Dubai shifts focus from gas to coal for power generation

10 January 2011

The issue of feedstock for power generation has become a growing problem for utility provider Dewa

Faced with constrained gas supplies and expensive oil alternatives, Dubai has turned its attention to the potential of coal for power generation.

With only 4 trillion cubic feet in natural gas reserves (Abu Dhabi has around 50 times more), Dubai has long relied on imports from its neighbours.

Dubai Electricity & Water Authority (Dewa) receives all of its natural gas supplies from 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. The lack of new gas supplies has meant that Dubai has turned to more expensive fuel oil to power its plants. In an effort to ease the strain, electricity consumers have been hit by price increases, including the severe hike implemented in 2010.

Dubai has unveiled plans to pursue alternatives to gas. While the emirate plans to develop a solar project, introducing coal into its energy mix would result in a much greater impact. Dewa has invited bids from consultants to carry out a study and advise on the tender for the emirate’s first coal-fired project.

While the plans are exciting, the project is a long way from implementation. Transporting the coal into and around the emirate will require significant infrastructure improvements. This will be costly and time consuming.

Oman’s experience with what would have been the sultanate’s first coal-fired plant at Duqm is telling. The need to import coal added an extra two years’ to the project schedule to build the import infrastructure. In the end, the project was cancelled.

The road to Dubai’s first coal-fired power plant will be long and wrought with pitfalls. Dewa will need to carefully consider whether the results will justify the effort.

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