Towers are seen at a facility operated by the Fujairah Asia Power Co. in Fujairah, United Arab Emirates.ENOC, as Dubai’s government-owned refiner is known, will expand the plant’s capacity to 250,000 tons a year by 2014, Image Credit: Bloomberg

Dubai: Power generation capacity in the UAE is growing at a higher pace than consumption – that not only ensures energy security of the country but will also make the UAE a net power exporter to the neighbouring countries once the GCC Power Grid becomes operational.

Power generation capacity in the UAE has grown at a compounded rate of 12 per cent per annum during the last 5 years and current capacity stands at about 30,000MW while power consumption grew at a slightly lesser than 8 per cent per annum during the same period, according to a latest report by Kuwait Financial Centre (Markaz).

“Power sector in the Emirates had been seeing a rise in tandem with the economic growth it has achieved over the last decade,” it said.

Dubai Electricity and Water Authority (DEWA) recently reported a 7 per cent increase in the capacity and efficiency of its electricity transmission networks to 6637 MW compared with 6206 MW for all year 2011.

“We are fully committed to maintaining and improving the capacity and efficiency of our substations and transmission networks to continue offering world-class sustainable and environment friendly services, which will achieve high levels of customer satisfaction. Part of our strategy is to expand our transmission and distribution networks catering to Dubai’s construction business growth,” Saeed Al Tayer, MD & CEO of DEWA, said.

Currently 98 per cent of the UAE power plants are fired by natural gas and the remaining 2 per cent are run by liquid fuels. Contribution of natural gas as fuel in the power sector is just 49 per cent in Saudi Arabia and 29 per cent in Kuwait.

“This gives UAE an advantage as gas fired plants are efficient and the fuel is cheaper as well compared to Oil. Although the country’s gas consumption has outpaced production, it imports natural gas from Qatar through the Dolphin gas pipeline,” Markaz says.

“Over the next four years, we estimate consumption to grow at 8.5 per cent annually, with much of the growth coming from Abu Dhabi. While Dubai expects consumption to grow at 3.5 per cent over the next decade and at 2.5 per cent from 2020-30, Abu Dhabi expects demand to grow by 11 per cent annually till 2015.”

Abu Dhabi Water & Electricity Company (ADWEC) supplies electricity to Abu Dhabi, Al Ain and also exports the surplus to Northern Emirates. Additionally, by 2014, FEWA is expected to stop its generation and rely on ADWEA for power. According to ADWEC estimates, power exports to northern Emirates are expected to increase from 2,400 MW in 2012 to 5,827 MW in 2020.

Large investments in alternate energy is expected to change the country’s energy landscape in the coming years. Abu Dhabi’s Economic Vision - 2030 aims at generating 7 per cent of its energy requirements from the renewable resources. Masdar, also called Abu Dhabi Future Energy Company, concentrates on carbon free power generation. Masdar Power is developing a 100MW Shams 1 Concentrated solar power (CSP) power plant in the western parts of Abu Dhabi. They are also working on a 30MW wind farm in addition to a plan to construct the world’s largest hydrogen power plant by 2015.

Emirates Nuclear Energy Corporation (ENEC) envisage constructing the first nuclear power plant by 2017 and by 2020 UAE will have 4 nuclear power plants in total with a gross installed capacity of 5,600 MW with an estimated capital cost of around $20 billion. In January 2012, Dubai’s Supreme Council of Energy unveiled its 1000 MW solar park estimated to cost around $3.5 billion.

GCC states are set to invest $252 billion (Dh925.62 billion) over the next five years on projects for setting up new power production plants, distribution systems and supply grids, recent reports suggested.