OBG talks to Abdulla Saif Al Nuaimi, Director-General, Abu Dhabi Water and Electricity Authority (ADWEA)

Interview: Abdulla Saif Al Nuaimi

How are extended deadlines for residential and industrial projects helping relieve utilities demand?

ABDULLA SAIF AL NUAIMI: Over the past few years, peak electricity demand has grown around 12% annually. Our master plan is updated regularly to reflect new and existing projects. As part of our five-year plan, ADWEA will support industrial projects like the capacity expansion of some Abu Dhabi National Oil Company subsidiaries and Emirates Steel. Such developments will continue to drive demand in addition to organic domestic growth.

At the same time, we face challenges in time constraints and varying levels of utilisation. For example, some real estate projects may take as little as one year to execute; however, bringing a power plant on-line requires a minimum of three years. As such, end-users are encouraged to submit proposals well in advance when requiring additional power. Our philosophy is to work in close collaboration with customers in order to fulfil their growing power requirements. With respect to utilisation, some developers have expanded, but such moves have not always translated into the anticipated utilisation rate of our assets, which affects such assets from a technical or commercial basis. The government is measured in its approach to expansion, including in terms of issuing licences to developers and implementing transparent regulations in this regard.

To what extent will the GCC-wide power grid improve efficiency in regional generation capacity?

AL NUAIMI: The GCC interconnection grid, which connects the electricity grids of the six Gulf states, makes Abu Dhabi more secure in the case of a blackout or power shortage. The grid does not offer continuous generation of power supply, but it can be used to stem any blackout issues experienced by the members. In 2011, before the Al Dur Independent Water and Power Project came on-line in Bahrain, the UAE supported Bahrain during a power shortage. This was the first time we supplied power through the GCC grid. Although the interconnection grid will give Abu Dhabi greater security, we cannot rely solely on the supply of others. As a national security measure, it is important for the country to have sufficient power supply to meet rising demand. The interconnection within the UAE is quite strong already and ADWEA is investing more to upgrade the electricity and water network, including within the Northern Emirates. We are working with the relevant stakeholders to bring key projects on-line.

In what ways has the global economic crisis affected Abu Dhabi’s ability to finance investments in the water and power sectors?

AL NUAIMI: The emirate’s new capacity is built through the Independent Water & Power Producers (IWPP) privatisation programme. ADWEA does not provide a guarantee to the financiers, but we do guarantee a power and water purchase agreement. The first IWPP tendered raised significant interest from international investors. In the past few years, the emirate has been able to close out its IWPP projects on time, and this stable track record has made it easier for IWPPs to source financing for future local projects. Currently, there are many investors interested in the Abu Dhabi market; ADWEA receives regular enquiries from outside investors wanting to know when the next IWPP will be tendered and how they can be involved. Clearly, there is an appetite for additional projects from investors, and I don’t see ADWEA having trouble sourcing further investment.

What is being done to educate the public on the importance of water and electricity conservation, as a way to improve demand-side management?

AL NUAIMI: The government subsidises electricity prices for consumers such as citizens and expatriates. We are currently working to educate consumers on the importance of energy conservation methods and encourage positive behaviours. Additionally, we are now developing, along with other stakeholders, both short- and long-term solutions to address these matters and enhance demand-side management policy.