INTERVIEW: UAE's Masdar eyes US renewable acquisitions to grow its $14 bil portfolio

Dubai — UAE's Masdar Clean Energy, owned by an Abu Dhabi investment fund managing $232 billion in assets, is eyeing more renewable acquisitions in the US to help grow its $14 billion portfolio, and expects to make a deal this year, a company executive told S&P Global Platts.

Masdar, which already owns two wind assets in Texas and New Mexico with a total capacity of around 180 MW, is looking at both wind and solar projects and wants to diversify its US portfolio with assets across states, including California and Florida, said Yousif al-Ali, executive director of Masdar Clean Energy, on July 1.

"US is a huge market and we will be trying to have sizable acquisitions," said Ali. "It's a huge market that provides you with the ability to invest in big ticket projects with reasonable return. It is a very liquid market. You can enter, you can sell."

Masdar, which was set up by the Abu Dhabi government in 2006 and is owned by Mubadala Investment Company, currently operates in over 30 markets with projects that have gross installed capacity of close to 6 GW.

Its portfolio spans the UK, where Masdar has stakes in three wind farms, to Australia, where it acquired a 40% stake in a waste-to-energy project for A$511 million ($353.54 million).

Most resilient

Companies such as Masdar are seeking to have a more global footprint to take advantage of the uptick in investments in renewables.

Renewable energy is the energy source most resilient to COVID-19 lockdown measures and total global use of renewable energy will increase by about 1% in 2020, according to the International Energy Agency. In the first quarter, global use of renewable energy in all sectors increased by about 1.5% from a year earlier and electricity generation rose by almost 3%.

Masdar, unfazed by the COVID-19 impact on the renewable sector, is bidding for a series of projects in CIS countries as well as in Saudi Arabia, which is tipped to be a major operator of renewables projects in the coming years.

Masdar, along with EDF Renewables, won in 2019 a 400 MW wind project in Saudi Arabia, the country's first such farm.

Saudi Arabia "comes with a very strong regulation and a very strong financial position that allows us to compete in these projects ... and also provide a decent return," said Ali.

Masdar is currently bidding for Saudi Arabia's third solar round that includes projects that have a collective capacity of 1.2 GW. Due to business and travel restrictions related to COVID-19, the Saudi ministry of energy extended the Request for Proposals time frame to six months from four months.

COVID-19 impact

Although COVID-19 is not diminishing Masdar's appetite for projects, it is expected to affect projects under construction due to delays in aspects such as import of materials, travel and other restrictions from lockdowns, said Ali.

However, the long-term nature of the power purchase agreements of Masdar's projects will guarantee a steady flow of revenue for the company, he added.

"In most markets where we operate, the practice is to have a long-term power purchase agreement, and these power purchase agreements have a fixed pricing," said Ali. "We continue to have this stability when it comes to revenue, hence pricing of these projects did not get impacted."

Despite Masdar's global reach, it is also focused on the Middle East, and the UAE, where solar price records have been broken in recent years.

The UAE, where currently power is mostly generated from gas, wants to produce 44% of its electricity from clean energy by 2050.