The Business Opportunities Within The Dubai Electricity and Water Authority (dewa) Strategy

Introduction

Dubai Electricity and Water Authority (DEWA), is a utility company based in Dubai city and mandated by the government of Dubai t provides water and electricity services to the people of Dubai. Since its inception in 1992, DEWA has grown to become an effective provider of water and electricity services to 500,000 and 600,000 customers respectively (DEWA, 2016). In their long-term strategy, DEWA aims at increasing their installed electricity capacity from 9656 MW to 10000 MW and supply of desalinated water per day to 470 million imperial gallons by 2018. In order to realize this goal, the company intends to apply modern technologies in the generation and supply of electricity and water (DEWA, 2016). Furthermore, DEWA intends to achieve their electricity capacity goals by investing in the green or renewable sources of energy as well as green technologies in line with their sustainability plan. This essay explores the business opportunities within the DEWA strategy and analyses how a private firm or individual can do business with DEWA.

Discussion

Most of the utility companies across the world attempt to make their services cheaper to their customers while at the same time increase their market reach. In order to achieve that, these companies aim at making their services more effective and efficient. Unlike in Dubai, most countries have fully opened up the market so as to reap the benefits such as low prices which usually come as a result of competition (APG&E, 2016). Nevertheless, the government of Dubai has broken down the utility sector into various components which are all under the control of DEWA. These subcomponents of DEWA’s business include power generation, power distribution, utility payments, water distribution and utility maintenance services among other areas. As a result, several avenues have been created for the investors to explore as they intend to do business with DEWA. Some of the opportunities that DEWA will seek partnership going into the future include construction of power plants and substations, development of desalination and reverse osmosis water plants, construction of water reservoirs and pumping stations, expansion of power and water distribution networks, adoption of SCADA systems and intelligent metering system, consultancy services in the area of water and power management and development of green sources of energy (Aramco, 2016).

In the past, the utility market was defined by clear roles encompassing generation, transmission, and distribution on the supply side. However, the supply side in the electricity market is greatly influenced by other external factors such as regulations and environmental concerns, customer demands and the emergence of new technologies within the energy industries (APG&E, 2016). In this new integrated utility ecosystem, greater and better opportunities to do business with the utility companies have also been created. In addition, the influence of the digital revolution on energy production and management has created dynamism in the sector leading to the creation of new avenues for business in companies like DEWA. As a way of embracing the challenges faced by the utility companies, the top executives of these firms must involve other players in core and subsidiary businesses of the firm.

DEWA’s supply chain can be broken into four components that present various opportunities to the business people. The first component of the supply chain comprises of the generators of electricity. Despite DEWA being the main generator of electricity in Dubai, other small generators play a significant role in helping the city to realize its long-term vision. Private companies can, therefore, partner with DEWA to produce electricity in order to realize this goal as well as to lower the cost of electricity as a result of increased supply. The second component of the energy supply market is the energy network operators. This area of the supply market is heavily regulated and very expensive for a private firm to join. In Dubai, DEWA operates as a monopoly in network operations (DEWA, 2016).

The third component of the energy market is the energy traders and marketers. In this market, firms are able to buy energy futures and other energy-related derivatives as a way of hedging against the fluctuations in the cost of energy (APG&E, 2016). Using this platform, major energy consuming firms can access power at stable and predictable prices therefore helping them to plan their future better. Despite the development of this energy segment in the markets such as the UK and the US, the Dubai utility market is yet to embrace this business opportunity. Lastly, energy service providers and retailer markets are one of the fastest growing components of the utility supply market in the United States (APG&E, 2016). Unfortunately, DEWA is the only energy service provider and retailer in Dubai. As a result of utility sector regulations, it will be impossible for an investor to develop an energy retail company.

Apart from the conventional supply chain components of a utility company, the emergence of green technologies is creating new and better opportunities for firms that want to participate in the energy industry. According to DEWA Vision 2030, the company wishes to adopt carbon efficient production technologies in order to realize their dream of green energy. In this regard, DEWA intends to partner with the private companies so as to enhance their green energy capacity by focusing on renewable energy sources (Schweiters & Flaherty, 2015). Dubai is blessed with a high solar and wind power capacity. Private companies can, therefore, partner with DEWA is the installation and distribution of solar panels, construction of wind mills, the supply of wind turbines as well as the supply of power storage tools like solar batteries.

The demand side of the utility market involves directly dealing with the customers. As a service provider, DEWA aims at ensuring a high level of satisfaction among its customers. In the service delivery side, DEWA prioritizes efficiency and effectiveness of their services. In this case, DEWA has adopted various technologies like smart metering systems which allow the customers to track their usage of electricity and water (DEWA, 2016). Additionally, the company has also launched an e-pay system in order to ensure convenience for customers as they settle their water and electricity bills. Furthermore, DEWA can easily develop and implement their energy saving plan since the smart metering system allows them to monitor the energy consumption within their households and by various appliances. This allows them to come up with various energy saving techniques or tools or buy assets that lead to efficient energy use.

The use of technology as a way of ensuring effective and efficient service delivery of water and electricity creates new opportunities for investors to partner with DEWA. For example, information technology and systems firms can now come up with ways of connecting various home appliances to a smart network which can be monitored and controlled using a remote server by the user (P&G, 2016). Postance (2015) outlined that adoption of the smart meter system also enhances the opportunities in other smart home networks such as security systems, electric vehicle charging and micro generation management. Furthermore, DEWA and its partners can create a platform of various energy tariffs where the customer is given the opportunity to choose the preferred tariff. Additionally, with DEWA choosing to go smart by 2030, there is increased motivation for investment in the authority’s demand management programs like power purchase agreements for wind power, solar power storage technologies and management software like Customer Relationship Management (CRM) software (DEWA, 2016).

In order for a private company or an individual to do business with DEWA, he/she must be having knowledge of the Dubai Integrated Energy Strategy 2030 and the product or service offered should be in line with this strategy. The Dubai Integrated Energy Strategy was developed by the Dubai Supreme Council of Energy with an aim of energy resources diversification as well as improved efficiency in the use of electricity and water within Dubai (Government of Dubai, 2016). In order to realize the green energy goal which is part of the strategy, DEWA is looking forward to generating at least 71% of power from natural gas, 12% from nuclear power, 12% from clean coal and the other 5% from the renewable energy sources. In this regard, investors hoping to partner with DEWA must therefore offer products which are in line with the guidelines of the strategy. To this date, DEWA has already partnered with other private companies in one of the clean coal projects. In addition, DEWA aims at coming up with technologies which will lead to reduced demand for water and energy by 30% by 2030 (Government of Dubai, 2016).

The first step in doing business with a utility company is the identification of the product or service that the firm can offer and the capacity of the firm to offer such a service (ABB, 2016). In the case of DEWA, some of the opportunities for partnership with a private company include supply of computerized water and electricity meters, supply of various types of pipes used in the distribution of water and electricity such as steel, cast iron and polyethylene pipes, pressure valves and regulators (PSE&G, 2016). Additionally, the private company can offer office equipment such as software which will assist in automation, laboratory analyzers, office furniture and computers among others (NASA, 2016). DEWA can also outsource services such as pipeline automation, machinery installation, civil engineering works and general construction (National Grid, 2016).

Just like other utility companies, the quality of products and services offered by the private companies is a core priority for DEWA. In this regard, DEWA has laid certain quality specifications that partners must adhere to in order for the product being offered to be considered. First, the supplier must ensure that the product on offer conforms to the quality specifications highlighted in the tender order and samples submitted during the tender selection must satisfy the quality requirements of the purchaser. Second, the product on offer must be made from the very best materials and with the best technology (Edison International, 2016). Third, the supplier must justify their capacity to supply the quantity of materials needed as per the tender notice, and lastly, the supplier must also adhere to other international standards of quality that may apply in the case of the product.

The process of selecting a partner for the utility company also involves other procedures that must be followed. Most of the utility companies require that their partners be first registered as suppliers by the company. The process of this mandatory registration usually involves the presentation of documents highlighting the corporate profile of the company, its products, and technical data. If the utility firm is convinced that the company has the capacity to deliver the products specified then it will be registered with the purchasing department of the utility firm and the documents held on a special file for future reference (OSAKA GAS, 2016). Request for proposal will only be issued to the companies which are already registered as suppliers with the utility firm. After issuance of the requests for proposals, the suppliers will be asked to submit their bids for the product. In the bid, the product on offer must match the specifications set by the utility firm and the deadlines for delivery (OSAKA GAS, 2016). Lastly, after evaluating all the bid entries, the purchasing department of the utility firm will notify the selected supplier so that the two firms can discuss the specific terms and conditions as well as the delivery schedule and inspection procedures to expect.

Unlike other utility firms in other parts of the world, DEWA is an entity of the government that operates under strict regulations from the government of Dubai. In this regard, in doing business with DEWA, the tender process will be expected to slightly differ from the general processes highlighted earlier (Government of Dubai, 2016). Here, the DEWA partners are expected to follow the tendering process that is laid down by the government when contracting a partner from the private sector. In line with the Dubai public procurement rules, DEWA must first advertise the business opportunity in which they intend to partner with a private firm using mass media. In addition, the company must obtain a specified number of tenders before closing the tendering process (Government of Dubai, 2016). Unlike other utility firms in Europe and the United States, DEWA is required to follow strict tender rules set by the government to avoid corruption as well as to ensure that the most capable partner is contracted.

On the other side, companies looking forward to doing business with DEWA must also fulfill certain guidelines set by the tendering department before they can be approved. These guidelines will help in the examination of the company’s eligibility in the provision of the product or the service needed. Accordingly, the government of Dubai has created an online tendering platform aimed at making the process efficient and effective. The online e-supply portal is managed by the government of Dubai in partnership with Tejari (Government of Dubai, 2016). This portal assists suppliers and prospective suppliers with various government departments and organizations to conveniently place their bid since it is open to all suppliers willing to do business with the government of Dubai. This portal is also used by more than 1000 government procurement officers from 35 departments to post various opportunities available within their departments (Government of Dubai, 2016). Furthermore, the portal is used by the procurement officials to evaluate various suppliers before awarding tenders. In order to achieve the goals of effectiveness, efficiency and transparency within the tendering process, the government of Dubai ensures that the whole process is managed online.

Using the online e-supply system, various vendors and suppliers can now bid online for DEWA contracts. This ensures that DEWA operations are streamlined in an efficient manner. However, even in the case of the online tendering process, the suppliers must follow the stringent procurement rules set aside by the government in order to avoid legal disputes (Government of Dubai, 2016). Apart from the selection of suppliers, other procedures followed by DEWA are relatively similar to those that apply in the private sector. For example, DEWA follows similar procedures to other private companies when it comes to invoicing and settling of fees with its suppliers. Nevertheless, before the company disperses payments for the contracts or tenders, the government of Dubai demands an original local purchase order (LPO), the company’s government assigned vendor number, proof of delivery and an original invoice from the company’s stationery. Despite the encouragement by the government to shift from paper work to an electronic invoicing system, the original copies are still required by the government before payments are made (Government of Dubai, 2016).

Conclusion

This paper sought to explore how a private firm can do business with DEWA. DEWA is the main utility company in Dubai tasked with the provision of water and power services. From the analysis, DEWA vision 2030 had created several business opportunities in which private firms could partner with DEWA. These opportunities were in the areas of green energy, green technologies, technologies to enhance efficiency and effectiveness of customer service delivery as well as other general material tenders. Unlike other utility companies, DEWA was under control and management of the government of Dubai and was therefore exposed to strict procurement and tendering rules as highlighted in the text.