Alternative means: Demand-side management shows promise to reduce consumption

With growth rates for peak electricity demand (5.9%) and water supply (5.9%) remaining high in 2013, the utilities sector has much work to do. Emphasis has largely been placed on additional investment and the supply side. However, the government is increasingly looking at demand-side management as a means of mitigating consumption trends and reducing the costs of power and water provision.

Efficiency Tool

 Global trends increasingly see energy efficiency as a valuable tool to generate cost savings and reduce power and fossil fuel requirements. A 2009 study by global consultancy McKinsey found that efficiency measures could cut US energy demand by 25% and lead to savings of $1.2trn. Abu Dhabi has been conducting its own studies that show similar potential. According to Carl Sheldon, CEO of the Abu Dhabi National Energy Company (TAQA), “A lot of the opportunity in the sector is around demand-side management.”

For the emirate, the implications are huge. The residential electricity tariff currently stands at Dh0.05 ($0.01) per KWh for nationals and Dh0.15 ($0.04) per KWh for non-nationals, while the real average unit cost of electricity supply to residential customers is Dh0.33 ($0.09) per KWh. The government is also looking at a number of initiatives that could dramatically impact use.

Cool - Off

The government has put together a cross-sector working group to develop a comprehensive cooling plan. Under this group, a number of studies and pilot programmes have been conducted to look at ways of reducing demand. One such study carried out on 10 medium- and high-rise buildings and completed in April 2011 found that without major capital expenditure, the emirate could reach 27% savings on cooling use through the basic maintenance of cooling systems. If rolled out across the emirate’s entire building stock, it could technically provide 15% savings in total consumption. Such savings would exceed the generation capacity of a single power plant. “It would be highly economically relevant to do this,” Sheldon told OBG.

Other areas of study have included looking at excess cooling capacity in buildings, the implications of temperature checkpoints, and the application of air-handling systems and their design in new buildings. These areas have been highlighted for their ability to offer energy savings with little cost and time implications. According to Abdulla Al Nuaimi, advisor at Abu Dhabi Water and Electricity Authority (ADWEA), “The cooling plan is implementable within the next four years without requiring any fundamental policy shift.”

New Standards

This furthers the work of the Abu Dhabi Urban Planning Council (UPC) in the built environment. In 2008 the UPC introduced the Estidama (“Sustainability”) initiative to support the Plan Abu Dhabi 2030: Urban Structure Framework Plan, which is the capital’s long-term development strategy. This has provided greater oversight of the sector and allowed for more energy-efficient building design.

In September 2010 the Estidama Pearl Rating System, which, like the Leadership in Energy and Environmental Design rating system, is used to evaluate green building practices, became a mandatory requirement for all new buildings in the emirate, resulting in a 40% improvement in buildings’ energy efficiency over pre-Estidama levels. “There has been a concerted effort to introduce new building codes. All of this is a step in the right direction in terms of quality control, but it will be the implementation that will dictate the overall success and benefit of the programme,” William Haddad, the founder and chairman of UAE-based Mechanical and Civil Engineering Contractors, told OBG.

Powerwise

Through the Powerwise initiative, the Regulation and Supervision Bureau (RSB) has also been focusing on demand-side management. In particular, the bureau has been conducting pilot studies relating to consumer behaviour. Starting in the fourth quarter of 2012, the RSB has been running a smart meter pilot scheme in a total of 400 villas in Abu Dhabi. The smart meters allow consumers to see their power consumption in real time. The bureau has also instituted a rebate scheme under which consumers receive money back if they can shift load from peak to off-peak times. The initial findings have been positive. Some 60% of customers were able to save power and the majority could adjust their usage towards off-peak times. Individual consumers have been able to reduce their consumption from 25% to 50%. As such, programmes that work to improve energy efficiency can make a meaningful contribution to reducing future demand requirements. According to Rashid Al Rashedi, the deputy director-general at RSB, “Currently, demand forecasts don’t factor in any demand-side interventions,” meaning there is significant potential to reduce the current forecasts.

Waterwise

Similar trends are also evident in the water sector. The RSB counterpart to Powerwise, called Waterwise, has also conducted a number of trials and studies to assess the potential for demand-side management and consumption savings. For example, the Residential End Use programme has used micro-component metering to look at patterns of residential water consumption in 150 villas in Abu Dhabi. The project, which will be completed in the first quarter of 2014, is monitoring water use across a number of appliances over three seasons (pre-summer, summer and post-summer). While it is too early to come to any conclusions, the RSB hopes that the data collected via this project will allow it to develop bespoke programmes to address areas where there are inefficiencies or losses. It will also allow the bureau to better target its awareness campaigns.

Other Gains

Greater efficiency is also set to be achieved by expanding the generation mix in the emirate. Given that the nuclear programme will provide a base-load of 5600 MW, easily exceeding the current minimum demand level in the winter when there is no demand for cooling, ADWEA is therefore likely to tender for new stand-alone reverse osmosis desalination plants to avoid the unnecessary use of thermal facilities simply for the purpose of desalination. Reverse osmosis technology will provide desalinated water more efficiently.

It is also a cost-effective means of generation. ADWEA is currently assessing the structure of future independent water plant contracts to ensure the operator is given the necessary incentives to run the plant in a cost-efficient manner. “Public spending on water subsidies is quite high, and there is a role for the private sector to play in terms of introducing technical enhancements that optimise efficiencies to reduce costs,” Syed Basar Shueb, CEO of the PAL Group, told OBG. “Should enhanced regulations pertaining to water supply contracts be developed, they may unlock greater opportunities.”

Reuse

The government is also emphasising reuse to meet demand. According to the Abu Dhabi Sewerage Services Company, the emirate currently reuses 60% of recycled water. However, the firm has the transmission capacity for 100% recycled water use and believes demand exists to offtake this water. The key challenge is bolstering the capacity in the distribution network to absorb the extra supply. Responsibility for the distribution of recycled water is to be transferred from the municipality to the ADWEA-owned distribution companies.

Population growth and infrastructure development are set to drive demand in segments ranging from power generation and electricity to desalination and district cooling, and this is expected to benefit small and medium-sized enterprises looking to diversify away from the oil and gas sector.

Abu Dhabi’s drive for efficiency is therefore likely to produce significant investment and contract opportunities. In addition, it should also further reduce the requirements for capital investment in generation infrastructure over the coming decade.