Power sector needs $8b to boost capacity
The UAE power sector will require at least $8 billion in investment to boost generation capacity over the next six to eight years, a study on the sector shows.
While electricity prices are expected to increase steadily over the next several years in line with world market prices, the government plans to expand installed capacity by more than 50 per cent – from 10 to 15 gigawatt (GW) to cope with the fast growing demand resulting from the on-going population boom, according to a Dubai Chamber of Commerce and Industry (DCCI) bulletin.
Quoting Business Monitor International (BMI) report, the DCCI bulletin said Dubai will have to boost its power generating capacity to 9.5 GW by 2010 to meet its spectacular growth.
"Dubai Electricity and Water Authority (Dewa) continues to invest heavily to raise power generation and desalination capacity to match increased demands resulting from a boom in residential and commercial development. Recently, Dewa unveiled a 1.3 GW power and desalination project in Jebel Ali. Dewa expects a two-GW expansion at Jebel Ali by 2010 and is seeking bids for a 3-GW plant at the same location for 2012 start-up. Abu Dhabi has 1.05 GW of new capacity at Taweelah, due on stream in 2008."
According to estimates, the cost of power generation in the UAE amounted to $2.97 billion in 2006. BMI forecasts generating costs of $3.1 billion to $3.9 billion between 2007 and 2011, assuming lower oil and gas prices, but increased fuel and power consumption. Gas is set to remain the largest component part of the power generation costs. UAE power prices are expected to increase steadily over the next several years, aligning with world market prices.
The BMI report forecasts that UAE will account for 5.77 per cent of the regional power generation by 2011. The BMI report estimates that Middle East Africa (MEA) region's power generation for 2007 was 1,136 terawatt hours (twh), an increase of 5.8 per cent over 2006. The report forecasts an increase in regional power generation to 1,473 twh by 2011, representing an increase of 29.7 per cent between 2007 and 2011.
According to the report, the thermal power generation in 2007 is estimated to be 1,005 twh, accounting for 88.4 per cent of the total electricity supplied in the MEA region. The report forecast a 28.3 per cent growth to 1,289 twh in 2011. "This reduces slightly the market share of thermal power generation to 87.5 per cent. This reduction is partly anticipated in response to environmental pressures to promote renewable energy sources and nuclear power generation."
The UAE thermal power generation in 2006 is estimated at 58.8 twh, or 6.19 per cent of the regional total. By 2011, the UAE is expected to account for 6.60 per cent of regional thermal power generation. BMI forecasts an average 7.4 per cent annual increase in generation to reach 85 twh by 2011, all of which will be thermal.
According to the forecast, electricity consumption per capita will increase by two per cent over the period 2006-2011. The UAE power consumption is expected to increase from an estimated 56.6 twh in 2006 to 82 twh by 2011. Therefore, it is expected that the consumption demand for electricity will be met by the generation capacity.
The report noted that conventional thermal sources are expected to remain the dominant fuel for electricity generation in the coming years, with most power projects under construction or planned using gas. "There is long term possibility of diversification into nuclear, while other options are being considered in order to limit the use of gas."
The natural gas demand is forecast to increase from 41.7 billion cubic mere (bcm) in 2006 to 60.1 bcm by 2011 and the gas-fired power generation to increase from 57.6 twh to 83.1 twh, representing 97.7 per cent of total generation by 2011.
Oil will remain a relatively insignificant part of the UAE power generation mix, with its market share set to hold fairly steady during the forecast period. It currently accounts for around two per cent of the total generation, and is expected to increase to a maximum of 2.4 per cent by 2011. BMI estimates that there will be no more than two twh of oil-fired power generation by 2011. Coal-fired generation is being considered by UAE as an option to reduce dependency on gas, but a lack of domestic resources and the size, cost and environmental implication of coal-fired facilities mean they are unlikely to be built during the forecast period.
The BMI forecasts that UAE overall business environment will remain attractive in the MEA regional context and the long term economic and political risks are exceptionally low. "There has been a considerable progress in power market deregulation, privatization and liberalization. The growth outlook for power generation and primary energy demand is healthy. In the BMI Business Environment Ranking matrix, UAE receives a composite score of 38, which ranks UAE second out of eight countries included in the MEA region." Source
While electricity prices are expected to increase steadily over the next several years in line with world market prices, the government plans to expand installed capacity by more than 50 per cent – from 10 to 15 gigawatt (GW) to cope with the fast growing demand resulting from the on-going population boom, according to a Dubai Chamber of Commerce and Industry (DCCI) bulletin.
Quoting Business Monitor International (BMI) report, the DCCI bulletin said Dubai will have to boost its power generating capacity to 9.5 GW by 2010 to meet its spectacular growth.
"Dubai Electricity and Water Authority (Dewa) continues to invest heavily to raise power generation and desalination capacity to match increased demands resulting from a boom in residential and commercial development. Recently, Dewa unveiled a 1.3 GW power and desalination project in Jebel Ali. Dewa expects a two-GW expansion at Jebel Ali by 2010 and is seeking bids for a 3-GW plant at the same location for 2012 start-up. Abu Dhabi has 1.05 GW of new capacity at Taweelah, due on stream in 2008."
According to estimates, the cost of power generation in the UAE amounted to $2.97 billion in 2006. BMI forecasts generating costs of $3.1 billion to $3.9 billion between 2007 and 2011, assuming lower oil and gas prices, but increased fuel and power consumption. Gas is set to remain the largest component part of the power generation costs. UAE power prices are expected to increase steadily over the next several years, aligning with world market prices.
The BMI report forecasts that UAE will account for 5.77 per cent of the regional power generation by 2011. The BMI report estimates that Middle East Africa (MEA) region's power generation for 2007 was 1,136 terawatt hours (twh), an increase of 5.8 per cent over 2006. The report forecasts an increase in regional power generation to 1,473 twh by 2011, representing an increase of 29.7 per cent between 2007 and 2011.
According to the report, the thermal power generation in 2007 is estimated to be 1,005 twh, accounting for 88.4 per cent of the total electricity supplied in the MEA region. The report forecast a 28.3 per cent growth to 1,289 twh in 2011. "This reduces slightly the market share of thermal power generation to 87.5 per cent. This reduction is partly anticipated in response to environmental pressures to promote renewable energy sources and nuclear power generation."
The UAE thermal power generation in 2006 is estimated at 58.8 twh, or 6.19 per cent of the regional total. By 2011, the UAE is expected to account for 6.60 per cent of regional thermal power generation. BMI forecasts an average 7.4 per cent annual increase in generation to reach 85 twh by 2011, all of which will be thermal.
According to the forecast, electricity consumption per capita will increase by two per cent over the period 2006-2011. The UAE power consumption is expected to increase from an estimated 56.6 twh in 2006 to 82 twh by 2011. Therefore, it is expected that the consumption demand for electricity will be met by the generation capacity.
The report noted that conventional thermal sources are expected to remain the dominant fuel for electricity generation in the coming years, with most power projects under construction or planned using gas. "There is long term possibility of diversification into nuclear, while other options are being considered in order to limit the use of gas."
The natural gas demand is forecast to increase from 41.7 billion cubic mere (bcm) in 2006 to 60.1 bcm by 2011 and the gas-fired power generation to increase from 57.6 twh to 83.1 twh, representing 97.7 per cent of total generation by 2011.
Oil will remain a relatively insignificant part of the UAE power generation mix, with its market share set to hold fairly steady during the forecast period. It currently accounts for around two per cent of the total generation, and is expected to increase to a maximum of 2.4 per cent by 2011. BMI estimates that there will be no more than two twh of oil-fired power generation by 2011. Coal-fired generation is being considered by UAE as an option to reduce dependency on gas, but a lack of domestic resources and the size, cost and environmental implication of coal-fired facilities mean they are unlikely to be built during the forecast period.
The BMI forecasts that UAE overall business environment will remain attractive in the MEA regional context and the long term economic and political risks are exceptionally low. "There has been a considerable progress in power market deregulation, privatization and liberalization. The growth outlook for power generation and primary energy demand is healthy. In the BMI Business Environment Ranking matrix, UAE receives a composite score of 38, which ranks UAE second out of eight countries included in the MEA region." Source
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