Market Trends of United Arab Emirates Power Industry
This section covers the major market trends shaping the UAE Power Market according to our research experts:
The Thermal Segment is Expected to Dominate the Market
- The natural-gas-fired thermal power production is expected to have the highest share during the forecast period due to the upcoming natural-gas-based power projects.
- The share of natural gas in the electricity mix of the United Arab Emirates was around 95% in 2020. According to the International Energy Agency, the natural gas share in the total primary energy supply was around 85% in 2019. This was due to the huge natural gas reserves held by the country, which stood at around 209.7 trillion cubic feet as of 2020.
- In December 2021, Mitsubishi Power shipped three M701JAC gas turbines to the Fujairah F3 gas-fired power plant in the United Arab Emirates. The project is believed to be the largest gas turbine combined cycle (GTCC) facility in the UAE, equipped with combined cycle technology. The power plant using this highly efficient gas turbine is expected to be operational by 2023.
- The Al-Layyah Power plant in Sharjah, UAE, is a clear demonstration of the demand for natural-gas-fired power plants in the country. The 1.02GW combined cycle power plant (CCPP) is an expansion of the Layyah power plant and is currently in the construction phase at the site. The plant is expected to be commissioned by July 2022.
- Owing to such developments, it can be predicted that the natural gas-fired thermal power generation segment will have a significant share in the near future.
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Growth in the Renewable Energy Sector is Expected to Drive the Market
- The United Arab Emirates has undertaken significant strides over the past several years and is leading the region's drive toward renewable energy, particularly in the solar sector. To meet the rising demand, the country has embarked on a challenging mission to increase energy security, diversify its energy sources, and increase the share of solar in its power mix.
- The UAE has proven that it holds some of the best solar resources in the world while supporting economic and regulatory policies that have helped its clean energy program excel. A contributing factor is an access to affordable finance.
- In addition to conventional project financing, the sector is seeing financial innovation to help facilitate and provide the investments required in the long term, including the AED 100 billion Dubai Green Fund, which will support the Shams Dubai initiative, a program aimed at facilitating the installation of rooftop solar panels.
- Additionally, 'UAE Energy Strategy 2050' targets to increase the contribution of clean energy in the overall national energy mix of the country to 50% by 2050, resulting in savings of approximately USD 190 billion of overall energy costs. As for its global efforts in this field and driven by its commitment to climate change mitigation, the UAE also announced the joining of the International Solar Alliance, which aims to help developing countries harness 1,000 GW of solar by 2030.
- Therefore, with the targets and policies set in place, the renewable energy sector in the UAE is expected to witness significant growth over the forecast period.
