Mega projects in the UAE, a catalyst for power capacity development

The United Arab Emirates (UAE) boasts one of the most secure and stable electricity supply systems in the region. Leveraging its substantial natural gas and oil reserves, among the largest globally, the UAE generates sufficient electricity to satisfy domestic consumption. The nation primarily utilises its gas for power generation and for reinjection into oil fields to enhance production while designating a significant portion of its oil for export. Backed by an increase in electricity demand, power capacity in the country is expected to reach 79.1GW in 2035, registering a compound annual growth rate (CAGR) of 3.4% during 2024-2035. The annual power generation in the UAE is expected to increase at a CAGR of 3.8% during 2024-2035 to reach 281.3TWh.

The power sector in the UAE offers abundant opportunities for investors, with the government poised to make significant investments in the expansion and modernisation of its generation and supply infrastructure. The anticipated increase in capacity is projected to occur predominantly in gas-based thermal power, as opposed to oil, where capacity is expected to remain stable. Manufacturers of gas turbines stand to benefit from this surge in gas-fired power capacity.

The UAE’s conditions are exceptionally conducive to solar power generation, prompting the government to allocate extensive tracts of undeveloped land for solar parks, including both photovoltaic and concentrated solar power installations. These developments will not only meet local demand but also cater to export needs.

Over the past decade, the UAE has experienced a marked increase in electricity demand, necessitating the importation of natural gas from Qatar. In response to this growing demand and to diversify its energy portfolio, the UAE has strategically shifted away from exclusive dependence on natural gas, expanding into the renewable and nuclear energy sectors.

The UAE is experiencing a notable surge in electricity demand, driven by its expanding population and urban development. As of 2024, the population stood at approximately 11 million and is projected to rise to 11.9 million by the year 2030. A significant factor in this increased energy consumption is the high expatriate population, which constitutes around 88% of the total and contributes to the growth in residential and commercial energy needs.

Additionally, the development of mega urban projects such as Masdar City and Expo City Dubai underscores the necessity for sustainable energy solutions. These smart cities are at the forefront of innovation, yet they also contribute to higher electricity consumption. Consequently, this trend necessitates the expansion of the electrical grid and investment in smart infrastructure to meet the evolving demands.