The Emirates National Grid (ENG), with an operational start date of November 2006, is ahead of schedule according to a source quoted in the Khaleej Times. Abu Dhabi Water and Electricity Authority (ADWEA) and Dubai Electricity and Water Authority (DEWA) have already achieved interconnection and a move to link up Dhaid in Sharjah with Fujairah is expected later this year.
The grid will allow each of the emirates to share power, and would create a greater safety net to compensate in the event of shortages and power blackouts. According to Saoud Aziz Ali Ghalib, assistant engineer to the project manager at the Ministry of Energy, the grid “will increase the spinning reserve and stability of the power structure in the UAE.”
Once the UAE has achieved full interconnectivity, it is expected to hook up with Oman prior to the planned connection with a Gulf Cooperation Council (GCC) wide grid in 2010. Bahrain, Kuwait, Qatar and Saudi Arabia are planning to connect their power supplies by 2008 in preparation for the six-country electricity grid, which is expected to cost more than $1.1bn.
Some analysts assert that the UAE has the most advanced utilities sector of the countries participating in the GCC project and as such, is expected to be a prominent provider of power. At home, Abu Dhabi is considered the powerhouse of the UAE utilities sector. However, some observers are concerned about the sustainability of Abu Dhabi’s position, as the emirate will have to dramatically expand its capacity to meet the huge growth in local demand.
Earlier this year, Keith Miller, head of planning at Abu Dhabi Water and Electricity Company (ADWEC) discussed a capacity shortage in the provision of power if current demand projections are not re-evaluated. He asserted, “changes in land ownership laws in 2005 and the release of surplus oil revenues for major infrastructure developments and mega projects have resulted in a development boom. This will require significant quantities of extra electricity and water capacity above the normal developments assumed in past forecasts.”
ADWEC’s most recent forecasts from May 2006 illustrates the expected dramatic growth in electricity demand in Abu Dhabi as a result of the spate of proposed real estate projects. The current peak demand for electricity in Abu Dhabi stands at 4,671 MW. The peak demand forecast for the five-year period from 2005 shows an almost doubling of electricity demand with the emirate requiring 8,652 MW by 2010. This is predicted to rise to 12,590 MW by 2015 and 14,226 MW by 2020.
This projected dramatic rise is largely attributable to the power demands of Mega projects that ADWEC believes will consume almost a third of the emirate’s electricity by 2020.
ADWEC believes that such an increase in demand will create more opportunities for investment in independent water and power producers (IWPPs). There are currently 5 IWPPs in Abu Dhabi operating power plants at Taweelah, Shuweihat and Umm Al Nar. The private companies own a 40% stake in the plants with the remaining 60% being held by state-run ADWEA largely through its subsidiary Abu Dhabi National Energy Company (TAQA).
However, the number of plants is expected to expand to meet the projected growth in demand. ADWEA signed a deal earlier this year with the Singaporean firm SembCorp to develop the power plant at Fujairah that has a current capacity of 535 MW. The joint venture company Emirates SembCorp Water and Power Company aims to expand generation capacity at the facility by 225 MW to be operational by the first quarter of 2009. Expansion is also possible at the sites at Taweelah and Shuweihat within the emirate and observers expect tenders to be sent out for the development of plants at these sites in the near future.
There is also an increasing recognition of the need for the long-term planning of fuel supplies to power these plants. The Dolphin Project is expected to solve the problem in the short-term as it will import 90.61m cubic metres of natural gas a day from Qatar. However, in the long-term, it is in Abu Dhabi’s interest to increase local production.
Indeed, many of the international oil companies operating in the emirate are working with Abu Dhabi National Oil Company (ADNOC) to increase gas production and develop sour gas reserves. Sultan al-Hajji, deputy general manager at Total Abu Al Bukhoosh, , told OBG that the Abu Al Bukhoosh field is now producing more gas than oil. Other companies such as Shell are working with ADNOC to source more opportunities for gas production.
Abu Dhabi is preparing itself for the increased power demands placed on it by the planned construction projects in the emirate. The involvement of the private sector is seen as an integral part of the drive to fuel this growth.
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