Abu Dhabi pushes to expand nuclear energy, water and electricity capacity

With strong private sector and foreign investor engagement, the utilities sector in Abu Dhabi is one of the most enduringly attractive to a wide range of businesses. Despite the economic slowdown of recent years, vital big-ticket projects in areas including nuclear energy, solar energy and desalination are continuing to progress at pace.


The power and water sector is overseen by several bodies, reflecting the UAE’s federal nature and the relevance of these industries to the public interest. Abu Dhabi is the largest emirate in the UAE, occupying more than 85% of the country’s land area. As home to the capital and the vast majority of the UAE’s hydrocarbons resources, it is central to federal decision-making. Power and water are closely related in the UAE, since most desalination units from which potable water is derived are linked to power plants.

The UAE’s Ministry of Climate Change and Environment evolved from the earlier Federal Authority for the Environment, and oversees the development of plans and strategies for water resources. The Ministry of Energy (MoE) oversees the electricity and water sector, as well as the oil and gas industry. Everyday development and investment in the emirate was formerly driven by the Abu Dhabi Water and Electricity Authority (ADWEA), a crucial institution and investment partner that has since been absorbed by the Department of Energy (DoE). It formed public-private partnerships (PPPs) to develop and operate water and power plants, including the flagship independent water and power producers (IWPPs). These agreements became exemplars of how private and foreign investors could work with the government in order to develop industries in Abu Dhabi.

Emirate Network

Power and water plants currently sell their output to a body known the Abu Dhabi Water and Electricity Company (ADWEC), a fully owned subsidiary of DoE, under a series of purchase agreements. ADWEC is the single buyer and seller of power and water, acting as an intermediary between producers and distribution companies across the emirate on a range of bulk supply tariffs that vary by season, and according to the day and week. Demand can vary significantly. ADWEC sells power and water to two fully owned subsidiaries of DoE: Abu Dhabi Distribution Company (ADDC) and Al Ain Distribution Company (AADC). AADC is the sole licensed distributor and supplier in the Eastern Region of the emirate, centred on Al Ain, the UAE’s fourth-biggest city. ADDC has the same role for the city of Abu Dhabi and the vast Al Dhafra region. The Abu Dhabi Transmission and Despatch Company (TRANSCO) operates and manages the transmission system as a whole, and is a fully owned subsidiary of DoE.

ADWEC also sells power and water to the five northern emirates of Sharjah, Ras Al Khaimah, Fujairah, Umm Al Quwain and Ajman, via Sharjah Electricity and Water Authority and the Federal Water and Electricity Authority. Abu Dhabi’s power transmission system is also linked to the broader GCC network, allowing the emirate to sell electricity across the border and to import from its neighbours when needed. In 2017 the UAE made net peak load exports to the GCC of 386 MW, up from 256 MW in 2016, according to ADWEC.

As of December 2018, plans were under way to replace ADWEC with the Emirates Water and Electricity Company, a new body set to unify water production and electricity generation.

Another important body is Abu Dhabi National Energy Company, or TAQA (meaning “energy” in Arabic), which is listed on the Abu Dhabi Securities Exchange, but majority-owned by DoE. The company invests in power generation, desalination, and the oil and gas sector, and has assets in 11 countries worldwide, including a 54% stake in six units of three power and water plants in Abu Dhabi.


The DoE has regulatory oversight of the emirate’s water, wastewater and electricity sectors, monitoring compliance with legal, technical and economic requirements. The organisation also has a remit to control prices in monopolistic areas of the market, including transmission, procurement, distribution and supply. It sets price caps for transmission and distribution companies on a multi-year basis. The DoE’s price control function gives it a crucial role in encouraging greater efficiency and improved services. Tariffs for the end consumer vary depending on the category of user, whether residential, industrial, commercial or government, and there are various tiers within each category depending on the type of property, level of usage, and whether the user is a national or not. Tariffs have been reformed in recent years to encourage more judicious use and to control demand growth, but they remain low by developed world standards. Efforts to ensure that growth is sustainable are supported by the Environment Agency - Abu Dhabi, which examines energy and water policy, as well as air quality and conservation, thus having an indirect impact on the sector.

Sector Consolidation

In March 2018 ADWEA was brought under the auspices of the emirate’s DoE, founded the previous month. The move was part of a broader, UAE-wide wave of consolidation of stateowned entities designed to improve efficiency and reduce the duplication of responsibilities. This consolidation is part of a strategic review of how the Abu Dhabi government operates, and the DoE integration follows a similar process of consolidation of subsidiaries by Abu Dhabi National Oil Company (ADNOC).

Power Companies

According to ADWEC’s “Statistical Leaflet 2017”, Abu Dhabi has a global electricity capacity of 16,622 MW and generated 83,006 GWh in 2017, almost 10% more than the 15,220 MW capacity of 2016. This is around double the capacity of 2007, which stood at 8698 MW. The Taweelah Asia Power Company (TAPCO) made the biggest contribution to power generation in 2017, with a capacity of 2200 MW and generation of 11,332 GWh. The Abu Dhabi government has a 60% stake in the company, held by TAQA (90%) and the DoE (10%). The remaining 40% is owned by outside investors, including Japan’s Marubeni (35%) and JGC (15%), Malaysia’s Edra (25%) the Emirati BTU Group (25%).

The Arabian Power Company (APC) made the second biggest contribution, with 1991 MW of capacity generating 12,850 GWh. APC is a joint venture between DoE, International Power, the Tokyo Electric Power Company and Mitsui & Co. Ranking third was the Mirfa International Power & Water Company (MIPCO), with 1702 MW of installed capacity generating 3089 GWh. DoE owns an 80% stake in the company, with the remaining 20% held by France’s Engie, which has a 25-year contract to operate the plant. Following these was the Gulf Total Tractebel Power Company (GTTPC), with 1671 MW generating 10,493 GWh. GTTPC is jointly owned by DoE (60%), French energy giant Total (20%) and Belgium’s Tractebel (20%). Other major producers include Ruwais Power Company (RPC), with 1627 MW generating 10,919 GWh; and Shuweihat Asia Power Company (SAPCO), with 1647 MW generating 7806 GWh.

The grid can also draw off power generated by the 3100-MW, gas-fired power station at the Emirates Global Aluminium (EGA) Taweelah smelter, and feed back to the facility when the need arises. DoE has interests in IWPPs in other emirates, indicative of the company’s leading position as a utility provider for the UAE as a whole. It has a 60% stake in the Fujairah Asia Power Company (FAPCO), one of the biggest contributors to the grid, with 2114 MW generating 7924 GWh. Emirates Sembcorp Water & Power Company (ESWPC) is 60% owned by DoE, with the remainder held by Singapore’s Sembcorp, and provides 861 MW of installed capacity and 3577 GWh of generation.


The UAE’s first large-scale solar plant, Shams 1, launched in 2013 with an installed capacity of 100 MW. Shams was at the time the world’s largest concentrated solar power (CSP) plant and the first of its kind in MENA. CSPs generate electricity through solar heat via parabolic mirrors and the creation of steam to drive a conventional power turbine. The plant covers 2.5 sq km in the Al Dhafra region and generates enough power to supply 20,000 homes, thereby playing an important role in meeting Abu Dhabi’s goal of achieving a 7% contribution of renewables to power production capacity by 2020. As in other power plants, international investors are playing a central role: local renewables company Masdar owns 80%, while Total has a 20% stake in the operating company.

Water Capacity

DoE’s water production capacity from IWPPs has grown steadily over the past decade. As of 2017 it had a total capacity of 960m imperial gallons per day (MIGD), including from its two facilities outside the emirate itself, with production of 268bn gallons in total throughout the year, up from 631 MIGD and 191.1bn gallons annually in 2007. Capacity rose 5.7% in 2017 from 908 MIGD the previous year, though production fell slightly, which is most likely attributable to a drop in the emirate’s population, as well as incentives for the more efficient use of water causing a reduction in demand.

As of 2017 the single biggest water producer in Abu Dhabi was TAPCO, producing 45.1bn gallons from a base capacity of 162 MIGD. It was followed by APC, with 41.3bn gallons from 145 MIGD of capacity, RPC with 30.4bn gallons from 101 MIGD, SCIPCO with 29.3bn gallons from 101 MIGD, and GTTPC with 25.4bn gallons from 84 MIGD. ECPC contributed 17.5bn gallons from 51 MIGD; and MIPCO, commissioned in October 2017, generated 7.8bn gallons from a capacity of 53 MIGD. The emirate also imported 47.8bn gallons from two Fujairah-based plants: FAPCO, with 132 MIGD of capacity; and ESWPC, with 131 MIGD. The plants produced just over 71bn gallons between them in 2017, while the remainder was used in Fujairah itself, or exported to the other northern emirates.

Demand Rising

Demand for power and water continues to grow. Peak power loads in the Abu Dhabi system in 2017 were 10.9 GW, up from 10.5 GW in 2016. In the Abu Dhabi region itself, the peak load grew from 6.2 GW to 6.4 GW, Al Ain saw a rise from 2.2 GW to 2.3 GW, while the Al Dhafra region saw a decline from 2.24 GW to 2.16 GW. Abu Dhabi peak water supply demand stayed level in 2017, at 467 MIGD, and Al Ain’s rose slightly from 207 MIGD to 208 MIGD. Al Dhafra saw a modest drop from 93 MIGD to 87 MIGD. This was somewhat offset by a small rise in peak export supply, from 66 MIGD to 69 MIGD. But this small drop belies a long-term trend of strong growth, driven by demographics and economic development.

Research carried out by the Paris-Sorbonne University Abu Dhabi suggests that demand for water in the emirate is set to grow by 9.5% a year over the medium term, having doubled in the past decade. With a range of important investment projects going ahead in 2018-19, it is anticipated that power and water demand will rise along with capacity.

Whereas some fast-growing markets have seen their power and water infrastructure put under serious strain by economic and demographic growth and diversification, Abu Dhabi’s forward planning and its encouragement of investment in capacity will stand it in good stead for the coming years. “There is a need for new power and utilities infrastructure to support the emirate’s economic vision,” Stephen Haw, partner at energy-focused management consultancy Baringa Partners, told OBG. “The government has clear intent and a sense of direction for the sector,” he said.

New Capacity

Abu Dhabi is investing heavily in new power and water production capacity to meet strong demand growth. Two of the biggest projects are the Dh73.5bn ($20bn), 5600-MW Barakah Nuclear Energy Plant, the first of its kind in the Arab world, and the Dh2bn ($544.4m) Taweelah desalination plant, which will provide 900,000 cu metres of water per day (see analysis). These new facilities are not only significant because of the substantial additional capacity that they will bring; they both mark significant changes in the production mix of energy and water. The Barakah plant will produce around 25% of the UAE’s electricity needs, providing a new solid baseline capacity for the country and the emirate to add to thermal plants and a growing renewables sector. This should help the emirate reduce its carbon footprint while freeing more natural gas for export and industrial use. Meanwhile, the Taweelah plant will be the first standalone desalination complex decoupled from power production in Abu Dhabi, helping the emirate meet changing demand through the year and new patterns of demand in the future. It also uses reverse osmosis (RO) technology, a considerably more energy-efficient method than the thermal systems most commonly used in the region. In addition to these various technological developments, the emirate aims to become a leader in waste management. “Abu Dhabi is positioning itself as the MENA region’s premier research and development centre for tackling waste management,” acting general manager of local waste management company Tadweer, Salem Al Kaabi, told OBG. “New developments include a waste-to-refuse derived fuel/solid recovered fuel facility, a wasteto-energy (for water desalination) facility, a material recovery facility, and green waste and animal waste treatment for resource recovery.”


In May 2017 construction started on what is to be the world’s largest solar plant, the 1.17-GW Sweihan project. A Dh3.2bn ($691.5m) financing package was secured from international and local financial institutions led by Bank of Tokyo Mitsubishi. The plant is being developed by Marubeni and China’s JinkoSolar in partnership with DoE. The authority signed a 25-year power purchase agreement with the two east Asian companies to provide electricity at $0.0294 per KWh, which makes Sweihan one of the lowest-priced solar projects in the world.

DoE is determined that the project will foster greater technology and knowledge transfer in the emirate, to support a growing domestic solar segment. The local climate is particularly well-suited to solar power production, and evolving technology has made it an increasingly affordable, efficient and suitable location. “The adoption of more renewable energy sources is a certainty,” Haw told OBG. “You will see a lot more investment in this area, particularly in solar.”

System Evolution

Demand and distribution patterns are likely to evolve considerably over the coming decade as new technology disrupts existing models. On the demand side, an upsurge in the use of electric vehicles (EVs) is a global trend that has taken longer to develop in the region than in most affluent markets, due largely to the low cost of fuel. But Abu Dhabi is among the markets developing EV technology. The Middle East’s first rapid EV charging station was installed in Masdar City in 2012 in partnership with Mitsubishi Heavy Industries. Charging stations have been installed in a number of locations in Abu Dhabi, and the government is working on a regulatory framework that will support EV usage.

In August 2018 Renault launched its latest EV in the Abu Dhabi market, an indication of the French automobile manufacturer’s confidence in local demand. CEO of Renault’s local distributor Al Masaood Automobiles, Irfan Tansel, noted that increasing the proportion of zero-emissions EVs on the roads is in line with the emirate’s goals of reducing its carbon footprint and protecting the environment. Official government plans unveiled in the 2017 “New State of Future” report forecast that 90% of vehicles nationwide will be EV self-driving cars by 2035. This suggests that there will be a rapid expansion of EV and a growing need for supporting infrastructure. Government agencies and investors are examining opportunities for distributed generation and smart grids. Solar panels attached to individual homes and businesses could feed power back to the grid when they are producing more than is needed, increasing efficiency and lowering bills.

Step up

In addition to building the world’s largest solar plant and desalination facility, Abu Dhabi has developed the world’s most extensive gravity-driven sewerage system through the Strategic Tunnel Enhancement Programme (STEP). A decade in the making, STEP fully launched in early 2018, implemented by Abu Dhabi Sewerage Services Company (ADSSC). Among the contractors were the US-based consulting, engineering, construction and operations firm CH2M, and South Korea’s Samsung C&T Corporation. As a result of the STEP launch, old pumping stations have been decommissioned, lowering the overall system’s power demands, and in the process helping both decrease its carbon footprint and make long-term cost savings. Installing a new gravity-driven system also means that the disruption that can be caused by augmenting an existing network is avoided. While sewage generation has levelled off in recent years, it is likely to grow over the long term.

With STEP now operational, ADSSC is focusing on ensuring that the system as a whole works optimally. “Our focus now will be to drive more efficiency in the system through data gathering and quantitative as well as qualitative measurements, so we can manage the network more effectively,” Omar Al Hashimi, the company’s managing director, told OBG. “We are also looking at more maintenance and rehabilitation. They have made significant investments recently to upgrade the system and build new treatment plants in the Western Region.” Also planned for the future is the construction of three new recycled water transmission systems. This will focus on ensuring that the supply to forestry and agriculture in particular is from recycled water, easing pressure on desalination capacity and scarce groundwater.


For more than two decades, Abu Dhabi has been establishing partnerships with private and international investors to develop the utilities sector, harnessing their expertise, technology and capital to meet the growing demands of the emirate.

Opportunities are constantly arising in the energy sector due to the investment in multibillion-dollar projects in areas as diverse as RO, nuclear power and sewerage systems. As economic growth picks up, there will be a strengthening of demand, and the government will continue to seek out partners in order to meet its economic and development goals.

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The Report: Abu Dhabi 2019

Utilities chapter from The Report: Abu Dhabi 2019

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