Developers are sharing utilities' burden of power

25 July 2008

As utilities focus on building power plants to supply all the real estate projects they have planned, developers are working to reduce their energy requirements.

At the launch of the Ras al-Khaimah’s Gateway City project in early July, power provision was at the top of the agenda.

“We can guarantee that there will not be any shortage of power, water and gas supplies to new projects and communities,” said Khater Massaad, chief executive officer (CEO) of Ras al-Khaimah Investment Authority (Rakia).

Power is a big issue in the northern emirates, where the future of several real estate projects is being called in to question over concerns about the provision of power and water.

To alleviate these concerns, Ras al-Khaimah is installing more than 2,740MW of power generating capacity over the next three years.

The capacity increase was made possible after the Federal Electricity & Water Authority (Fewa), which provides power and water to the northern emirates, agreed to allow private sector involvement last year.

Building infrastructure

The issue does not just affect Ras al-Khaimah and the northern emirates.

Vast projects across the region will give rise to scores of high-rise apartment blocks and hundreds of villas, creating cities with growing populations.

These will require extensive infrastructure such as roads, sewers and water and power distribution networks.

Perhaps the greatest challenge is delivering these utilities to meet the timetable for development. Many of these schemes will require power in the next three years.

“The bind is getting power plants on line fast enough, and getting gas feedstock,” says Robert Bryniak, general manager of Abu Dhabi-based Golden Sands Management Consulting.

“New plants take time. Abu Dhabi plans for four years, but it can be done in three if you plan to meet summer peaks.”

In Dubai, where the real estate market is more mature, the issue of infrastructure provision has forced developers and utility prov-iders to co-ordinate their efforts.

Like other infrastructure providers such as the Roads & Transport Authority, Dubai Electricity & Water Authority (Dewa) now has meetings with the large masterplan developers to ensure they are aware of the power requirements of major projects.

With projects on its books such as Palm Deira and the Waterfront, local developer Nakheel will be creating homes for more than 2 million people, which will have a massive impact on Dubai’s total electricity requirements.

“We have three-to-four monthly meetings with Dewa to discuss our upcoming needs and they discuss their constraints with us,” says Chris O’Donnell, CEO of Nakheel.

“I think their team [Dewa] has well and truly got a handle of what is happening. The plant at the Waterfront will be supplied with Dolphin [pipeline] gas, so I am not concerned at all.”

Abu Dhabi has adopted a similar policy, where the utility providers can use the Plan Abu Dhabi 2030 Urban Masterplan to forecast future power requirements, based on the population density of the project.

To speed up the delivery of power plants, Bryniak expects the region’s authorities to approach the private sector for assistance.

“I think all utilities will rely more on the private sector and there has been evidence of this over the past few months,” he says. “Dubai has issued a decree allowing private sector participation in the provision of power, and Sewa is now looking at the private sector too.”

Securing feedstock

Although the private sector could help deliver much-needed plants, securing feedstock remains a concern because readily available gas is still in short supply.

As the region’s most advanced real estate market, the issue is most acute in the UAE.

The Dolphin gas project that imports gas from Qatar to the federation has given some respite, but more supplies are needed if the emirates are to meet all their power-generation commitments.

Sharjah-based Dana Gas plans to import gas from Iran, although the first deliveries have been delayed by Tehran’s insistence that the two sides renegotiate the gas export price as the cost of gas has risen rapidly over the past three years, as oil prices have soared and demand for gas has increased.

Dubai Supply Authority (Dusup) plans to import liquefied natural gas (LNG) by building a regasification terminal at Jebel Ali to supplement the emirate’s existing supplies of gas during summer peak demand.
Governments are also exploring alternatives to gas.

Dubai is considering plans to generate up to 4,000MW of electricity from coal, together with Oman.

Nuclear energy is another option and avoids the environmental concerns that surround coal-fired facilities.

Forecasting a shortfall in power generation capacity, the federal government has created the Emirates Nuclear Energy Corporation (Enec) to oversee the development of nuclear power facilities.

In the long term, Abu Dhabi hopes that nuclear power will be complemented by alternative technologies such as solar and wind power, and waste-to-energy facilities.

Real estate companies are playing a bigger role with projects such as Masdar, using solar power and other alternative energies to create a city with a zero carbon footprint.

The developer plans to do this using a combination of a concentrated power plant, photovoltaic (solar panel) fields, wind farms and biofuels. Masdar hopes that by promoting these technologies and demonstrating that they can be used effectively, other developers will follow its lead.

Although Masdar has attracted the most attention, it is not alone.

Qatar is developing its own 3,500MW solar plant, Oman is considering pilot projects using wind and solar technologies, and Dubai Municipality is planning a waste-to-energy solution for municipal garbage that will have the added environmental benefit of reducing the emirate’s landfill requirements by 90 per cent.

Local projects

At a more local level, real estate developers are also planning their own environmental projects.

For example, Nakheel is planning to use waste-to-energy technology at its Waterfront development, which, once completed, will require about 1,000MW for residents.

“Power supply is a big issue,” says Matt Joyce, managing director at the Waterfront.

“Dewa is dealing with it, but we are looking at complementing its efforts with sustainable technologies such as waste to energy.”

At an even more micro level, individual buildings can also produce their own power.

UK-based consultant Atkins has put these concepts into practice on several projects in the Gulf.

Construction was recently completed on the Bahrain World Trade Centre (BWTC), which uses three wind turbines to produce up to 1,300 megawatt hours (MWh) of energy a year - 11-15 per cent of the total electrical consumption of the building.

Atkins is also working on a project in Dubai that aims to reduce its total energy consumption by up to 65 per cent and water consumption by up to 40 per cent.

The 400-metre-tall tower will achieve this by using passive solar architecture, low-energy, low-water engineering solutions, recovery strategies for both energy and water, and building integrated renewables - including large-scale wind turbines as used at BWTC and photovoltaic (PV) panels.

According to Atkins, these technologies, together with other energy-saving features, can reduce a building’s energy requirements by more than 50 per cent.

“Up to half should be readily achievable depending on which measures are taken and how effectively they are incorporated,” says Nick Lander, head of sustainability for Atkins in the Middle East and India.

“Integration is key, like with the Bahrain World Trade Center where the turbines were integrated from the outset.

“But if you add something onto a building design as a separate item - such as a wind turbine that is not integrated, PV panels or efficient building services kit - if you do not take saving into account when you size your plant, it will make minimal difference and cost a lot of money.

“If your whole design process considers energy savings, though, costs are minimal for the bulk of feasible energy saving features.

Obviously, it depends on how you define your benchmark in the first place. A lot of savings also come from how you run your building once operational.”

One major criticism of these schemes is that the power they produce is more expensive.

However, Bryniak says that is not necessarily the case as transmission and distribution costs, which typically account for about 25 per cent of the cost of electricity, are either minimised or eliminated.

“You should not compare the cost of generation, because that does not include transmission and distribution costs,” he says.

“For example, the developer would save on investment in substations.”

Buildings like these will become more common as cities across the Gulf develop environmental building regulations.

Dubai introduced legislation at the start of this year and Abu Dhabi recently launched the Estidama programme for sustainable buildings in the capital.

“The new rules are a step in the right direction and will encourage designers to stretch themselves to come up with more elegant solutions,” says Lander.

“Schemes that rate the green credentials of designs such as Estidama, Leed and Breeam International Emirates are all good vehicles for showing how far we can push and that global best practice is possible here.

“As to how much, it is difficult to quantify as we do not yet have adequate benchmark data for energy consumption, but it could well be significant.

If we try, we can easily make big savings in energy consumption, but it has to start with the clients wanting to do it, the design teams engaging, and building occupants changing how they operate.”

Energy supply is only one side of the equation. Green-buildings regulations will help control energy demand, and reduce the burden on the utility providers.

“With water and electricity, Dubai is one of the highest users of those components of energy, so I think there are incredible gains to be made through energy saving initiatives, and I know Dewa has it well in hand,” says O’Donnell.

District cooling, where a single refrigerator system is used to chill water, which then runs through a centralised pipeline system and cools the air in buildings, is also becoming more popular.

“District cooling is the big thing that developers can do,” says Bryniak. “It can reduce [power] demand by about 50 per cent.”

Developers are beginning to realise the economic and environmental benefits of centralised cooling, and most major high-rise schemes now include it.

“District cooling works very well for high rise where there are sufficient economies of scale, but it does not work as well for low-rise projects,” says Joyce.

Architecture can also play a role by helping to reduce the cooling load required by a building and demand can be controlled on a small scale by educating customers and using more energy-efficient appliances in the home.

The potential power shortage is a common problem that affects the utilities and real estate developers.

By sharing the burden and tackling the problem from different angles, both parties hope to increase the supply of electricity, while at the same time controlling the demand created by future projects.

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