Today's Edition
BATOOL GHAITH (ABU DHABI)
Reliable electricity, efficient infrastructure and predictable energy costs are becoming central to the UAE’s ability to attract manufacturers, support industrial expansion and compete for long-term investment, according to energy experts.
As Abu Dhabi prepares for significant growth in electricity demand, officials and industry specialists said competitiveness increasingly depends not only on generating enough power, but on whether that power can be delivered reliably and efficiently as industrial and commercial activity expands.
Abdulaziz Mohammed Al Obaidli, Director General of Regulatory Affairs at the Abu Dhabi Department of Energy, said energy is one of the practical considerations influencing where manufacturers invest.
“They need to know that electricity will be available when they need it, that costs will remain competitive and that the infrastructure can support their business as it grows,” Al Obaidli told Aletihad.
“These are practical considerations that influence where factories are built and where companies choose to expand,” he added.
According to Al Obaidli, Abu Dhabi expects electricity demand to reach around 197 TWh by 2035, rising to approximately 240 TWh by 2050, driven by industrial expansion, economic diversification and emerging industries such as AI.
Meeting that demand will require substantial investment, he noted, as Abu Dhabi plans to invest Dh250 billion in energy and water infrastructure between 2025 and 2035, including expanding generation capacity, strengthening networks and improving system efficiency.
“Ultimately, reliable and competitively priced energy allows businesses to focus on what they do best, producing, innovating and growing,” Al Obaidli said.
Sameer Vhora, Energy Lead at Egis in the Middle East, said electricity should be considered part of industrial production itself rather than simply another utility cost.
“For a manufacturer, electricity is not really a utility bill, it is part of the production line, a voltage dip lasting a fraction of a second can trip a petrochemical unit, and a prolonged outage at an aluminium smelter can freeze the potlines and take months to recover from,” Vhora said.
Consistent supply and predictable pricing throughout the year are therefore important both in attracting an industrial base and keeping it viable once companies have invested, he said.
Vhora said the UAE starts from a strong position on electricity reliability, citing Dubai’s record of less than one minute of interruption per customer in 2025, compared with roughly 15 minutes for leading European utilities.
He also pointed out that investors are increasingly looking beyond how frequently outages occur.
“That is resilience, and it comes from a diverse mix of gas, nuclear, and solar, with clean sources now supplying close to half of Abu Dhabi’s power, up from around 1% a decade ago, spare capacity and links to neighboring grids and control systems protected as seriously as the physical assets,” Vhora explained.
Planning networks ahead of demand allows manufacturers to choose locations based on supply-chain considerations such as port access, feedstock and proximity to customers rather than simply where spare capacity is available, he added.
He pointed to the 27-year utilities agreement for TA'ZIZ in Ruwais as a good example of utilities being designed in from day one.
Energy costs also enter investment decisions early, “For aluminium, steel, chemicals, or data centres, power is one of the largest operating costs, and a few fils per kilowatt-hour over a 20-year life can decide whether a project gets built,” he said.
For lighter manufacturing, predictability can matter more than the headline price, while the carbon content of electricity is also becoming increasingly relevant, Vhora noted.
Joe Challita, Partner at London Management Group Ltd, said reliable and competitively priced energy remains fundamental to manufacturing competitiveness because energy is a major production input and disruptions can carry costs far beyond electricity itself.
“Energy is a fundamental input in manufacturing. Competitive energy prices help manufacturers protect profit margins while reliable supply allows them to maintain quality and meet delivery commitments,” Challita told Aletihad.
He indicated that reliability matters as much as price, as in some industrial processes, even a brief outage can ruin a production batch, damage equipment, and cost far more than the electricity itself.
Challita said predictable energy costs are also important for investment decisions, allowing businesses to price contracts, forecast cash flows and plan expansion, while high or volatile energy prices can put pressure on margins and weaken competitiveness.
He also said that reliable infrastructure reduces operating risk for global investors considering the UAE as a manufacturing base.
“The UAE’s diversified energy mix, including gas, nuclear and solar, also provides access to lower-carbon electricity, which is increasingly relevant to manufacturers serving customers with sustainability requirements,” Challita added.
Combined with ports, logistics and industrial zones, this gives investors greater confidence in the UAE where factories can operate consistently and access additional power as production expands, Challita said.
According to Challita, in energy-intensive industries such as metals, chemicals and cement, lower energy costs can make a substantial difference to competitiveness, while technology, skills and productivity may carry more weight in advanced manufacturing.
“Competitive energy prices, combined with greater efficiency, help UAE producers reduce their cost per unit and narrow that gap,” Challita said, referring to competition from imported products.
He added that local production can also reduce shipping costs and delivery times.
For the UAE, Challita said the stronger competitive opportunity lies in combining skilled labour, automation and advanced manufacturing with reliable energy and access to markets.
Dr Yousif Al Hammadi, CEO of Tabreed, said cooling can account for up to 70% of electricity consumption in buildings in the UAE, making the way cooling is produced and delivered increasingly important as cities and commercial districts expand.
He noted that district cooling can achieve up to 50% greater energy efficiency than conventional cooling systems by using centralized networks rather than individual cooling systems for each building.
“This translates into lower electricity consumption and a smaller environmental footprint. Beyond energy savings, district cooling provides reliable, scalable infrastructure that can grow alongside commercial and industrial developments,” Al Hammadi told aletihad.
As industrial and commercial activity grows, he said the challenge is meeting increasing demand without placing unnecessary pressure on the electricity grid, particularly during peak periods.
Thermal energy storage can allow chilled water to be produced and stored during off-peak hours and used when electricity demand is at its highest, helping balance demand across the grid while maintaining cooling supply, according to Al Hammadi.
Tabreed has also integrated 2.4 MW of solar power across two plants in Abu Dhabi, while its G2COOL project with ADNOC uses geothermal energy to meet approximately 10% of Masdar City’s cooling requirements, he noted.
“These are practical examples of how integrating alternative energy sources can further enhance the inherent efficiency of district cooling, reduce dependence on grid electricity and support continued economic growth,” Al Hammadi said.
Al Hammadi added that reliable infrastructure is also an important consideration for companies deciding whether to establish or expand operations.
“Electricity, cooling and other essential utilities are fundamental to business continuity, any disruption can affect daily operations, particularly during periods of peak demand. Equally important is having infrastructure that can accommodate future expansion without compromising service reliability,” he noted.
Technology is also being used to improve the efficiency and resilience of cooling infrastructure. Al Hammadi said district cooling plants generate continuous operational data covering energy consumption, equipment performance and demand across their networks.
Milan Misra, Regional Head for ABB’s IEC Low Voltage Motors business across the Middle East and Africa, said energy efficiency is increasingly important for energy-intensive industries as operations become more electrified.
“Reliability supports continuity of production, while greater efficiency helps industries achieve more productive output from the energy they consume,” Misra told Aletihad.
High-efficiency motors, drives, automation and energy management can all contribute to better industrial energy performance, he said.
“Energy efficiency is no longer only a sustainability discussion, it is increasingly about productivity, resilience and long-term competitiveness,” he noted.
