UAE power demand is among the largest in the region due to financial and tourist projects as well as a growing population. According to Global Insight, UAE has added 24 percent electricity-generating capacity at an annual rate over the last 30 years. Current total capacity for electricity production is around 16.7 gigawatts (GW), but will need to increase further considering the 10 percent per year demand rise expected through 2010. Nearly all UAE power comes from conventional thermal generation. In 2004, consumption reached over 45 billion kilowatthours (Bkwh).

Construction is underway to develop a national grid between emirates to increase electricity efficiency, as well as link UAE with the multi-national Gulf Cooperation Council (GCC). UAE is part of the second phase of the $1.1 billion GCC regional grid project. The first phase of the plan links Saudi Arabia, Kuwait, Bahrain and Qatar, followed by the UAE and Oman. (See Kuwait and Bahrain Country Analysis Briefs) The plan calls for each nation to first develop its own unified power grid, and the UAE is connecting all power stations along its western coast with the central region.