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BMI View: Clean coal, nuclear and renewables all form part of the long-term energy plan, although it

would be a surprise to see the UAE having operational reactors during the current decade. The emirates

appreciate the need to cap oil and gas use in power generation, so new clean coal technology is to be

used over the medium term. There is growing momentum behind the use of renewables, with international

backing being sought for ambitious programmes.

It has been estimated that the UAE’s electricity sector will require at least US$8bn in investment over the

next six to eight years in order to meet growing demand, and the government has plans to expand

installed capacity by more than 50% during the current decade.

Key trends and recent developments in the UAE electricity market include:

During the 2011-2021 period, the UAE’s overall power generation is expected to increase by an annual

average of 5.03%, reaching 138.5TWh. Driving this growth is an annual 4.67% gain in gas-fired and a

0.90% rise in oil-fired generation, accompanied by rapid growth in renewables-based electricity supply,

albeit from a very low base. It is assumed that nuclear generation will be available from 2021.

The UAE has reconfirmed its renewable energy aspirations, revealing that the government aims to boost

investment in clean energy technology over the next five years and attract AED367bn (US$100bn) of

investment in alternative and sustainable energy projects by 2020.

Following an increase in 2011 real GDP of an estimated 3.3%, BMI forecasts average annual growth of

3.8% between 2011 and 2021. The population is expected to rise from the current level of 7.9mn to 9.3mn

during the 2011-2021 period, and net power consumption looks set to increase from 73.4TWh to

96.3TWh by 2016, rising further to 119.6TWh by 2021. During the 2011-2016 period, the average annual

growth rate for electricity demand is forecast at 5.44%, but slowing later in the decade to an average

4.71% in 2016-2021.

Thanks partly to the forecast rise in net generation, growth of which at least matches the underlying

demand trend, the UAE is likely to create a growing power supply surplus later in the decade as new

capacity kicks in – particularly if the nuclear option is used. A gradual decline in the percentage of

transmission and distribution losses from around 12.2% will help improve the market. The theoretical net

export capability by 2021 is put at 3.4TWh.