A comprehensive energy policy being developed by the Abu Dhabi Government includes measures to slow the emirate's huge consumption but will stop short of raising electricity prices for consumers, a senior Government official says. The long-delayed policy, which has been described as imminent by a number of officials for at least a year, will put into words an emphasis on managing energy consumption that has already become clear through developments announced this year.
New appliance efficiency standards, a fuel price increase and an experimental effort to get large users of air-conditioning to switch off chillers in the middle of the day, will all slow consumption growth, experts say. Peak power consumption is forecast to grow by 11 per cent a year over the next decade - one of the highest growth rates in the world - forcing the Government to spend billions of dirhams on new power stations and transmission capacity.
"The Government has been developing a holistic document around the energy policy. All the shareholders in the sector have a say in the policy," said the official, who wished to remain anonymous. "The policy is comprehensive, looking at both supply side issues and demand side management." A change in electricity prices "won't be identified specifically", he said, but the policy would allow for different rates during peak and off-peak hours.
"[The policy] does acknowledge the role of dynamic tariffs," the official said. "Ultimately the price-setting mechanism comes from the Executive Council." The Abu Dhabi Executive Affairs Authority has spent well over a year studying how electricity consumption could be decreased without changing prices, and found that expected growth could be reduced as much as 12 per cent by 2020, according to figures presented two weeks ago at a conference in Dubai.
But experts agree that an increase in prices would have an even larger impact. Cheap electricity and petrol have been a fixture of Abu Dhabi for years, courtesy of government subsidies, but are not sustainable for the long-term, said Abdulkhaleq Abdulla at UAE University in Al Ain. "People should gear up and prepare themselves for a price hike," Mr Abdulla said. "The very generous welfare system is not sustainable fiscally, but also probably not sustainable socially."
Low prices for energy have led to "massive waste", he said. "If the Government gradually does away with all these subsidies, maybe we'll all be better off," Mr Abdulla said. "We have made the price so attractive that it created so many dislocations in the market." cstanton@thenational.ae
