Playing the long game: An integrated strategy mapping a more sustainable model

Developed in 2010 and initiated in 2011, the Dubai Integrated Energy Strategy 2030 (DIES) aims to guide the emirate’s energy sector toward sustainability and enhanced efficiency. Responsible for executing the plan is the Dubai Supreme Council of Energy (DSCE), a governing body made up of key stakeholders.

The Dubai Electricity and Water Authority (DEWA) buys its fuel on international markets. This exposes the emirate to outside economic forces, but also drives progress, as stakeholders work to increase efficiency, lower costs and diversify energy sources.

THE PLAN: The DSCE has mapped out a plan with three main thrusts. The first is policies and governance. The second objective revolves around securing gas supplies, improving supply forecasting and diversifying Dubai’s energy resources. Demand management, the third, is focused on gathering information on current consumption and mapping ways to abate demand through technology and efficiency measures.

DEWA has signalled a slight change in the direction of its electricity policies. Previously, the public utility was exploring the possibility of initiating public-private partnerships to continue increasing production capacity. To that end, DEWA signed an agreement with four shortlisted bidders to develop the emirate’s first independent power plant, the 1600-MW Hassyan 1. By April 2012, however, DEWA had reassessed the demand situation and announced it would be delaying the $1.3bn project. The public utility decided that it would be more prudent to implement a set of grid improvements and efficiency-boosting measures before investing in new capacity. Such improvements could increase production by as much as 450 MW. Moreover, many of these measures cost less per unit than building new capacity. In 2011, for example, the public utility was able to reduce electrical network line losses, or energy lost in transit through the grid, to 3.5%, down from 6.3% in 2011.

SUPPLY MANAGEMENT: As for supply management, the key government player is the Dubai Supply Authority (DUSUP). DUSUP is responsible for ensuring a steady supply of fuel for DEWA, Dubai Aluminium Corporation, Dubai Gas Company, Emirates National Oil Company and other key energy stakeholders. The company purchases gas though long-term contracts with the Abu Dhabi National Oil Company and Dolphin Energy, which operates a pipeline from Qatar’s offshore North Field.

Although most imports come from Dubai’s neighbours via pipeline, DUSUP also constructed a floating LNG terminal in 2010. “Our ability to now import LNG is an important step in meeting the growing need for energy,” the general manager, Abdullah Abdul Karim said, following completion of the terminal. The authorities are working towards a more diverse fuel mix altogether, which could translate to increased security and lower costs for end-users, as the industry would have more flexibility should external economic factors affect fuel prices.

DEMAND MANAGEMENT: The DIES 2030 also calls for improved demand management, and DEWA has been working to roll out power demand best practices. One of the most far-reaching is a slab tariff. This new pricing system adds a fuel surcharge for high-use customers, providing incentives to eliminate waste. DEWA introduced its slab tariff scheme in 2008. At the beginning of 2011, DEWA raised the slab tariff again to reflect rising energy costs. As the price of electricity has risen, demand has fallen. In 2011 the number of utilities accounts rose 5%, yet power demand growth held at 3%, half of the year’s expected 6% growth rate. Although rising costs may affect business margins at first, allowing utility bills to reflect the actual cost of energy could do much to encourage efficiency and conservation.

Overall, the DIES 2030 is likely to have far-reaching effects across the private sector. Policy changes from the government are already emphasising ways to maximise efficiency and reduce consumption. Grid improvements could help squeeze every megawatt out of fuel burned, while a more accurate pricing system could trigger energy-saving behaviour from end-users. In this context, developers of green and energy-saving technologies will likely see a welcome boost in business.