United Arab Emirates - Country Commercial Guide
Conventional Power

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-09-12

Overview

The power sector in the United Arab Emirates (UAE) is in the process of changing under the country’s 2050 strategy.

The UAE is planning to add nuclear, renewable, and coal-fired electricity generating capacity to accommodate rising demand, but the country currently relies primarily on natural gas, with oil playing a secondary role. The UAE began liberalizing electricity markets in 2015 to support the national economy, lower consumption, and protect the environment.

In 2018, there were over 27 gigawatts (GW) of installed capacity to generate electricity across the seven emirates utilizing natural gas. The UAE aims to increase power clean energy power generation to 27% by 2021. The country’s energy consumption has slowed in recent years compared to the jumps in 2014 and 2015, but demand continues to increase in line with population and economic growth.

The generation, transmission, and distribution of electricity in the UAE are 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:

The Ministry of Energy and Infrastructure 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.

Dubai and Abu Dhabi have enacted laws creating specialized regulatory bodies for the electricity sector. In 2018, the emirate’s power utility, ADWEA, and the Regulation and Supervision Bureau merged to form the Department of Energy (DoE). The newly created DoE is responsible for developing strategic initiatives and overall power sector security and sustainability in Abu Dhabi, including programs to help increase energy efficiency. Electricity is supplied in the emirate through DoE owned distribution companies:

The UAE plans to decrease consumption rates, but they continue to see a growth in demand at certain times such as summer. The peak demand, which includes supplies to the Northern Emirates, is forecast to grow by more than 80%, from 14.2 GW to as much as 26 GW by 2030.

The projects currently underway include the Mirfa combined cycle fossil fuel power plant, the Barakah nuclear energy plant, and the Sweihan solar photovoltaic project – with a combined total more than 8 GW of power capacity. The main drivers for Abu Dhabi’s electricity sector include:

  • Onshore hydrocarbon developments.
  • Expanding industrial zones.
  • New large residential and commercial developments.
  • Increased exports to the Northern Emirates.

As per the UAE State of Energy Report 2019, Dubai has the highest customer growth in the country, increasing 28% in 2017. Dubai is working to diversify its energy mix to increase electricity from renewable energy sources to 25%. According to the 2017 energy report, Dubai’s electricity sources were:

  • Gas turbines: 73%.
  • Steam turbines: 25%.
  • Renewable energy: 2%.

In Sharjah, SEWA has embarked on improving and expanding its electricity transmission and distribution network on a large scale due to the increased demands in electricity and energy. Currently, the electricity used to power the emirate comes from Abu Dhabi. In September 2018, SEWA announced that it was looking to develop electricity networks throughout the emirate.

The northern emirates of the UAE currently do not have sufficient power generation capacity. The construction of additional capacity and the supply of power from the larger emirates through the Emirates National Grid (ENG) was launched by the Ministry of Energy and Infrastructure in 2001 to enhance integration between the various electricity and water authorities in the UAE. FEWA is planning to develop a combined cycle power and coal fired power plants in Ras Al Khaimah with additional new generation plans.

In late 2018, the Emirates Water and Electricity Company (EWEC) was established as a public shareholding company, replacing ADWEC. 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.

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 2013 – 2017 (Megawatts)

Authority

2013

2014

2015

2016

2017

DoE

14,383

15,546

15,546

15,220

16,622

DEWA

9,656

9,656

9,656

10,000

10,200

SEWA

2,895

2,894

2,840

2,838

2,846

FEWA

924

733

703

703

703

Total

27,858

28, 829

28, 745

28,761

30,371

Source: Open Data Soft

Gross Generated Electricity by Authority 2014 – 2018 (Gigawatt hour)

Authority

2014

2015

2016

2017

2018

DoE

70,847

79,768

80,527

83,006

84,182

DEWA

39,599

42,006

43,092

45,162

45,961

SEWA

5,683

5,433

5,685

5,899

5,272

FEWA

399

158

293

486

582

Total

116,528

127,365

129,596

134,553

135,997

Source: Open Data Soft

Outlook

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 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 reduced the availability of government funds compared to previous years.

The UAE’s goal is to increase clean energy to meet 25% of its energy requirements in 2030 and 50% in 2050. The country established its first nuclear power station, the Barakah nuclear energy plant in Abu Dhabi. The UAE has officially become a peaceful nuclear energy operating nation. An agreement with DoE’s TRANSCO was signed in 2016 to transmit nuclear power to the ENG.

Opportunities

The UAE has seen double-digit increases 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 and establishing solar parks and energy efficient communities. In compliance with regulations, private participants can own up to a 40% economic stake in electricity generation plants in Abu Dhabi and up to 49% in Dubai. 

Resources

Key Websites

Abu Dhabi Department of Energy

Abu Dhabi Distribution Company (ADDC)

Abu Dhabi National Energy Company PJSC (TAQA)

Abu Dhabi Transmission and Dispatch Company (TRANSCO)

Al Ain Distribution Company (AADC)

Dubai Electricity and Water Authority (DEWA)
Dubai Supreme Council of Energy

Emirates Water and Electricity Company (EWEC)

Federal Electricity and Water Authority (FEWA)

Middle East Economic Digest (MEED)

Ministry of Energy and Infrastructure

Regulatory & Supervisory Bureau Dubai

Sharjah Electricity and Water Authority (SEWA)