Dubai Electricity and Water Authority (Dewa) is planning to invest US $13.6 million (AED50 billion) on power, sewerage and desalination plants between now and 2012. Sayeed Mohammed Al Tayer, managing director and CEO of the state-run utility made the announcement during Wetex 2007 - the Dubai-based water, energy and environment exhibition - in March.

Dewa is expected to increase its electrical capacity to 13,250MW and desalination to over 2.6 million m3 per day over the five-year period. The demand for desalinated water grew by 13% in 2005, while electricity demand rose by 17%. Currently, a surplus of both is available, but demand is forecast to rise further when a vast wave of construction projects complete in 2007-08.

In bid to keep up with these projections, Dewa recently rolled out its latest power grid expansion project - H Station (phase three) - which was won by German power giant, Siemens.

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The $100 million turnkey contract is to build a 400kV/132kV substation in Al Awir. And with 24 gas-insulated switchgear bays at 400kV, and 28 bays for 132kV, the substation is the largest of its kind that Siemens has undertaken worldwide to date.

The project will link H Station with the country's power supply network, and the substation also completes the Emirates National Grid, by providing a link between the power plant and the power supply systems of Abu Dhabi.

"This project is important for both companies. Dewa is a key account for Siemens, and, having worked with them in the past, we believe that we fulfill their demands," says Michael Jesberger, vice president - high voltage substations, Siemens AG.

He adds that the Middle East, specifically the UAE and Qatar, has long-been the largest market for GIS projects for Siemens and that the speed of growth requires careful coordination of utilities.

"The development of this country is amazing, especially when compared to Germany, where things are going more slowly. But to build at this pace, you need to have a reliable power supply, and Dewa has done a great job."

But in a market where contractors are kept extremely busy, the tendering of power and water projects in the past has presented certain challenges to Dewa, which had to re-tender its M Station project towards the end of last year. The size of the plant had to be downgraded from 2,000MW to 1,200MW and split into two phases in order to attract firms.

"The plant will still produce 2,000MW but this will now be done over a two-phase construction period," says Sayeed Mohammed Al Tayer, managing director and CEO, Dewa.

"After we only attracted one bidder [Doosan] for the project last year, before re-tendering we found out from contractors that this was because the plant size was too big. It was also because most contractors are too busy; so time is a problem, as are the financial risks associated with such a project."

Despite the pressure to find bids on the market, Jesberger says that Siemens faces tough competition in the region.

"There are the Japanese firms - Mitsubishi and Hyundai, and a lot of Indian contractors including Larsen & Toubro and Tata Industries. Then there are the Saudi Arabian contractors, which are doing more higher voltage contracts. So the competition is tremendous."

He adds that Siemens has changed the way it works in the region in order to give it the best possible chance of winning projects.

"What we are doing now is building up local competencies. In the past we largely had an export business out of Germany. But we found that it took time to communicate with the customer and get approval for our designs, for example. By building up our local engineering competence we are getting closer to our customers and reduced our project execution times by up to 60%. So we have sped up the process by having a local presence.

"Siemens is present in a lot of countries - more than the United Nations. And we are growing in all areas: people, location and competencies. And we are shifting our production facilities around the world to be closer to the markets, the customers, and

to meet local requirements. It is better to have a Chinese member of staff talking to a Chinese customer than an Austrian, for example. It's logical."

As well as developing its local competencies, Siemens has also carried its German reputation for precision and delivery, which has attracted other European firms to carry out subcontracts on its major jobs.

Shad Asif Khan, general manager - Gulf, Keller Grundbau, which has carried out deep soil treatment for power projects for Siemens, says that working for with them is preferable for Keller.

"Let's put this way, Siemens is our favourite client; they like us. Last year we did three jobs with them, in Qatar, Bahrain and Saudi Arabia. The Saudi job was a power generation plant in Shuaiba on the west coast. And our Saudi Arabia branch had a record year last year.

"There is no denying that we have a good relationship with Siemens as we are both German companies. But of course, we have also delivered. It is a good client but it is very demanding. The time schedules are not easy but we have managed to deliver. And that is the secret as to why they were coming back to us, and not the competition."

But even with reliable subcontractors, a reputation for meeting deadlines, and delivering high quality, it is impossible for Siemens to escape the increasing steel prices being seen in the market.

"We are of course affected," adds Jesberger. "The increase of steel prices is a global issue and the whole industry is facing the same problems. If you source a transformer, for example, the factory will have already had to compensate for the cost.

"We are suffering, but more on the capacity side than the financial side. It's a matter of how clever you are and how you balance the load."

And in a market where balancing the load is imperative, it is no surprise that companies who can rely on each other, stick together. By investing in its local competencies and partnering firms with reputations such as Keller, Siemens has developed its operations in the Gulf into a reliable source for Dewa and other utility clients.

But project re-tenders and unpredictable shifts in steel prices are keeping the market on its toes. And as large numbers of construction projects come online this year and next, the question will remain: can the necessary electrical infrastructure be built quick enough to meet demand?

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Siemens shines the light on solar energy

As part of its evolving presence in the Middle East, Siemens launched its turnkey solar solutions into the market at the Wetex 2007 exhibition in Dubai.

Its expansion of the solutions into the Middle East market is in response to a growing interest in the technology throughout the region.

Jos Schlangen, business development manager, Siemens Solar Projects, says: “There is a lot of interest in solar coming up; the demand is not there yet because there is not a framework in government for this type of application. [For the market to take off] it needs funding from universities and utilities firms and to get renewables placed next to other types of energy solutions to be part of the total energy mix.”

Siemens produces its own inverters and will provide a turnkey solution of the entire project including sourcing of solar panels from the market.