This is a best prospect industry sector for this country. Includes a market overview and trade data.
Almost all electricity generation in the United Arab Emirates (UAE) is thermal-fired, with natural gas supplying the majority and oil playing a secondary role. The UAE’s world-class gas reserves have so far provided the country with a comparative advantage in both energy costs and funding sources, favoring the development of gas-fired power plants that account for 90 percent of all production. The UAE contains of the world’s ten largest proven oil and gas reserves. In 2018, there were over 27 gigawatts (GW) of installed capacity to generate electricity across the seven emirates utilizing natural gas, perceived as a bridge fuel while large-scale tenders are introduced to potentially facilitate a shift to renewable inputs.
The UAE aims to achieve a sustainable infrastructure for generating power through renewable energy. The demand for electricity and water continues to grow at a fast pace due to a rise in population, an expanding economy and climatic considerations, and the demand is expected to continue to grow at about 10 percent annually for the next decade. According to Business Monitor International, a sharp increase in annual power demand throughout the country is expected over the period 2012-2021, with an anticipated average annual increase in consumption of 5.6 percent.
According to goals within the UAE State of Energy Report 2015, the share of power generation from gas will drop from 98 percent in 2012 to less than 76 percent in 2021 as clean energy INS increasingly introduced into the mix.
The energy sector plays an important role in shaping the UAE's internal and external policies. Since the discovery of oil and gas more than half a century ago, the UAE became a central player in the global hydrocarbon energy market.
The generation, transmission and distribution of electricity in the UAE is dominated by four water and power authorities. Three of these authorities are owned by the governments of the Emirates of Abu Dhabi, Dubai, and Sharjah, whereas the authority that operates in the smaller northern emirates is federally-controlled.
These state-owned authorities serve as the exclusive purchasers and distributors of electricity in the respective emirates. The four major utility authorities are as follows:
- Abu Dhabi Department of Energy (DoE): The largest producer of water and power for the Emirate of Abu Dhabi (previously known as Abu Dhabi Water and Electricity Authority-ADWEA)
- Dubai Electricity and Water Authority (DEWA): The second largest water and power generation, transmission and distribution authority covering the Emirate of Dubai
- Sharjah Electricity and Water Authority (SEWA): Responsible for the generation, transmission and distribution of electricity in the Emirate of Sharjah
- Federal Electricity and Water Authority (FEWA): Responsible for the generation, transmission and distribution of electricity in the Northern Emirates of Ajman, Umm Al Quwain, Fujairah and Ras Al Khaimah
Dubai and Abu Dhabi have enacted laws creating specialized regulatory bodies for the electricity sector, which consist of the Dubai Supreme Council of Energy (DSCE), the Dubai Regulation and Supervision Bureau (RSB Dubai) and the Regulation and Supervision Bureau of Abu Dhabi (RSB Abu Dhabi). The Ministry of Energy and Industry regulates the sector at the federal level and works in conjunction with FEWA to implement the federal government's electricity policy in the northern emirates.
The northern emirates of the UAE, currently do not have sufficient power generation capacity, and construction of additional capacity and the supply of power from the larger emirates through the Emirates National Grid (ENG) will address this issue The Ministry of Energy and Industry launched the ENG project in 2001 to enhance integration between the various electricity and water authorities in the UAE, each of which contributed proportionately to the capital investment required to build the ENG. It also enables the commercial transfer of electricity between the power authorities. The following authorities own the ENG in the following proportions 40 percent DoE, 30 percent DEWA, 20 percent FEWA, and 10 percent SEWA.
To date, no power generation, transmission or distribution companies exist in any of the free zones in the UAE since these companies are not allowed to conduct business outside the free zones and onshore, even though the UAE free zones allow for 100 percent foreign ownership.
The Abu Dhabi Department of Energy, established in 2018, is a consolidation of the emirate’s utility authority ADWEA and the RSB (Note: ADWEA wholly owns the Abu Dhabi Water and Electricity Company (ADWEC), the single buyer of water and electricity in Abu Dhabi, and Abu Dhabi Transmission and Dispatch Company (TRANSCO), the main transmission company in the emirate).
The electricity is supplied in the emirate through DoE owned distribution companies, Abu Dhabi Distribution Company (ADDC), which operates in the city of Abu Dhabi and the western region of the emirate; and Al Ain Distribution Company (AADC), which operates in Al Ain city and the surrounding areas.
The DoE acquires the natural gas, the primary fuel used in the power generation sector in the UAE, from two sources the Abu Dhabi National Oil Company (ADNOC) and Dolphin Energy Limited for onward supply to the power producers.
Owing to its larger production capacity and extensive distribution network, the DoE has increased its assistance to the other emirates in meeting their power demand. The DoE exported about 13,664 Gigawatt hours (GWh) of electricity to other emirates via the ENG in 2012, up from 12,228 GWh in 2011. The DoE has established a long-term program for the privatization of the electricity sector through joint-venture arrangements as BOO (build, operate, own) projects with many independent water and power producers (IWPPs). The ownership of IWPPS is split 60:40 between the DoE and foreign investors.
In late 2018, the Emirates Water and Electricity Company (EWEC) was established as a public shareholding company. As part of the law, EWEC will replace ADWEC and will exist under the umbrella of Abu Dhabi Power Corporation. The development of EWEC will pave the way for FEWA to join the new company, with the objective of unifying water production and power generation efforts in Abu Dhabi and the emirates that are currently served by FEWA.
DEWA is an integrated supplier owning and operating in all segments of the electricity market in Dubai, including12 plants in the emirate whose individual capacities vary between 400 megawatt (MW) to 2,200 MW. DEWA’s current capacity is 10,413 MW, with clean energy producing 413 MW. By 2020, clean energy could reach1, 313 MW in Dubai, and the total electricity generation capacity in Dubai reachw14,085 MW, including solar power.
DEWA has commissioned 15 132/11 kV substations as of 20 May 2018, and it had 236 132/11kV substations by the end of 2017, with 15 of these commissioned in 2017. With the Dubai Electricity Privatization Law since 2011, several independent power projects (IPPs) have launched in Dubai.
The Hassyan Clean Coal project was launched by DEWA, and it was awarded to the consortium of ACWA Power and Harbin Electric. In 2016, the major engineering procurement and construction contract for the project was awarded to Harbin Electric International and General Electric. The project will tentatively become operational by 2023. Multiple projects to expand the Jebel Ali Power and Desalination Plant and Al Aweer Power Plant are also underway.
In Sharjah, SEWA is responsible for electricity generation, transmission and distribution and has the authority to determine electricity prices and connection fees. SEWA has recently embarked on improving and expanding its electricity transmission and distribution network on a large scale due to the increased demands in electricity and energy. SEWA has commissioned and inaugurated the Al Khan power transmission and distribution station in 2016, to ensure the reliability of power supply throughout areas such as Al Khan, Al Nahda and Al Taawun in Sharjah.
FEWA covers the northern emirates of Ajman, Ras Al Khaimah, Fujairah and Umm al-Quwain. TRANSCO expanded its operations to assist FEWA in planning, developing and operating its water and electricity transmission assets. In addition to FEWA, certain private power companies such as Utico are involved in the power sector of the Emirate of Ras Al Khaimah.
In March 2013, the Ras Al Khaimah Electricity and Water Authority (RAKEWA) was established, and is tasked with the regulation, management, operation and maintenance of power stations, water desalination plants, electricity distribution and transport networks, as well as controlling prices of electricity and water in the emirate. However, FEWA continues to own, manage and operate the electricity resources situated in the emirate and is the actual authority on ground.
|Installed Capacity of Electricity Generation Plants by Authority 2012 – 2017 (Megawatts)|
|Abu Dhabi Department of Energy||13,842||14,383||15,546||15,546||15,220||16,622|
|Dubai Electricity and Water Authority (DEWA)||9,646||9,656||9,656||9,656||10,000||10,200|
|Sharjah Electricity and Water Authority (SEWA)||2,768||2,895||2,894||2,840||2,838||2,846|
|Federal Electricity and Water Authority (FEWA)||924||924||733||703||703||703|
|Total||27,180||27,858||28, 829||28, 745||28,761||30,371|
Source: Open Data Soft
|Gross Generated Electricity by Authority 2012 – 2016 (Gigawatt hour)|
|Abu Dhabi Department of Energy||62,165||65,492||70,847||79,768||80,527|
|Dubai Electricity and Water Authority (DEWA)||36,297||37,478||39,599||42,006||43,092|
|Sharjah Electricity and Water Authority (SEWA)||5,362||5,428||5,683||5,433||5,685|
|Federal Electricity and Water Authority (FEWA)||2,398||1,581||399||158||293|
Additionally, the UAE connects to the rest of the Gulf Cooperation Council (GCC) countries and trades a limited amount of electricity through the GCC Grid.
State-owned water and power authorities comprise the electricity market for private power producers each of which acting as the single point of sale in their respective areas of operation. In addition to the drive towards privatization, notable developments towards energy diversification and introduction of renewable sources have taken place.
Currently, Abu Dhabi and Dubai are the only emirates that have private sector participation in the energy sector. At the federal level, private sector participation has yet to materialize in the northern emirates with the exception of Ras Al Khaimah which has allowed Utico, a private sector utility company. The other emirates are also beginning to recognize the benefits of encouraging private sector participation. This change in attitude is driven principally by the increased demand in electricity due to increasing population and economic growth, as well as current low oil prices, which have reduced the availability of government funds compared to previous years.
The UAE’s goal is to meet 25 percent of its energy requirements in 2030 and 50 percent in 2050 from renewable sources. The country has made rapid strides in establishing its first nuclear power station, the Barakah Nuclear Energy Plant, in Abu Dhabi and commissioning of the project’s first reactor is expected in 2020. An agreement with DoE’s TRANSCO was signed in 2016 to transmit nuclear power to the ENG. Dubai has also established a Dubai Green Fund and Etihad Energy Services Company (Etihad ESCO) to contribute towards the renewable energy sector.
The UAE has seen double-digit increase in the demand for electricity in recent years and is expected to continue seeing rapid growth in the coming years. Many major power projects, both in the fields of conventional and renewable energy, are under development to meet the country's existing and future electricity needs. In line with diversifying energy sources and preserving energy, the UAE is expected to continue its projects such as retrofitting buildings, establishing solar parks and energy efficient communities. All these will require the investment and research capabilities of the private sector.
In compliance with extant regulations, private participants can own up to a 40 percent economic interest in electricity generation plants in Abu Dhabi and up to 49 percent in Dubai.
In 2015, Dubai awarded 49 percent of the ownership of phase 1 of Hassyan, a 2,400 MW clean coal power plant, to a consortium led by Harbin Electric International and ACWA Power. DEWA awarded a contract worth $52.4 million to US-based GE to upgrade gas turbines at the Jebel Ali Power and Desalination E Station. The work will begin in the first quarter of 2019 and will be completed in the first quarter of 2021. DEWA is also working to build 112 stations over the next few years at a total value of $2.7 billion and plans to invest over $22 billion over the next five years to meet the energy needs of the emirate. Despite the commendable diversification efforts, the authorities are continuing to invest significantly in hydrocarbon-based power generation facilities to meet the growing demand for electricity across the UAE.
Abu Dhabi Department of Energy
Abu Dhabi Distribution Company (ADDC)
Al Ain Distribution Company (AADC)
Dubai Electricity and Water Authority (DEWA)
Dubai Supreme Council of Energy
Federal Electricity and Water Authority (FEWA)
Middle East Economic Digest (MEED)
Ministry of Energy and Industry
Regulatory & Supervisory Bureau Dubai
Sharjah Electricity and Water Authority (SEWA)