Masdar City, the carbon-neutral development at the edge of the capital, will serve as a unique test bed for consumer concerns about the electricity grid of the future, experts say.
Utilities in the US and Australia that installed elements of a "smart grid" in recent years have faced complaints from consumers about higher bills. Consumer advocates have expressed even greater concern about more advanced grids that would enable utilities to take direct control of household appliances or cooling systems to match electricity consumption with available supply.
An agreement signed on Tuesday between the Abu Dhabi Government's Masdar and Siemens, the German industrial conglomerate, will test those concerns in a real-world environment as the two companies roll out highly advanced grid technology in Masdar City, said Abhay Bhargava, a power grid expert at Frost & Sullivan, a management consultancy.
The results of the experiment will shape the growth of the regional market as Abu Dhabi's utility and others across the region decide whether to mimic a recent flood of investment into grid developments in the US and Europe, Mr Bhargava said. Abu Dhabi will have installed advanced digital meters in every home across the emirate by the end of the year but it would need to introduce additional technologies and changes to pricing to create a true smart grid.
"The biggest challenge [utilities] face in demand response and implementing smart grids is consumer attitudes and opinions," he said. "With Masdar City, what the utilities can achieve is to evaluate the consumer response, their opinions and attitudes towards the various methods used in a smart grid."
At its core, a smart grid introduces advanced software and information technology into the electricity market to give data to both consumers and producers on the supply-demand balance of electricity at any given moment. Consumers face higher prices when demand spikes but can also reduce their bills by using power at night and selling back excess electricity that they can produce from solar panels.
Under the agreement, Masdar City will serve as a "living research and development facility" that will integrate each building's energy system into a city-wide distribution management programme, with a view to creating "end-to-end demand response from the utility direct to consumers", Masdar and Siemens said. The officials running Masdar's power grid will have access to detailed data on how energy is being used at any given moment and will have the means to directly moderate high rates of consumption to balance supply with demand.
Masdar City "gives Siemens a unique opportunity to design and implement a complete smart grid for a whole city", said Alexander Becker, a Siemens spokesman.
"In established cities there will always be a phased approach to convert existing installations into a smart grid-smart buildings environment."
Consumers at Masdar are unlikely to raise objections to smart grid experiments, said Christian von Tschirschky, an electricity grid expert at the management consultancy AT Kearney.
"The consumers know from the moment when they move in what to expect," he said. "You can, of course, develop the smart grid and smart meter opportunities to the maximum extent because you're starting from scratch."
The agreement with Siemens complements a separate deal Masdar reached last year with General Electric, the US conglomerate, to install smart home appliances in the city that regulate their energy consumption levels to match supply.
Siemens is likely to reap a significant commercial benefit as it looks to create a new market for smart grids across the region, Mr Bhargava said. Frost & Sullivan estimates GCC countries will spend US$60 billion (Dh220.37bn) on electricity transmission and distribution systems over the next 10 years, of which a sizeable proportion could go towards smart grid technology.
"Masdar is the only opportunity in the region," Mr Bhargava said. "For any company to be successful when it comes to applied technology here, they need to show proof of concepts that are relative to the region."
Any such changes will also require the approval of electricity regulators, he said.