Dubai Electricity & Water Authority (Dewa) has approved a total budget of AED23.655bn ($6.44bn) for 2016, which is up about 3.5 per cent on its 2015 budget of AED22.873bn.

The budget includes an increase in spending on capital projects.

“The sum of AED8.72bn will be allocated to capital expenditure and projects, compared with AED8.028bn in 2015. The 2016 budget includes a number of key projects, including AED 2.957bn in generation, AED3.416bn in power transmission, AED1.209bn in power distribution, and AED1.042bn in water and civil, in addition to other amounts totalling AED95m,” says Saeed Mohammed al-Tayer, managing director and chief executive officer of Dewa.

The operational budget for 2016 is AED14.165bn compared with AED13.465bn in 2015. The administrative capital budget is AED770m.

Dewa adds that it has launched strategic projects valued at more than AED27bn that use the Independent Power Producer (IPP) model to enable the private sector to help diversify the emirate’s energy mix.

Dewa is developing two major new projects that will not use gas fired power plants to generate electricity.

In October last year, Dewa selected the consortium of Saudi Arabia’s Acwa Power and China’s Harbin as the preferred bidder for the 1,200MW Hassyan coal-fired independent power project (IPP).

The Acwa/Harbin consortium was selected as the preferred bidder with a levelised cost of energy tariff (LCOE) of 4.501$cents a kilowatt hour.

In December last year, Dewa received 21 requests for qualification (RFQs) for the 800MW third phase of its Sheikh Mohammed bin Rashid al-Maktoum solar park.

Like the first two phases of the solar park, the third phase will use photovoltaic (PV) solar technology. It will be developed as an independent power project (IPP). If developed as planned in one stage, it will be the largest single-phase solar scheme in the world.

Despite reduced project spending in other GCC markets such as Saudi Arabia and Oman, Dubai plans to increase its investments in 2016.

The emirate’s government says it will increase its spending on infrastructure by 20 per cent, according to its budget for 2016. It plans to spend AED6.4bn on infrastructure in 2016, up from AED5.3bn in 2015, and is planning to maintain the size of its investments in infrastructure over the next five years.

The plans to spend 14 per cent of its AED46.1bn budget on infrastructure and the increase in spending indicates that recently awarded projects will move forward as planned and contracts that are being tendered will be awarded in 2016.

The largest government contract being tendered is for an extension to Dubai Metro connecting to the Dubai Expo 2020 site, which is known as Route 2020.