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Hassyan IWPP tender to be launched in Q1, 2011

Dewa CEO: PPP, plant upgrades & smart meters to counter rising demand

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Dewa CEO Al Tayer is charged with keeping power generation in Dubai in line with demand.
Dewa CEO Al Tayer is charged with keeping power generation in Dubai in line with demand.

The Dubai Electricity and Water Authority (Dewa) will launch the tender for the Hassyan power plant in the first quarter of 2010, once regulation allowing for public private partnerships in the emirate has been implemented, Dewa CEO Saeed Mohamed Al Tayer said on Tuesday.

“The legal framework will be introduced during the first quarter,” said Al Tayer on the sidelines of the Smart Electricity World conference held in Dubai. “I think the tender will also be around the first quarter.”

The 1,500MW, 120 million gallons per day (MIGD) independent power and water project (IWPP) will be Dubai’s first foray into public private partnerships in the utilities sector.

Dewa announced its intention to make use of the IWPP model in January, and in July appointed a consortium of advisors comprising of HSBC, Clifford Chance and Mott McDonald. The emirate is currently working on the legislation to facilitate public sector involvement.

Al Tayer, who last week revealed that peak power demand in the emirate had risen almost threefold to 6,161MW over the last decade, said that apart from Hassyan, additional generation capacity is being added by upgrading the power plant in Jebel Ali.

Dewa will add 400MW by enhancing the existing gas turbine and through other upgrades at a capital expenditure of around US$200 million.

“To add new power, we will work on efficiency rather than creating new capacity,” said the CEO.

In the longer term, the authority seeks to roll out smart metering across Dubai. A pilot project consisting of 10,000 smart meters installed in selected buildings will be commissioned “in a few months” confirmed Al Tayer. The success of the project will determine Dewa’s course of action:

“We are evaluating this project, based on that we have to make a final decision.”

Installing smart meters across the emirate would pave the way for variable tariffs to curb consumption during peak hours and penalising excessive use of electricity.

A lower peak load would reduce the need for new power generation capacity. An accurate reading of individual consumption would enable the utility to raise the tariff after a certain threshold has been passed, so encouraging more moderate consumption.

“Its good to have a time-based meter in order to give incentives,” replied Al Tayer to the question of whether tariffs would be altered in response to the smart meter roll out.

Electricity and water consumption in the GCC is the highest in the world, due to heavy subsidisation and high cooling and water requirements.

Dewa will not enter the bond markets next year to funds its activities, according to Al Tayer. The authority in October issued a $2 billion, dual tranche bond in October, but the CEO said that no issuance is planned for 2011.
 

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