Dubai Electricity and Water Authority signed a Dh1.5 billion ($408 million) water purchase agreement with Utico for the Hassyan seawater reverse osmosis plant.
The agreement with the Ras Al Khaimah-based private utility company is for 35 years.
The Hassyan plant, which will have a capacity of 120 million imperial gallons per day, is being built under the independent water producer (IWP) model.
Utico, which already operates independent water and power producer plants in Abu Dhabi and Ras Al Khaimah, was named as preferred bidder for the Hassyan project in November. The project is due to begin production in 2024.
“This key project supports Dewa’s strategy to engage the private sector in developing innovations that enhance water supplies and improve the efficiency and quality of water services," Saeed Al Tayer, the authority's chief executive and managing director, said.
Dewa is targeting an increase in desalinated water capacity to 750 million imperial gallons per day, up from 470 million imperial gallons currently.
"We aim to produce 100 per cent of desalinated water using a mix of clean energy and waste heat by 2030," he added.
Reverse osmosis is a membrane-based method of desalination that uses less energy compared with the thermal process used to produce fresh water.
Dewa reached a record $0.277 per cubic metre of levelised water tariff for the project, which is the state utility's first developed under the IWP model. The authority also plans to lower water consumption by 30 per cent by 2030.
The push towards greater efficiency is part of Dubai's drive towards adding more renewable power capacity. The emirate plans to power three quarters of its requirements from clean sources by 2050, with the massive Mohammed bin Rashid Solar Park expected to reach 5 gigawatts of capacity by 2030.
Utico has interests across water supply, desalination, power generation and transmission as well as solar plants in the UAE and Oman. Sovereign entities from Saudi Arabia, Bahrain, Oman and Brunei are investors in the company, which is part of the Abu Dhabi-based RMB Group.