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Abstract

The emirate of Abu Dhabi was the first in the Gulf Cooperation Council (GCC) to design and implement reforms aimed at moving away from a wholly government-owned vertically-integrated electricity market structure. From 1998, Abu Dhabi introduced several policy, legislative, structural and institutional reforms to its electricity sector and the related water desalination industry.

This analysis discusses reform initiatives, restructuring activities and key market players as well as the challenges and opportunities associated with increased participation in regional electricity trading.

Key features of the emirate’s electricity market and challenges and opportunities associated with cross-border electricity trading include:

  • Maintaining economically competitive self-sufficiency in power. Reducing the cost of electricity procurement by using regional interconnections is thus an emerging driver for market integration.
  • With lower peak demand growth projections and the commissioning of a 5.6 gigawatt nuclear power plant, Abu Dhabi’s electricity sector is likely to produce larger power surpluses, encouraging cross-border electricity trading opportunities.
  • The current single-buyer model provides limited ‘implicit’ competition in the procurement of bulk supply. There is little or no pressure on power generators to compete with others in day-to-day operations.
  • Power trading prospects are also hampered by the lack of volume- and time-specific marginal costs.
  • Abu Dhabi’s electricity and water producers do not receive explicit fuel subsidies. However, electricity tariffs are still heavily subsidized for many residential consumers.
  • Abu Dhabi is exploring several options to further liberalize its electricity market.
  • Electricity trading is likely to be recognized as a separate licensed activity, which is expected to give fresh impetus to electricity trading within Abu Dhabi, across the United Arab Emirates and throughout the Gulf region.

The paper is part of a KAPSARC research project to develop insights that can facilitate the creation of a well-functioning integrated electricity market among members of the GCC and wider Middle East and North Africa region and to suggest potential enablers that could help to fill existing knowledge gaps for policymakers in the region and to facilitate ongoing efforts toward regional electricity market integration.

Authors

Shahid Hasan

Research Fellow Prior to joining KAPSARC, Shahid was an associate director at TERI, an independent research institution working in the areas of… Prior to joining KAPSARC, Shahid was an associate director at TERI, an independent research institution working in the areas of energy, environment and sustainable development. As part of his managerial responsibilities, he was responsible for defining, providing direction, implementing research agenda. he has immensely enjoyed working in a team, guiding and mentoring fellow colleagues. As an energy specialist with research and consulting experience, Shahid has worked on various aspects of electricity market reforms covering a range of issues around energy-economics, energy-policy/regulation, energy-markets, energy-sustainability, pricing, DSM especially related to the electricity industry in India and abroad. He has interacted widely with policymakers, regulators, utilities (public and private), multi-lateral & bi-lateral organizations, and international research institutions. He also contributed to a number of government reports aimed to facilitate transition of the energy sector. Representation as energy sector specialist in a number of national and international expert groups/task forces etc.

Expertise

  • Energy policies/regulations
  • Markets and transitions

Publications See all Shahid Hasan’s publications

Beyond Smart Meters

Beyond Smart Meters

The emirate of Abu Dhabi was the first in the Gulf Cooperation Council (GCC) to…

11th July 2021
Turki Alaqeel

Turki Alaqeel

Former Senior Research Associate Turki Al-Aqeel was a Senior Research Associate at KAPSARC. He has also worked in many national and multinational firms in… Turki Al-Aqeel was a Senior Research Associate at KAPSARC. He has also worked in many national and multinational firms in Saudi Arabia and the United States in policy-related research, economic and market analysis, and electric power systems. His professional experience includes ABB, Woodward, Colorado Concept Coatings, and the Advanced Power Engineering Laboratory. Al-Aqeel holds a Ph.D. in Electrical Engineering, master’s degree in Business Administration from Colorado State University, and Graduate Certificates in Power and Energy, and Finance. Al-Aqeel is a Senior Member of IEEE and a Certified Modular Advanced Control (MACH2) Engineer for Flexible AC Transmission Systems. He has published several journal articles and conference proceedings in peer-reviewed journals and events and is a reviewer in several journals and conferences and a member of local and international committees.

Iqbal Adjali

Iqbal Adjali

Former Senior Research Fellow Iqbal is a former KAPSARC senior research fellow who led the Utilities of the Future project that develops decision support tools… Iqbal is a former KAPSARC senior research fellow who led the Utilities of the Future project that develops decision support tools for operational and strategic decision making. He is a Fellow of the Institute of Mathematics and its Applications (IMA), a member of the Institute of Physics (IOP) and a member of the Chartered Institute of Marketing (CIM). Iqbal is also the inventor of several patents.

Yagyavalk Bhatt

Research Associate Yagyavalk is a research associate at KAPSARC. His research interests include analysis of energy policies, with a focus on alternative… Yagyavalk is a research associate at KAPSARC. His research interests include analysis of energy policies, with a focus on alternative fuels and their impact on energy security. He previously worked as a researcher, providing sustainable development and decentralized renewable energy system solutions to rural areas of north India. He holds a master’s degree in renewable energy engineering and management from TERI University, India.  

Expertise

  • Energy market
  • Renewable energy transition and climate finance

Publications See all Yagyavalk Bhatt’s publications

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