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UAE’s Power Sector: Increasing generation through renewable sources [free access]

February 12, 2018

United Arab Emirates’ (UAE) energy sector has been undergoing various changes over the past few years. The key driver for this change is the UAE Energy Plan for 2050, which calls for diversification of its energy portfolio via the integration of renewable sources of energy. The country’s current energy policy revolves around the objectives of sustainability, energy security, energy efficiency, diversification of fuel sources and creating a low carbon economy. Being one of the top 10 oil and natural gas producers in the world, UAE is setting an example of a hydrocarbon-dependent nation pioneering a green energy revolution.

 

The UAE Energy Plan envisages increasing the share of clean energy in the total energy mix to around 50 per cent, reducing carbon emissions emanating from power generation by 70 per cent and improving the energy efficiency by 40 per cent by 2050. This is expected to result in national savings worth around AED700 billion by 2050.

 

Despite its position as a global oil exporter, UAE has been installing nuclear and solar plants to meet its energy needs to achieve greater sustainability and security of energy supply as well as to reduce environmental pollution and carbon emissions.

 

The growing population has pushed up the demand for power in recent years. Since 2011, the country’s electricity generation has grown at a compound annual growth rate (CAGR) of 5.7 per cent while consumption has increased at around 7.5 per cent. Currently, the country relies heavily on natural gas for energy generation to meet its growing demands. However, going forward, it has plans to reduce the share of natural gas from 98 per cent in 2012 to less than 76 per cent in 2021 via the entry of clean energy in the overall mix.

 

In order to connect the upcoming renewable energy and non-conventional fuel-based plants with the transmission grid, UAE has been undertaking grid expansion activities, installing more transmission lines, adding more substations and expanding the existing ones. In addition, UAE is working to making its grid smarter by installing more smart meters.

 

Generation plans

Given the rising electricity demand and the increasing carbon emissions, UAE must explore sustainable and renewable energy resources. According to its recent Nationally Determined Contribution (NDC), the country plans to increase the share of clean energy (defined as renewable and nuclear energy) in the total energy mix from 0.2 per cent in 2014 to 24 per cent by 2021. These targets have also been reflected in the UAE Energy Plan for 2050, which aims to increase the share to 50 per cent, and the country has been initiating various projects to achieve its targets.

 

Solar energy

Due to its geographical location, UAE has massive solar generation potential and its energy policy has also shifted substantially, owing to the declining price of solar. The UAE was ranked third in the world in the production of concentrated solar power (CSP) in 2013. In 2014, the UAE was generating roughly 140 MW of solar power.

 

Various solar energy facilities have been planned in the UAE, with some of them already under operation. These include the Muhammad bin Rashid Al Maktoum Solar Park being constructed in Dubai, which will be the largest CSP project in the world. The first phase of the plant became operational in 2013, with a capacity of 13 MW. The second 200 MW phase became operational in April 2017, while the third phase of 800 MW is expected to come online in 2020. The plant is expected to be expanded to 5,000 MW by 2030. The project is in line with the Dubai Clean Energy Strategy 2050, which aims to diversify the energy mix so that clean energy will generate 25 per cent of Dubai’s total power output by 2030 and 75 per cent by 2050.

 

Dubai Electricity and Water Authority (DEWA) has awarded the contract for the 800 MW third phase of the Muhammad bin Rashid Al Maktoum Solar Park project to the Masdar-led consortium including the Spain-based companies FRV (Fotowatio Renewable Ventures) and Gransolar Group. This phase will be constructed based on the independent power producer (IPP) model.

 

The largest CSP plant in the UAE—the 100 MW Shams 1 plant—is located in Abu Dhabi and has been operational since 2014. Additionally, the Sweihan photovoltaic (PV) project, which has a capacity of 1,177 MW and is being constructed at a cost of USD872 million, is the largest solar PV site in the world.

 

Smaller solar plants are also under construction elsewhere in the country. Federal Electricity and Water Authority (FEWA), which covers several northern Emirates, anticipates that an additional 200 MW of the Ras al-Khaimah solar project will become operational by 2025.

 

With the increasing number of solar projects being tendered to private players, UAE is also exploring public-private partnerships (PPP) as a potential tool to help manage the economic volatility caused by the oil prices in the past few years, while creating an additional investment stream to boost the energy sector expansion.

 

Nuclear energy

The government of the UAE plans to explore nuclear energy as the main source of generating clean electricity. In 2008, the country released its Nuclear Energy Policy, which is built on the standards of safety, transparency and security, making the UAE a role model for nuclear energy development worldwide. To meet the ambitious milestones set by the UAE's Nuclear Energy Policy, the Emirates Nuclear Energy Corporation (ENEC) was established in 2009. Since 2014, UAE has also reached agreements with several countries (Argentina, Japan, South Korea, the United Kingdom, France, Australia, Canada and Russia) on cooperation in the nuclear power sector.

 

ENEC is currently involved in overseeing the construction of the country’s first nuclear power station, the 5.6 GW Barakah nuclear power plant (NPP). The NPP is an important part of the UAE’s efforts to diversify its energy sources while reducing the country’s carbon footprint. Once it becomes operational in 2020, the Barakah NPP is expected to reduce carbon emissions by approximately 12 million tons every year. The project is part of the country’s vision to achieve 6 per cent of electricity generation through nuclear sources by 2050.

 

Clean coal energy

DEWA is involved with the construction of the 2,400 MW Hassyan clean coal power station being developed by the consortium of Saudi Arabia’s ACWA Power and China’s Harbin Electric. The project entails the construction of four 600 MW units and is being developed along the lines of the IPP model.

 

Table 1: Key renewable-based generation projects planned in UAE

Project

Energy source

Regulating Authority

Capacity

Expected commissioning

Mohammed bin Rashid Al Maktoum Solar Park

Solar

DEWA

5 GW

1 GW by 2020; 5 GW by 2030

Barakah nuclear power plant

Nuclear

ADWEA

5.4 GW (4*1.4 GW)

2020

Sweihan solar plant

Solar

ADWEA

1,177 MW

2019

Ras al-Khaimah solar plant

Solar

FEWA

200 MW

2025

Hassyan clean coal power station

Clean coal

DEWA

2,400 MW

2023

Hatta pumped-storage hydroelectric power station

Hydroelectric

DEWA

250 MW

2021

Ras al-Khaimah clean coal power station

Clean coal

FEWA

1,800 MW

2021

Source: DEWA; FEWA; ADWEA; Global Transmission Research

 

Transmission plans

Going forward, UAE plans to focus on strengthening and upgrading the existing grid network and increasing its capacity, primarily by adding more substations and transformers. The country is expanding its existing network in order to transmit electricity from the planned generation stations.

 

In Dubai, DEWA has allocated a budget of AED5.013 billion for power transmission expenditures in 2018. The budget has been distributed across various transmission projects in the pipeline, which include building three new 400 kV substations at a cost of AED1,080 million; installing 116 km of 400 kV overhead lines for AED812 million; and constructing 10 new 132 kV substations at a cost of AED855 million. AED1.3 billion has been allocated for laying 235 km of 132 kV cables and installing substation control systems.

 

In Abu Dhabi, Abu Dhabi Transmission and Despatch Company (TRANSCO), a subsidiary of ADWEA, has launched projects aggregating USD98 million to expand the power grid and water infrastructure of the UAE capital city and the northern region. A key project to be undertaken is the construction of a USD51.5 million, 400 kV double-circuit transmission line between Barakah Switchyard 2 and the new 400 kV Bab substation to connect the Barakah NPP with the national grid.

 

Further, FEWA is planning to invest AED95 million in its grid expansion initiatives, which include the construction of 132/11 kV substations and 132 kV cables in the new Ajman area, expected to be auctioned in 2019, with likely completion in 2022. Additionally, it had projects worth AED78 million under construction in 2017, including two 33/11 kV power plants and 33 kV power cable lines in the new Safia area and Ajman Industrial Zone.

 

Table 2: Key planned transmission projects in UAE

Project

Voltage (kV)

Length (km)/ Transformer capacity (MVA/MVAr)

Scheduled completion

Developers

Barakah–New Bab transmission line

400

144 km

2018

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Hameem–Al Ain South Junction transmission line

400

40 km

2019

Abu Dhabi Transmission and Despatch Company (TRANSCO)

New Bab–Hameem transmission line

400

135 km

2018

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Expansion of Mahawai substation

400/132

500 MVA (1x500 MVA)

2018

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Expansion of Ajman substation

400/132

NA

2018

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Expansion of Qurm substation

400/132

NA

2019

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Construction of Al Faya switching station

400

NA

2020

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Construction of Hameem switching station

400

NA

2020

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Extension of Barakah NPP substation

400

NA

NA

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Construction of Al Dhafrah substation

400

NA

2019

Abu Dhabi Transmission and Despatch Company (TRANSCO)

Construction of Canal Gardens substation

400/152

NA

NA

Dubai Electricity and Water Authority (DEWA)

Construction of Dubai Janoub substation

400/152

NA

NA

Dubai Electricity and Water Authority (DEWA)

Construction of Shamal substation

400/152

NA

NA

Dubai Electricity and Water Authority (DEWA)

Note: NA - not available

Source: Abu Dhabi Transmission and Despatch Company; Dubai Electricity and Water Authority; Global Transmission Research 

 

Smart grid and electric vehicles

The various Emirates are also rolling out their plans for the deployment of smart grid technology, which is in line with the targets set by the UAE Energy Plan 2050. Dubai, for instance, aims to install more than 1 million smart meters by 2020. Recently, DEWA also signed a memorandum of understanding (MoU) with Germany’s RWE Energy Group to undertake further innovation and research and development in smart energy and smart grids. The authority also appointed Honeywell to install smart metres for its smart energy project.

 

Likewise, Abu Dhabi is taking the lead in advanced metering infrastructure (AMI), which was evident by its efforts to deploy more than 250,000 smart electricity meters across the Emirate by 2016. Lastly, Sharjah Electricity and Water Authority (SEWA) aims to replace all conventional meters with smart meters, as mentioned in its strategic plan for 2020.

 

UAE is also focusing on promoting the use of electric vehicles (EVs) throughout the country. The UAE’s Ministry of Energy has devised an incentives programme to encourage people to buy electric cars. Green bank loans, green insurance plans, attractive EV prices and green registration of vehicles are some of the incentives planned to encourage people to buy the environmentally-friendly EVs. This is being promoted in line with the country’s target of achieving a 15 per cent reduction in carbon emissions by 2020.

 

The Dubai Supreme Council of Energy has also established a new target of ensuring 2 per cent of all vehicles are hybrid or electric by 2020 to help reduce carbon emissions in Dubai by 19 per cent by 2021.

 

Challenges ahead

The government of UAE is introducing numerous policies and initiatives to achieve the targets laid down in its Energy Plan for 2050. The country aims to be seen as a nation involved in developing global and regional best practices. Given the country’s abundant solar potential, organisations such as Masdar are taking steps to increase the use of solar power.

 

However, various challenges lie ahead for UAE in its move towards greater integration of renewable sources. One of the challenges for the solar sector is related to the damage inflicted upon the solar panels and mirrors due to the dust and sand in the area, which drives up the associated maintenance costs.

 

Another challenge facing the alternative sector is that renewable-based power is less cost effective than hydrocarbon-based power as oil prices remain relatively low. Also, due to its geographical location, UAE has high temperature levels, which reduces the efficiency of solar modules. Thus, the companies face the challenge of installing solar panels that can withstand excessive heat and work efficiently.

 

Summing up

The renewable energy sector in the UAE has been developing rapidly. Facilitated by strong government support, solar energy has been making considerable progress. While hydrocarbon is likely to remain the country’s major source of energy for the foreseeable future, UAE is working towards its commitment to a cleaner and greener future. Additionally, the country is investing in modern and smart grid technology to achieve its renewable energy targets and optimise the electricity grid.