Electricity outlook is lowered

The Government has cut its 10-year forecast for electricity 30 per cent, suggesting it expects the recent recession to have a long-lasting impact on the economy.

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The Government has cut its 10-year forecast for electricity demand by about 30 per cent, suggesting it expects the recent global recession to have a long-lasting impact on the national economy. The Emirates would increase power generation capacity by 81 per cent over the next decade to about 33,500 megawatts (mw), the official WAM news agency said yesterday, citing comments by the country's oil minister, Mohammed al Hamli. It said the country had 18,500mw of installed capacity at the end of last year.

The projected capacity requirement is 6,500mw lower than the 40,000mw that Dr Anwar Gargash, the Minister of State for Foreign Affairs, last month said the UAE would need by 2020. Dr Gargash was citing a forecast that the Government unveiled in the spring of last year in a white paper that formed the basis for the country's civilian nuclear power programme. Since then, the worst global recession in decades has ended a property boom in Dubai while slowing industrial development across the UAE.

The Abu Dhabi Water and Electricity Company, the utility owned by the Abu Dhabi Government, predicted last April that the largest emirate would need 19,648mw of power generation capacity in 2020, a threefold increase from the 6,542mw of peak electricity demand projected for this year. That implies a big slowdown in the rate by which electricity demand is now expected to grow in Dubai, the emirate with the next biggest economy and population.

Dubai authorities do not publish forecasts for electricity demand in the emirate. However, Saeed al Tayer, the chief executive of the Dubai Electricity and Water Authority, said last April that power demand in the first quarter rose 13 per cent from a year earlier despite the economic slowdown. He predicted a 10 per cent increase in power demand for the full year. That confounded analyst expectations that the slowing economy and an expected drop in population would curb electricity usage.

The investment bank Nomura predicted last March that annual growth in UAE electricity consumption would slow to 7 per cent from 9 per cent over the medium term as much of the previous increase had been driven by robust population growth, particularly in Dubai. "We expect demand growth in Dubai to moderate, while Abu Dhabi and the northern emirates may remain more resilient to the UAE slowdown at 6 per cent per annum. This partly reflects Dubai's higher exposure to commercial real estate," Nomura said.

Peak power demand in the Emirates would more than double to 31,000mw by 2020 from an estimated 15,000mw last year, it said. @Email:tcarlisle@the national.ae Dewa on credit watch, b2