Abu Dhabi Water & Electricity Authority (Adwea) and Abu Dhabi National Oil Company (Adnoc) have struck a deal that will see the utility become the sole power provider to the state-owned oil and gas firm.

As a result of the deal between the two firms, Adnoc will no longer develop its own power projects, and is expected that its existing power generation capacity of around 500MW will be incorporated into the Adwea network. They will then be used to help provide additional capacity during periods of peak demand.

Adnoc is expected to take around 256MW of power from Adwea in 2010, rising to 2,800MW by 2030 as more Adnoc projects are completed. The oil firm also began to take some power from Adwea in 2009.

An Abu Dhabi-based source close to the deal between the two companies says that in the past Adnoc was not confident in the ability to get the power it needs from the Water & Electricity Department, the predecessor to Adwea, which was established in 1998.

“Over the past 10 years Adwea has shown that it is a reliable source of power, so it makes sense for Adnoc to concentrate on developing oil and gas projects, rather than have two companies developing seperate sources of power in the same emirate,” says the Abu Dhabi-based source.

Adwea has already incorporated the demand from Adnoc into its project pipeline. At the moment it is working on the development of the Shuweihat 3 independent power project, which will provide 1,600MW of power when completed in mid-2013.

This is expected to be followed by Taweelah C, which could have a capacity of around 2,500MW, as well as a water component.