Emirates Global Aluminium, Mubadala Investment Company and Dubal Holding will develop a power generation facility and water desalination plant worth more than Dh1 billion ($272.3 million) at EGA's aluminium smelting facility in Jebel Ali.
Mubadala and Dubal Holding agreed to form a joint venture to develop the new facility, according to a joint statement on Tuesday. EGA will buy power from the new JV for 25 years once the facilities are operational.
“This deal will enable EGA to further improve energy efficiency, saving natural resources and reducing the costs and environmental emissions associated with our aluminium production," Abdulla Kalban, managing director and chief executive of EGA, said.
"Bringing in our shareholders to invest in such power facilities through a new company makes sense for EGA from a capital allocation perspective as we expand our core business upstream and internationally."
The JV will install a combined cycle power facility at EGA’s Jebel Ali site capable of generating over 600 megawatts of electricity.
Shareholders of the joint venture signed an agreement with Germany's Siemens to install the UAE’s first combined cycle H-class gas turbine. The H-class is a more energy-efficient turbine than previous generations.
"This project is a breakthrough on many levels: the first Siemens H-class globally to power an aluminium smelter, the most efficient power plant in the UAE and the most efficient in EGA’s fleet," Karim Amin, chief executive of sales for Siemens Power Generation, said. "This proven technology will be a boost to the UAE’s industrial sector."
Once the project is complete, five older, smaller and less-efficient turbines at EGA Jebel Ali will be put on standby for use only in emergencies.
The new facility is expected to reduce greenhouse gas emissions from EGA’s power generation at Jebel Ali by about 10 per cent.
Emissions per tonne of aluminium produced at Jebel Ali, which includes both power generation and aluminium smelting, are expected to be reduced by up to 7 per cent.
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The project creates an "attractive opportunity" for Mubadala to build on its portfolio of investments in power generation and utilities in the UAE and abroad, Khaled Al Qubaisi, chief executive of aerospace, renewables and ICT at Mubadala, said.
The UAE and some other Arabian Gulf states are increasingly relying on desalinated water to meet domestic and industrial demand and supplement existing groundwater reserves.
Desalination is one of the biggest drivers of energy consumption in the region, with some estimates suggesting that the GCC’s desalination plants alone account for 0.2 per cent of all energy consumed globally. Some states, such as the UAE, have explored reducing the energy cost of such processes by using renewable sources.
Abu Dhabi Water and Electricity Authority is pursuing some large desalination projects across the UAE, including plans for a scheme that would have the capacity to produce 200 million imperial gallons per day.