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DEWA forges power path

The Dubai utility is closing in on plans

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Dubai's fast growing economy demands more and more power
Dubai's fast growing economy demands more and more power

Plans by Dubai Electricity and Water Authority (DEWA) to boost the Emirate’s capacity and diversify sources of power generation appear to be gathering pace following a number of recent developments.

The utility has shortlisted eight international developers to bid for the first phase of the Hassyan Clean-Coal Power Project.

Twenty-four firms are vying for the 100MW expansion of the Sheikh Mohammed bin Rashid Al Maktoum Solar Park, while DEWA is close to making a call on the 600MW expansion of the huge M-Station power and water plant at the Jebel Ali Power and Water Complex.

DEWA whittled the list for the Hassyan Clean Coal project down from the 17 expressions of interest it received in response to the Request for Qualification released last May, it revealed in a statement last month.

East Asian companies dominate the bidders for the 1,200MW plant, though a pair of major European firms remain in the running. Those two are EDF International and International Power, a GDF SUEZ subsidiary.

Separate bids by Japan’s Mitsubishi Corp and Marubeni’s Axia Power Holdings make up the Japanese representation, according to the tender results listed on the DEWA website.

Chinese duo Harbin Electric International and China Huadian Corp Power Plant Operation Co. have teamed up on a joint bid. Another Chinese firm, Meiya Power has joined forces with Dubai Holding LLC on a bid.

Korea Electric Power Corp (KEPCO), which is developing the UAE’s first nuclear power plant at Barakah in Western Abu Dhabi, has entered the race with Saudi Arabia’s Acwa Power. Malaysia’s Tenaga National and China Machinery Engineering complete the line-up.

The tender closing date is a little over two months away, on 26 November. The first phase of the project will have a capacity of 1,200 MW and is expected to be operational by 2020.

Clean coal will make up 12% of Dubai’s power generation mix, under the Dubai Integrated Energy Strategy (DIES), which calls for natural gas to provide 71%, nuclear 12% and solar 5% of the Emirate’s power output by the year 2030.

Unusually for Dubai, the project will be developed according to the Independent Power Project (IPP) model more commonly used in the Emirate of Abu Dhabi. In fact this is the first IPP launched by DEWA since plans for a gas-fired power plant at Hassyan were shelved late into procurement in April 2012 following a revised assessment of Dubai’s demand forecasts. Dubai has traditionally taken an EPC procurement path for its power plants.

At a conference for phase 1 bidders last month, H.E. Saeed Mohammed Al Tayer, CEO and MD of DEWA, said: “DEWA is adopting the IPP model, out of its belief that it is one of the developed models that will help achieve its aspirations and enhance its strategic growth.”

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The winning bidder will operate and own 49% of the coal-fired power plant with DEWA purchasing the output under a long-term Power Purchase Agreement (PPA). It is still unclear which of the number of different technologies that fall under the clean coal banner DEWA favours, but the shortlisted bidders all have prior experience in the sector in one form or another.

The push for a clean coal power plant is part of DEWA’s ambition to diversify its sources of electricity generation. Almost all of the Emirate’s current capacity of around 9,600MW output is fired by natural gas, much of it imported from Qatar via the Dolphin pipeline as well as LNG shipped in from its gas-rich GCC neighbour.

However, with local power demand rising in lockstep with Dubai’s fast growing economy and the price of gas linked to the high price of oil, the Emirate is seeking cheaper and more sustainable alternatives to gas to meet its future electricity demand.

The move to get some solar power into the mix is another example. Currently producing 13MW at the Sheikh Mohammed bin Rashid Al Maktoum Solar Park, DEWA recently shortlisted 24 companies (see box above) for its 100-MW solar project and hopes to evaluate bids by the end of October. The park will be expanded in stages and is eventually planned to reach 1000MW.

Meanwhile, plans for the 600MW expansion of the 2,060MW M-Station at the Jebel Ali Power and Water Desalination Complex have reached an advanced stage with bids due on 18 October. The AED 10bn ($2.70bn) facility is the newest addition to DEWA’s fleet of power plants having been commissioned in stages between 2010 and 2013.

The expansion involves adding two gas turbines, a steam turbine and a heat-recovery unit, which will increase the plant’s thermal efficiency to 90%, one of the highest levels in the world.

Investments in these three ambitious projects alone is expected to top around $20bn.

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