It is the second time Dewa has decided to cancel the tender, citing high prices as the reason.
The authority has yet to decide how or when to proceed.
However, it expects the global economic slowdown to work to its advantage.
A Dewa source argues that with fewer projects around, contractors are likely to lower their prices if the contract is retendered.
The commissioning of both the first and second phases of the project, which was originally scheduled for 2011, has been delayed until at least 2012.
The first phase plant will have a power generating capacity of 1,500MW and 120 million g/d of desalination capacity, while the second phase will have a power-generating capacity of 1,300-1,500MW and desalination capacity of 100-120 million g/d.
Bids for the two phases of the plant were first submitted in April.
Dewa then retendered the first phase of the scheme in May and fresh bids were submitted in July.
The second phase was also retendered and bids are still due on 30 December.
According to the Dewa source, the cancellation of the bids for phase 1 will have no impact on the tendering process for the second phase MEED 17:10:08).