Abu Dhabi moves to unify UAE utility production

27 March 2019 (Last Updated March 27th, 2019 12:51)

Arguably the most significant reform is the creation of the Ewec, a new public shareholding entity established to unify production and supply of power and water across Abu Dhabi and the northern emirates.

Abu Dhabi moves to unify UAE utility production

Abu Dhabi’s utility sector has undergone unprecedented changes in the past 12 months.

New government entities have been created and existing ones restructured with the goal of enabling efficient and cost-effective provision of power and water for the UAE capital and northern emirates.

UAE’s future energy plans

Arguably the most significant reform is the creation of the Emirates Water & Electricity Corporation (Ewec), a new public shareholding entity established to unify production and supply of power and water across Abu Dhabi and the northern emirates.

Ewec will not only replace Abu Dhabi Water & Electricity Company (Adwec) as the off-taker for utilities in Abu Dhabi but will also assume responsibility for buying and selling electricity and water production from Federal Electricity Company (Fewa), the northern emirates’ state utility.

While Abu Dhabi has been supplying power and water to the northern emirates and Sharjah at a rapidly increasing rate over the past decade, the move to unify production and supply across Abu Dhabi and the northern emirates marks a sharp break from the past – when planning and procurement of new capacity remained under the control of each utility.

“Ewec will contribute to a key transformation in the water and power sectors in the UAE,” said Mohammed Hassan al-Suwaidi, chairman of Ewec, when the entity was launched in November.

“Integration of our national institutions will have a significant impact on boosting water production and power generation efficiencies. Furthermore, this cooperation will open the way for further investments.”

UAE’s future energy plans: new structure

The restructuring of Abu Dhabi’s power and water sector began in March last year when the Department of Energy (DoE) was established to consolidate state-owned utility entities.

The emirate’s main utility company, Abu Dhabi Water & Electricity Authority (Adwea), was folded into the DoE along with the emirate’s utility regulator, the Regulation & Supervision Bureau.

While many in the market were a little unclear about the role of DoE initially, it has become clear that the department’s primary function will be regulating and planning for Abu Dhabi’s utilities and wider energy sector. Ewec will take over Adwec’s mantle as the off-taker for utilities projects and procurer of fuel to sell to private utility providers.

“Ewec will be in charge of planning and procuring capacity, and will be the off-taker for local and Fewa capacity, which encompasses five out of the seven emirates,” says a source close to the new entity.

“Fewa will still be able to tender and develop capacity on its own, but, as the single buyer, Ewec would buy the produced power and water and sell it back to the Fewa distribution company.”

Ewec will be under the umbrella of Abu Dhabi Power Corporation (ADPC), an existing entity that has had its role significantly strengthened under the new structure. ADPC will in effect manage the assets across the five emirates and will have the final say on the procurement of new projects.

“Ewec has a board and will oversee planning and procurement for future capacity, but the ultimate investment decisions have to be approved by ADPC – it will sign off all projects,” adds the source close to the body.

After the impending integration of Fewa into Ewec, ADPC will oversee a network with a power capacity of more than 25GW and a water production capacity of more than 1 billion gallons of water a day when current projects under-construction are completed.

UAE’s future energy plans: changing the utility market

While the benefits of a cross-emirates utility provider has long been preached by many involved in delivering power and water in the UAE, the move towards renewable energy and the decoupling of power and water have made the case for a unified approach much stronger.

“The driver for the establishment of Ewec is to ensure more efficient, cost-effective supply of utilities, and the integration of renewables into the grid will play a major part in this moving forward,” says the source.

Work is ongoing on the 1.17GW Sweihan photovoltaic (PV) solar project, and Abu Dhabi has already started the prequalification on an even-larger 2GW PV project planned for the Al-Dhafra area.

As PV solar is an intermittent energy source, with power only produced during daylight hours, the importance of planning for peak power periods and different regions becomes paramount.

The other shift taking place in the UAE’s utility sector is the decoupling of power and water, with Abu Dhabi recently awarding a contract for its first independent water project (IWP).

The 200 million imperial-gallon-a-day (MIGD) Taweelah IWP, which will be the largest standalone reverse osmosis (RO) desalination plant in the world when completed, breaks with Abu Dhabi’s tradition of its desalinated water coming from cogeneration power and water facilities.

The move towards independent water production has been facilitated by the rise of RO membrane technology, which allows production of potable water in a much less energy-intensive process.

Previous cogeneration thermal desalination plants were designed to produce maximum power and water, which leads to operational inefficiencies and fuel efficiencies during non-peak periods. The separation of electricity and desalination production will drive reductions in costs and carbon emissions across the UAE’s energy sector.

In the case of Abu Dhabi’s IWP, the decision to move ahead with standalone desalinated plants is inextricably linked to the commissioning of the Baraka nuclear power plant, which will add 5.6GW of baseload capacity to the emirate’s independent power capacity when completed in 2020.

With almost 9GW of baseload nuclear and intermittent solar power set to come online in the next four years, integrated planning and delivery from Ewec will be crucial to ensuring that electricity and water are produced in an efficient manner.

MEED
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