Dubai Electricity & Water Authority (Dewa) has said it is delaying plans to develop the $1.3bn Hassyan power project, which would have been the first private sector power scheme in the emirate.

Dewa said in a statement that “significant and prolific” progress had been made in boosting power production through efficiency gains meaning that it did not need to develop a new plant. It also said that it would be focusing more on solar power generation.

The utility said it had expanded the capacity of its Jebel Ali power station by around 450MW through “innovation and use of the latest technologies, for a fraction of the costs of installing new generating units”. Dewa has also reduced percentage losses in its electrical network from 6.28 per cent to 3.49 per cent.

The decision is a blow to private sector developers that had been involved in bidding for the 1,600MW Hassyan project. Dewa’s advisers had been expecting a preferred bidder to be announced, rather than the project to be shelved.

“There is no change to the policy of the Supreme Council of Energy on partnerships with the private sector in future power-generation projects,” Dewa said.

The project was originally expected to also include a desalination element, but this was dropped because of overcapacity in the water sector. With slow demand growth forecast, Dewa has now decided to drop the entire project. The utility gave no indication how long it would defer the development of Hassyan for.