Dubai Utility Doubles Business Electricity Rates in Three Years

dubai lights buildingYou wouldn’t want to be responsible for keeping the lights on in buildings like these!

In an attempt to reign in Dubai’s profligate fossil energy use, Dubai Electricity and Water Authority (DEWA) has sharply raised rates for business customers who have failed to reduce their electricity consumption since 2008, Utilities-ME is reporting. Starting in January 2011, there is a more sharply tiered rate system, so that profligate energy users wind up paying far more for each kilowatt hour than their more energy-efficient competitors. The new rates mean that in practice, businesses can pay almost double what they paid before 2008.

In 2008, the new system was begun. In January, the first rise means that for monthly consumption under 2,000 kilowatt hours, rates have gone up from 20 to 23 fils. But for consumption above 6,000 kilowatt hours monthly, the already high rates of 33 fils have gone up to 38 fils, almost double the pre-2008 charge at the old rate.

There are numerous cleantech solutions to reduce building energy use, from waste heat recovery, to renewable energy, to solutions that reduce the costs and fossil fuel use associated with air conditioning, so the reluctance of large businesses to take advantage of them is mystifying. As Markus Oberlin, the General Manager of one such company, Farnek Avireal points out:

“Consumers, particularly commercial, that did nothing to arrest consumption or waste after the first slab tariff increase in March 2008, will have electricity bills that in some cases will have soared by an additional AED1.1 million during the past twelve months.”

For example, a hotel of around 20,000 square metres in the New Dubai area which had annual energy costs of AED1.5 million in 2008 will now be paying over AED3 million in 2011 for the same level of energy use, about double.

The emirate relies on fossil fuels to make 93% of its electricity: 70% comes from burning gas, and 30% from burning oil. Two thirds of an estimated 56.6 terrawatts of power used in all the gulf emirates combined is used for cooling and lighting, and Dubai, with its over-the-top architecture, man-made islands and spectacular attractions is responsible for even more than the UAE average.

As we all begin the bumpy descent down the other side of Hubberts Peak, even within the Gulf countries, fossil energy prices are rising again, because the world is staggering back to its feet after the blows of the last oil price shocks of 2008.

Even in the Gulf nations, oil prices are becoming significant. In fact, the situation in the region is even more desperate, because what remains of fossil energy must be conserved to desalinate seawater.

Oberlin has one modest solution. The Farnek Avireal Energy Saving Module – which reduces electricity consumption from air conditioning and refrigeration systems – by only 20% – used to have a pay back period in utility costs savings, of about 22 months.

Now, with the higher prices, that payback time is down to within just one year, they claim. But actually, greater energy reduction yields the highest savings overall.

If you are in the LED business, you might want to get over to Dubai.

::Farnek Avireal

More on attempts to reign in profligate energy use:
Dubai’s Conservation Incentive: Higher Energy And Water Bills
California’s Hara Could Cut a Staggering 12 Terawatt Hours of Energy Waste in Abu Dhabi
Dubai’s New Net Zero Building Codes Should Boost Cleantech Worldwide

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