Dubai's power and water spare capacity hits double digits

The spare capacity of Dubai's power and water supply reached one of its highest levels last year, while the growth in installed capacity was the lowest in five years, official data show.

The installed electricity capacity of Dubai Electricity and Water Authority (Dewa) increased modestly to 6,997MW in 2009 from 6,676MW in 2008. This marks a dive in terms of year-on-year growth – from 22.5 per cent in 2008 to 4.8 per cent in 2009. Of the total electricity output, 77 per cent was generated by gas turbines and 23 per cent by steam turbines.

Peak demand, on the other hand, grew by 6.3 per cent, which, although commended by analysts keeping in mind the financial slowdown, still reflected a substantial drop in the growth rate of 15 per cent in 2006 and 2007.

But even amid the slowdown, Dewa's continuous expansion has led to a high level of spare capacity. Spare capacity, which is the difference between installed capacity and peak demand, reached 24 per cent in 2009, a little lower than the 26 per cent recorded in 2008. Dubai has only had 7 per cent spare in 2005, 12 per cent in 2006 and 15 per cent in 2007.

This level of spare capacity is just right, an independent energy analyst said. "What Dewa is doing is good. I would say, 20-25 per cent capacity or above is the ideal percentage," Khalid Al Awadi told Emirates Business. "About five per cent of the spare capacity is used for maintenance, the other 8-10 per cent is used for spinning reserves, which is vital for electrical operations. So out of 25 per cent, more than half will be used and only 10 per cent can be said to be the real extra capacity."

The data, seen by this newspaper, shows the largest consumption (70 per cent) coming from Dubai's 8,700 residents, while the commercial segment (146,000 units) contributes to 27 per cent of demand. Industrial sector's demand is only about 0.40 per cent. Dewa expects to see a 6.4 to 6.5 per cent growth this year, and to match the growing demand, the utility firm is building an additional 30 per capacity.

In water desalination, installed capacity went up by 20 per cent from 275 million imperial gallons per day (MIGD) in 2008 to 330 MIGD in 2009. Peak demand, however, increased only by 2.6 per cent from 264 MIGD to 271 MIGD. As with power generation, water spare capacity has for the first time reached 22 per cent. There was only 4 per cent spare in 2008.

 

Fitch affirms Dewa's Thor notes

 

Fitch Ratings has affirmed Thor Asset Purchase's notes rating at 'BBB-' and removed the rating from rating watch negative (RWN) and assigned a negative outlook. Thor is a securitisation of water and electricity receivables generated by Dewa.

The affirmation of Thor's rating and the removal of the RWN reflect Fitch's opinion that amendments to the transaction documents reduce the likelihood of an immediate downgrade of its rating. The transaction was placed on RWN on November 30, 2009, as a result of the credit crunch.