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Masdar poised to scale up green investments

UAE adapting oil and gas expertise to spearhead renewables drive

Abu Dhabi based green investment company Masdar has helped put the United Arab Emirates (UAE) on the map as a high-profile player in global renewable energy development – and that role is set to expand, Thani Al Zeyoudi, director of energy and climate change in the country’s Ministry of Foreign Affairs, told WEC Congress News.

Little more than a name and a concept when it was created in 2006, Masdar has since carved out a niche as a key investor in several large renewable projects in Europe and the developing world, including concentrated solar power plants in Spain and solar power projects in Mauritania, the Seychelles and Fiji.

The company plans to expand its portfolio over coming years, regardless of progress in international climate change talks. “If there is a delay in reaching climate change agreements, we won’t delay our projects. We always try to be positive,” Al Zeyoudi said.

One of the company’s best-known investments has been its injection of more than £500 million ($800m) in the London Array, which became the world’s largest offshore wind farm on its completion earlier this year. Located in the Thames Estuary near London, the project, which has a capacity of 630 megawatts (MW), supplies power to a swathe of south-east England and could expand further if further phases are approved. Denmark’s Dong Energy and Germany’s E.On are Masdar’s partners in the project.

“We know such mega-projects create more jobs and bring more small and medium-sized companies to the market, which really helps the economy,” Al Zeyoudi said.

Masdar’s success in the re-financing of £266m of investment in the London Array suggests flagging appetite for investment in renewable energy can be re-kindled for the right project. Bank of Tokyo-Mitsubishi UFJ, KFW-IPEX Bank, Siemens Bank, and Sumitomo Mitsui Banking Corporation all took part in the refinancing, while the Green Investment Bank (GIB), established by the UK government, also made a £58.6m loan.

The deal frees up funding for Masdar to invest in other renewable energy projects and persuade other investors to invest in the UK’s burgeoning offshore wind industry. Earlier this year, Masdar signed a memorandum of understanding with GIB, under which the two would seek out green infrastructure projects in the UK, in which they could jointly invest over the next seven years. Some estimates have suggested the agreement could result in an extra £1 billion of investment in the UK.

While the UK government has received criticism from some quarters for reducing subsidies in parts of the renewable sector, Al Zeyoudi says Masdar is satisfied with market conditions in the country. “The UK market is very well established, the policy is there and the government are really supportive,” he said, adding that falling technology prices over the last two or three years had made new products more competitive.

Masdar is using experience gained internationally to aid its renewables drive in the UAE. In March, the company commissioned the Shams 1 CSP project, built in partnership with France’s Total and Spain’s Abengoa at a cost of around $600m. The 100MW-capacity plant took three years to build and  was the largest operational CSP project in the world when it was launched.    

Further similar plants are due to follow, while the company is also hopeful that international companies can be tempted to the country to develop solar energy to power water desalination plants. Adequate water supply is a growing problem in the UAE and elsewhere in the Gulf.

Desalination provides one solution, but it requires a large amount of power, adding significantly to carbon emissions when produced with fossil fuels.

Last week, Abu Dhabi opened its 1.5-gigawatt Shuweihat 2 power and water plant, a gas-fired facility capable of producing up to 120m gallons of drinkable water a day. At present, solar energy’s contribution to this push is restricted to small pilot projects, but the country is eager to scale this up.

“We want as much power for desalination as possible to come from renewables,” Al Zeyoudi said. To that end, international firms have been asked to make proposals for possible collaborations in the sector. He said the firms selected would be announced in January.

The company’s flagship Masdar City complex in Abu Dhabi is also taking shape, albeit at a slower pace than originally planned. He said a slow down in research into and acquisition of the cutting-edge technology required at the clean energy showpiece, during the global economic downturn, had caused delays to some elements of the project.

However, high-profile tenants are now poised to move in including Siemens, which is moving its regional office there and the recently-created International Renewable Energy Agency, whose headquarters is due to open in Masdar City in 2014.

Al Zeyoudi hopes that a rich energy mix created through the combination of the UAE’s credentials as a renewable energy pioneer, its long history as an oil and gas producer, its plans to generate 25% of its power from nuclear power by 2020 and to build an LNG terminal will aid its bid to host the WEC Congress in 2019. If successful, the UAE would be the first Opec country to host the conference in its 90-year history. 

“Our region has a very compelling story in the field of energy. We believe it is the right time now to take the conference there to see how we can add value to the discussions, how the world can benefit from what we have done and how we can work together,” he said.

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