Addressing Energy Demand

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Shortages in supplies of energy feedstock are creating challenges for the Northern Emirates, forcing the authorities to address water and energy demand.

The UAE as a whole is among the highest consumers of energy and water per head in the world. Water consumption in the UAE is currently running at 130 gallons per person per day, while energy consumption is around 20,000 KW per person per year. According to the World Wildlife Fund, the UAE has the highest per capita ecological footprint in the world, at 29.4 acres per person.

The impact of consumption falls unevenly however, with the Northern Emirates most exposed to increases in demand. Electricity in the Northern Emirates is sold at a subsidised price of around 15 fils per kilowatt-hour (kWh), well below the average annual cost of 70 fils, Khaled Al Awadi, gas operations manager at the Emirates General Petroleum Corporation (Emarat), told local press. By comparison, consumer rates in Dubai and Abu Dhabi are marked down by only around 10% during the summer, he said.

The difference relates to the ease of acquiring feedstock in varying regions. Al Awadi estimates the UAE's total natural gas supply to be around 4.5bn cubic feet per day, a figure some analysts say is around 1bn cubic feet below demand. Whereas Abu Dhabi and Dubai are able to meet some need from their own resources, the Northern Emirates are not so fortunate. They have been forced to meet shortages by burning liquids (diesel, liquefied petroleum gas, crude, medium fuel oil or kerosene) or even resorting to coal.

This is a far from ideal solution, as liquids are both more polluting and less energy efficient. The cost per MW for liquid generated power is also much higher, hence the Northern Emirates' large subsidies. Problems in securing supply from Qatar via the Dolphin Energy project (currently supplying 2bn cubic feet per day to the UAE) mean the situation is likely to deteriorate further.

Umm Al Qaiwain in particular is beginning to feel the pinch. In a region as water-scarce as the Gulf, feedstock scarcity affects not only energy supply, but also water availability. A planned $54.5bn desalination plant in Umm Al Quwain, for example, is currently stalled due to a chronic shortage of energy feedstock.

The plant, to be built by Imdad, a joint venture between the Umm Al Quwain government and Saudi Arabia's Al Rajhi Investment Group, has exclusive rights to supply a number of new developments planned across the emirate: Al Salam City, developed by Sharjah-based Tameer; Dubai-based Emaar's 2000-acre Marina project; and White Bay, developed by Al Murjan Real Estate, a joint venture between Sheikh Abdullah bin Rashid Al Mualla, deputy ruler of Umm Al Quwain, and Sheikh Tariq bin Faisal Al Qassimi, chairman of the Emirates Investment Group. The combined value of these projects is an anticipated $14bn, bringing in a total of $12.7bn in foreign direct investment (FDI) in 2007 alone, making them vital to Umm Al Quwain's development.

The plant was originally scheduled to come on stream in 2009, but is on indefinite hold due to ongoing difficulties in securing electricity supplies.

The Federal Electricity and Water Authority has, until recently, been in charge of securing all energy and water for the Northern Emirates. Responsibility for securing electricity is now shared with the Abu Dhabi Water and Electricity Authority (ADWEA). There have been widespread calls for greater privatisation throughout the UAE's energy and water sector and private developers are reportedly being told that they must source and supply feedstock for new plants themselves.

However, the Federal National Council (FNC), meeting earlier in the month, rejected a draft law to privatise the electricity and water sector in the Northern Emirates. Yousuf Al Nuaimi, an FNC member for Ras Al Khaimah, said privatisation in the Northern Emirates would send rates as high as 90 fils per kwh, compared to 7.5 for Abu Dhabi.

"Privatisation of electricity would be a fatal blow to Emiratis, it would mean higher bills for consumers, hitting the ordinary people the hardest, and as such I reject this law," he said.

As an alternative step to curb demand, the Sharjah Electricity and Water Authority (SEWA) launched a year-long power and water conservation campaign this month. The campaign will focus on spreading awareness through media advertising, public events and even Friday sermons. It remains to be seen though how much impact such a campaign can have: much of the Northern Emirates' high demand for water and electricity comes not so much from individual usage, as from the raft of resource-hungry new construction projects currently underway.

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