August 15, 2015

Rising energy consumption calls for a more sustainable and integrated strategy in the UAE, says study

Energy usage in the UAE has grown at an annual average of 4% over the past 6 years, with projections that it will increase to 5% through 2020
An integrated energy efficient strategy comprising of three key aspects - smart cities, building efficiency and water usage can significantly reduce consumption
The study identifies four strategic priorities that can aid in achieving greater levels of energy efficiency in the UAE

The UAE’s gross domestic electricity consumption has more than doubled over the past 10 years, and is expected to grow even more rapidly over the next five years as the country undergoes substantial population and economic growth, according to a study by management consultancy Strategy&, formerly Booz & Company.

The study reveals that energy usage in the UAE has grown at an annual average of 4% over the past six years, and is projected to increase to 5% through 2020. A recent forum organized by the Energy Working Group of the UAE-UK Business Council and facilitated by Strategy&, highlighted three key aspects of energy efficiency which comprise of smart cities, building efficiency and water usage. Although numerous initiatives have already been launched in the UAE, implementing additional comprehensive measures and policies can help reap the full benefits of an improved energy efficiency strategy, as challenges cannot be overcome in isolation.

Studying three aspects of energy efficiency: smart cities, building efficiency and water usage

While UAE’s increased urbanization is a sign of the country’s growth and progress, it also presents some challenges alongside.  According to the UN, 85% of the UAE’s population resided in urban areas as of 2014, and this is forecasted to reach 91% by 2050. The UAE, therefore, needs to have integrated infrastructure planning as a prerequisite to any urban master plan.

Per-Ola Karlsson, a senior partner with Strategy&, formerly Booz & Company in Dubai, said : “One of the best way of doing this, which takes advantage of digitization and the Big Data that urban populations produce, is through the so-called ‘smart city approach’.  This term typically entails integrated infrastructure planning that applies digital technologies to deliver better services and, critically for the UAE, reduce energy consumption. Smart cities allow city planners and managers to improve efficiency at the intersection of different infrastructure sectors, such as electricity, water, transport, telecommunications, cooling and waste.” 

The study reveals that there have been commendable efforts on behalf of UAE governments to manage energy consumption. For example - Abu Dhabi has deployed an advanced electric metering system that monitors usage over time, and encourages customers to reduce consumption. Similarly, Dubai now has several interrelated programs in place to substantially reduce electricity consumption.

Another important feature of smart cities is transportation, an area in which technology has advanced dramatically. The UAE is encouraging the use of electric cars and building the necessary infrastructure to support them.

“One of the most effective ways to drive a smart city initiative is to influence citizens’ behavior through awareness programs. One of the best examples of this is the launch of Emirates Energy Award by the Dubai Supreme Council of Energy, which offers monetary prizes for innovative work in projects of all sizes across both the public and private sectors. The Dubai Electricity and Water Authority (DEWA) also launched customer awareness campaigns which have contributed towards DEWA’s initiative of saving more than 600 million AED (US$163 million) since 2009,” Karlsson added.

A second essential aspect to consider is improving building efficiency, also referred to as “green” or “sustainable” construction. In Dubai, the government has issued a set of green building regulations and specifications that cover planning, the use of resources, materials, and waste. Notably, the regulations are intended to improve the sustainability performance of buildings throughout their entire life cycles, from design through construction, operation, and ultimate tear-down.

Christopher Decker, a Principal with Strategy& in Dubai, said: “Although the UAE already has a range of building efficiency measures in place, government authorities will still need to develop more detailed regulations and frameworks that dictate energy efficiency in buildings, particularly during construction. This has to be supported by enhanced communication and information campaigns that persuade real estate companies to improve the energy efficiency of their projects without regulation. The government should also encourage the use of innovative building technologies, materials, and systems adapted to the region’s requirements that would substantially improve the efficiency of buildings.”

The third aspect of energy efficiency involves water consumption and desalination processes. Water consumption in the UAE is about 740 cubic meters per capita per annum (m3 pcpa), or roughly 50 % higher than the 500 m3 pcpa world average. Also, the energy required to desalinate seawater represents approximately 30% of the country’s total yearly power consumption.

Jad Moussalli, a manager with Strategy& based in Dubai, said: “The majority of the country’s water is generated as a by-product of thermal energy plants, through combined water-and-power infrastructure. Electricity and Water have different demand cycles: electricity has large peaks in demand, whereas water demand is relatively flat, limiting the optimization of the infrastructure for either resource. The planned introduction of nuclear energy as a prominent source of power in the UAE might mitigate this issue. Nuclear power can help break the connection between water and electrical infrastructure, creating opportunities to select more efficient desalination technologies such as reverse osmosis.”

Additionally, the study also suggests the adoption of both hard and soft regulatory levers to reduce water consumption. A hard approach would, for example, be increasing water tariffs which will reduce water demand. A softer measure would include for instance awareness campaigns targeting all segments of the population, especially educational and corporate institutions.

Strategic priorities for nationwide energy efficiency

In this context, the study suggests four strategic priorities that will aid towards implementing a more sustained energy efficient program in the UAE. These consist of (i) The need for an overarching strategy that joins individual sectors and their respective value chains around a single set of goals and objectives;  (ii) Ensuring a regulatory framework that addresses demand/market challenges, in order to change behaviors and maximize benefits; (iii) Introducing communication and information campaigns to demonstrate the benefits of energy efficiency and obtaining support from all stakeholders including consumers: (iv) Identifying  and promoting region-specific R&D and technology that will create an innovative ecosystem to help meet energy efficiency goals while also boosting the overall economy.

“For decades, the abundance of hydrocarbon resources meant that energy efficiency was not a pressing topic in the UAE. However the steady population and economic growth have changed attitudes. Today, sustainability is a critical issue, and the UAE government needs to reinforce its efforts to create a more sustainable future for the country and for generations to come,” concluded Karlsson.