The majority of the energy produced in the United Arab Emirates (UAE) comes from natural gas and oil, making the country— a major exporter of these resources—dependent on hydrocarbon energy. Despite this, the UAE is actively working to reduce its reliance on oil and gas. Due to its geographic features, the UAE lacks significant potential for hydropower and wind energy development, which is why it is focusing on nuclear and solar energy to diversify its electricity generation and reduce carbon dioxide emissions. In 2024, 30% of the UAE’s GDP was directly tied to the oil and gas industry, making the energy transition a key priority. As part of its efforts, the UAE has set a “net zero” emissions target, becoming the first Arab state to do so.
The UAE operates 16 power plants (with two still under construction), most of which use natural gas as fuel. The electricity sector is managed by four state-owned entities under the Ministry of Energy’s oversight: the Abu Dhabi Water and Electricity Authority (ADWEA) in Abu Dhabi, Dubai Electricity and Water Authority (DEWA) in Dubai, Sharjah Electricity and Water Authority (SEWA) in Sharjah, and Etihad Water and Electricity (EWE), which replaced the Federal Electricity and Water Authority (FEWA) and serves Fujairah, Ras Al Khaimah, Ajman, and Umm Al Quwain. All of these entities operate under the Ministry of Energy and Infrastructure’s guidance.
Evolving Demand for Renewable Energy
The UAE’s electricity market is seeing increased demand from energy and construction companies, particularly in the field of renewable energy. This includes a growing interest in developing new solar power plants, solar parks, and other power stations. The UAE collaborates with foreign companies on these projects, showing a willingness to engage in international partnerships. However, Russian businesses have a limited presence in the UAE market.
Energy Structure of the Country
By the end of 2023, DEWA had an installed generation capacity of 15.7 GW, with 2.6 GW from clean energy sources. Most electricity in the UAE is produced domestically. According to the UAE’s Energy Strategy 2050, the country aims to increase the share of clean energy in its energy mix to 50% by 2050, which could result in savings of approximately USD 190 billion in energy costs. Key projects include the Barakah Nuclear Power Plant and the Al Dhafra Solar Plant, the world’s largest solar power facility, as well as the Mohammed bin Rashid Al Maktoum Solar Park in Dubai, which is expected to reach a capacity of 5,000 MW by 2030.
Barakah Nuclear Power Plant: A Key Component of Energy Transition
The Barakah Nuclear Power Plant, developed with Korea Electric Power Corporation (KEPCO) and Emirates Nuclear Energy Corporation (ENEC), plays a crucial role in diversifying the UAE’s energy production. The plant’s first reactor, with a capacity of 1.4 GW, was commissioned in 2020, with additional units following in 2021, 2022, and the fourth unit entering commercial operation in 2024. Each unit generates up to 1,400 MW, making it a key player in meeting the growing demand for electricity.
Barakah Nuclear Power Plant
Solar Energy: A Growing Sector
The UAE’s solar energy potential is substantial, and its energy policy has evolved due to declining solar energy costs—prices for solar photovoltaic systems have dropped by more than 76% in the past five years. The UAE offers tax incentives, benefits, and competitive prices for Power Purchase Agreements (PPAs), making it an attractive market for foreign investors and companies in the solar sector.
Transmission and Distribution in the UAE
Electricity production, transmission, and distribution in the UAE are managed by four regional water and electricity authorities. ADWEA, DEWA, and SEWA oversee their respective emirates, while EWE handles electricity in the northern emirates. Dubai and Abu Dhabi have also created regulatory bodies, including the Dubai Supreme Council of Energy (DSCE) and Abu Dhabi Regulatory and Supervision Bureau (RSB), to oversee electricity policy.
The UAE is also a member of the Gulf Cooperation Council Interconnection Authority (GCCIA), which manages a unified electricity grid for the six GCC countries. The Abu Dhabi Transmission and Control Company (TRANSCO) links the UAE to this grid, ensuring regional connectivity.
Key Players in the UAE’s Electricity Market
The UAE electricity market is divided into electricity production, transmission, and distribution, with sources including natural gas, nuclear, and renewable energy. Major players include Abu Dhabi National Energy Company (TAQA), Transco, DEWA, ENEC, and Emirates Water & Electricity Company (EWEC).
- TAQA plays a critical role in Abu Dhabi’s energy strategy, meeting about 85% of the UAE’s electricity needs and 90% of its water requirements through eight power and desalination plants.
- Transco, a subsidiary of ADWEA, operates and maintains high-voltage electricity and water networks in Abu Dhabi, controlling about 68% of the UAE’s transmission network.
- DEWA is responsible for building the Hassyan clean coal power plant and other significant projects, while EWEC is focused on integrating water and electricity efforts across the emirates.
Involvement of Foreign Companies
Foreign companies interested in the UAE’s market typically choose between establishing a presence in the mainland UAE or creating a representative office in one of the country’s free zones. Joint ventures with local partners are common, and companies can benefit from tax exemptions in free zones. However, the UAE’s energy market remains partially closed due to the dominance of state-owned entities, limiting opportunities for privatization and private investment in infrastructure.
Despite this, the UAE has attracted partnerships with companies from Europe, Asia, and Southeast Asia, engaging in multi-billion dollar agreements, particularly in the solar energy sector. Yet, the absence of widespread privatization has been a barrier to more rapid modernization in the energy infrastructure.
Special thanks to the team at Assettracing.com for their valuable input in research capacities, advice, and support with resources in preparing these articles.
© 2024 United Action Foundation. All rights reserved. This publication may not be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the United Action Foundation, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law.