Dubai awards clean coal advisory contract

23 May 2011

McKinsey & Company, Black & Veatch and Allen & Overy win contract

Dubai Electricity and Water Authority (Dewa) has selected a team to advise on the first phase of its study to evaluate the use of clean coal to generate electricity in the emirate.

McKinsey & Company and Black & Veatch, both of the US, and UK law firm Allen & Overy have been selected as consultants.

More than 16 national and international consultancy companies took part in the tender to study the economic technology of generation energy by using clean coal. Nine groups submitted bids, which were led by firms including McKinsey & Company, Germany’s Lahmeyer, the UK’s Mott MacDonald, Germany’s Fichtner and the US’ Parsons Brinkerhoff.

“This study is a major step towards the implementation of the energy diversification strategy adopted by the Dubai’s Supreme Council of Energy, in which coal is set to become part of Dubai’s energy portfolio,” says Dewa chief executive officer Saeed Mohammed al-Tayer. “The strategy aims to diversify energy sources to ensure energy supply and meet the growing energy demands in the Emirate of Dubai.”

The study will be divided into two phases. In the first phase, the consultants will conduct a preliminary analysis on the type of technology, the type of coal and sourcing strategy that best suit Dewa’s requirements, to include logistics and infrastructure requirements, as well as environmental impacts in association with the first coal-based power plant for Dubai.

The second phase comprises setting technical and business specifications to implement and establish coal-based power plant after the request of bid submission and assessment. The plant may use super critical pulverised coal (SCPC) or integrated gasification combined cycle (IGCC) technology. First power from the project is expected in 2015 or 2016.

Dewa is expected to finish this study in September. It will be followed by another tender for second phase of the study in the fourth quarter of 2011.

The issue of feedstock for power generation has become a growing problem in Dubai. Dewa receives all of its natural gas supplies from the fellow state-owned entity Dusup. In recent years, Dusup has experienced a shortage in supply. As a result, the price of gas has increased sharply.

Further, the lack of new gas supplies has meant that Dubai has turned to more expensive fuel oil to power its plants. Electricity consumers have been affected by the increased cost of power production with severe rate hikes.

“We really have no choice. It is a long way before nuclear power will be available and renewables are not really playing a role in baseload operations. Gas price fluctuations may cause some insensitivity in supply in the future. So we really have to look into our fuel sources,” says a Dewa source.

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications