Coal is Dubai’s best option to meet rising demand

22 February 2008
In the latest sign that the Gulf is starting to take innovative steps to deal with soaring demand for power, Dubai is planning to build several coal-fired power plants.

Efforts to reduce power consumption are also being made, but not nearly as effectively. While tariffs are being raised, they are unlikely to prove a useful tool as long as the biggest users are exempt. But to do otherwise is far too politically sensitive.

Oman has previously said it is considering importing and burning coal to produce electricity, but Dubai’s plans to install up to 4,000MW of coal-fired capacity are the most extensive so far.

It is not hard to see why it is doing this. In 2007, Dubai Electricity & Water Authority (Dewa) spent far more on fuel than it had over the same period the previous year.

The reason is a lack of gas, which has forced Dewa to run its plants on costly liquid fuel oil.

Dewa argues that using coal will be more cost-effective in the long run, even though there are high upfront costs and the price of coal is soaring on global markets. But the costs of limiting the impact that a coal-fired power plant has on the environment are also signi-ficant. If carbon-capture technology is included, it could be as expensive as a nuclear power plant.

With no previous experience of coal-fired generation, Dubai will be starting from scratch. It will need to build the infrastructure to receive, handle and store the coal, as well as getting used to using it for power generation.

However, it will still be quicker to develop. On average, it takes about four years to build a coal-fired plant, but years more to develop a nuclear plant.

With demand for energy showing no sign of slowing, and in the absence of effective measures to cut consumption, Dewa has little option but to develop coal-fired power plants.

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