Dubai Electricity & Water Authority (Dewa) is set to launch the tender for developers to build its first independent power project (IPP) by the summer.

According to a source close to the project, “Our expectations are that it will be launched to the market during the second quarter of 2011.”

The Hassyan 1 project will be constructed on a build-own-operate (BOO) basis. When complete, it will generate 1,500MW. The project is expected to be commissioned in 2014. Dewa will buy all of the power produced by the project.

Dubai power demand
Year Installed power capacity (MW) Peak power demand (MW)
2004 3,833 3,228
2005 3,833 3,571
2006 4,599 4,113
2007 5,448 4,736
2008 6,676 5,287
2009 6,997 5,622
Source: Dewa

A UK consortium comprising bank HSBC, engineering firm Mott MacDonald and law firm Clifford Chance was selected in June to advise on the project. The advisory contract included three phases – regulatory review, strategic review and project tender.

The first two phases are now complete. The policy has been approved by Dewa’s board and the Supreme Energy Council and project details can now be drafted.

Electricity consumption, 2009
Percentage of 30,056GW
Commercial 13,383 45
Residential 8,791 29
Power station and desalination  2,686 9
Industrial 2,540 8
Others 2,656 9
Total 30,056  
Source: Dewa

Dewa has said that it will take a shareholding in the IPP and continues to include the option to list the project company in an initial public offering (IPO).

Hassyan 1 IPP is expected to be followed by five or six similar independent projects as part of Dewa’s private power programme.

The IPP at Hassyan was originally to be developed as an independent water and power project (IWPP), but the desalination element was recently dropped.

According to a source at Dewa, the decision to adjust the project plan was taken following a revised water demand forecast. While power continues to increase at a steady rate, meeting water needs in coming years will be less difficult.