase of 13 per cent from current levels.

Access anticipates that some 600 MW of existing capacity will be decommissioned over the next seven years and replaced with more efficient power generation units. In total, there will be 1.65 GW of fresh capacity by 2020.

This involves an investment of approximately $2 billion in power generation capacity, notwithstanding the added cost of modernising the transportation, distribution and metering networks. If however DEWA adopts a strategy of maintaining a 30 per cent spare capacity level it will mean that by 2020 it will need to install 2.9 GW at a cost of at least $3.5 billion.

Fuel requirement
Having sufficient capacity units is one thing, but making sure there is sufficient fuel to power those units is another. This area is of utmost importance and is particularly sensitive for Dubai, given the fact that the emirate already imports 99 per cent of its fuel requirement.

Almost all of that fuel is natural gas which is imported from Qatar via the Dolphin pipeline at very favourable prices (below $2.00/mmbtu). During the summer months, the incremental peak demand is met with liquefied natural gas (LNG) which is imported at international market prices, currently at $17.50/mmbtu.

The additional fuel required for the anticipated 3 GW of new demand by 2020 will be satisfied in large part by natural gas. About 100 MW of it will come from solar PV with the introduction of Phase 2 of the Sheikh Mohammed Bin Rashid Al Maktoum Solar Park, scheduled for 2016-17.

And by 2020, an additional 600MW could come from coal with the introduction of the Phase 1 project of DEWA’s Hassyan clean coal project. However, a final decision on the Hassyan project or its fuel mix has not yet been taken.

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Electricity trading
There is a strong possibility that Dubai will import electricity from its GCC neighbours, notably Qatar, in the next 3-4 years. By then the integration and harmonization of the grid between the six GCC countries is expected to further strengthen, allowing for active trading between the members.

Although their demand patterns are relatively similar, their cost of production is not. For example, Qatar’s Water and Electricity Corporation (QWEC) cost of electricity production is between $0.03 and $0.04/kWh.

Whereas Saudi Electric Authority’s cost is twice that figure during the summer months when the Kingdom has to rely on imported diesel at over $120/barrel to cushion its fuel requirement. Therefore, as GCC members strive to reduce their electricity production costs one can expect to see trading.

Expo 2020 demand
During the World Expo 2020, the demand is expected to be relatively modest. For one, the organizers have decided to host the event during the cooler months of the year, between October 20 and April 10. This means that air conditioning, which represents roughly 60 per cent of the electricity usage in the UAE, will be relatively low.

Moreover, the Expo organisers have adopted an aggressive demand-side management strategy aimed at reducing demand during the Expo period. These measures include the deployment of innovative solutions for environmental and facilities management.

For example, the design and construction of the pavilions, buildings and public realm will incorporate energy efficient technologies which will minimize their energy consumption.

Additional sustainability criteria have been set to monitor carbon footprint, achieve neutral water balance and manage material recycling and reuse. As a result of these protocols and systems, energy consumption is anticipated to drop from 350,000MWh to 250,000MWh over the 6-month World Expo period.

These efforts are not only expected to cut down energy consumption but will also serve as a living demonstration of how energy efficiency can be practically and cost-effectively applied on a large scale, both in Dubai and across the Middle East.

Renewable Energy at Expo
In a bold and first of its kind initiative, the expo organisers plan on producing at least 50 per cent of the total operational energy requirements from renewable sources on site - which will be half of the estimated 250,000MWh that will be required to power the Expo.

In no previous mega event, be it the summer Olympics or the World Cup, has such ambitious target been set, let alone achieved.

To reach this target, the organisers will need to deploy high efficiency photovoltaic (PV) solar panels for roof-top installations as well as paper-thin solar layer that will be incorporated into the walls of the various buildings, also known as Building Integrated Photovoltaic (BIPV).

According to current projections, some 200,000 solar panels will be installed, covering an area of roughly 350,000 m2 with a total installed capacity of 50 MW, generating 100,000MWh of clean energy per year. This is more than 10 times the capacity installed at the 2010 Shanghai World Expo (4.7MW).

This commitment to solar energy will help validate the expansion of solar power across the Middle East, adding new momentum to the region’s drive to achieve sustainable development. Domestically, this energy strategy will help raise awareness about sustainability and serve as a hands-on tool to test new solar innovations and technologies.

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Post the Expo
Winning the rights to host the World Expo in 2020 is indeed a major achievement for Dubai and that is just the beginning. Building the ambitious project and powering it is only part of the process. Thus, along with it comes a challenge for Dubai to not only initiate but also rapidly absorb the rapid expansion in its infrastructure sector. And the prime task is to make sure there is enough power generation capacity to sustain that growth.

DEWA is expected to bring on at least 1.15 GW of power generation capacity during the next seven years in anticipation of the 50 per cent increase in demand over the same period. This will expand DEWA’s capacity to 10.8 GW, sufficient to absorb the anticipated peak demand of 9.6 GW in 2020. Further, this will carry an investment of at least $2 billion and possibly more if DEWA opts to maintain the spare capacity level above 11 per cent.

During the Expo itself, demand will be modest at around 250,000MWh. This will be satisfied by 50MW of solar systems installed at the Expo site and further supplemented by the 100 MW solar PV facility which will come online in 2016-2017 as part of Phase 2 of the Sheikh Mohammed Bin Rashid Al Maktoum solar park initiative.

More importantly, contrary to popular belief, the likelihood of a ‘bubble’ in the power sector post Expo 2020 is nonexistent. The added capacity is expected to be absorbed by sustained levels of visitors from growing hubs in Asia and Africa. Access anticipates that post-Expo, demand will grow at 3-4 per cent per annum.

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Capacity expansion
Additional power generation capacity will come from:
• Decommissioning: - 600 MW
• Hassyan IPP (coal): 1.2 GW
• Retro-fit combined cycle units: 1.65 GW
• Solar: 100MW IPP + 50MW on-site
• Wild Card: GCC integrated grid (imports from Qatar)

Role of solar during Expo 2020
• 200,000 solar panels installed
• 350,000 m2 of solar footprint
• 50MW in total capacity
• 115,000 MWh of clean energy
• 10X more than Shanghai Expo
• Fuel saving: US $10mn over 20 year operation, assuming gas market price ($5.50/mmbtu)

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