INTERVIEW: UAE's Masdar may take part in 100 GW US-UAE partnership

UAE's renewables power firm Masdar, in which Abu Dhabi National Oil Co. has a stake, may participate in a UAE-US partnership to mobilize $100 billion for investment in 100 GW of clean energy projects globally by 2035 as OPEC's third biggest producer seeks to hit net zero emissions by 2050.

Masdar has set a target to develop as much as 100 GW of renewable projects by 2030 from more than 15 GW in 2021. UAE's power company TAQA has a 43% shareholding in Masdar's renewables business, while sovereign wealth fund Mubadala Investment Co. retains 33% and ADNOC holds 24%.

In November, the US and the UAE signed an agreement, called the US-UAE Partnership for Accelerating Clean Energy, to galvanize investments in clean energy, as the two oil producers seek to boost their renewables portfolios amid net zero emissions targets.

"We will definitely look into the US-UAE Partnership for Accelerating Clean Energy, and we are already in discussions about potentially developing and investing in renewable energy projects in the US," Fawwaz al-Muharrami, executive director of clean energy at Masdar, told S&P Global Commodity Insights in an interview.

"This is part of our target for the US, under our new strategy."

The UAE, which is set to host the UN climate change conference COP28 in 2023, is the first Middle East country to commit to net zero emissions by 2050.

Masdar is bolstering its clean energy portfolio at a time when the global renewable capacity expansion is set to account for over 90% of global electricity capacity growth between 2022-2027, the International Energy Agency said in a Dec. 6 report.

IEA has estimated renewable capacity expansion in the next five years to grow by almost 2400 GW, an 85% acceleration from the previous five years.

S&P Global Commodity Insights has estimated solar photovoltaic additions in 2022 to exceed 190 GW, driven by record buildup in China and Europe, with total global installed capacity expected to surpass 1 TW by year-end. Global wind capacity is a step behind, meanwhile, with projections seeing the 1 TW mark passed in 2023.

Acquisitions and partnerships

Masdar is looking at forming new partnerships, acquiring assets and bidding for projects to hit its 100 GW target, said Muharrami. It is planning to bid for projects in the UAE, Saudi Arabia, and CIS countries in 2023.

Renewable electricity capacity expansion in the Middle East and North Africa region is forecast to triple in 2022-2027 to 45 GW, compared with the previous five years, according to the IEA.

"We are definitely looking to forge the new partnerships needed for us to acquire and develop these projects," he said.

"We are currently in discussions with several potential partners, and we are open to extending that kind of collaboration with them, in different geographies."

Offshore wind pivot

Masdar will also focus on offshore wind projects and has signed a partnership agreement with RWE, Germany's biggest power generator and the world's second-biggest offshore wind developer, to jointly explore developing such projects in key markets, building on their collaboration in the 630 MW London Array facility.

Masdar will explore opportunities to develop as much as 10 GW in offshore wind in the North Sea and Baltic Sea in Germany by 2030.

"We have a dedicated team based in the UK focusing predominantly on offshore wind in the European market," said Muharrami.

"It is also working on finding opportunities within the US and Asia too."

Green hydrogen opportunity

Masdar also plans to produce as much as 1 million mt/year of green hydrogen by 2030.

The share of renewable capacity dedicated to hydrogen in the Middle East and North Africa is higher than in other regions, accounting for 14% of total renewable deployment in the area, according to the IEA.

The UAE seeks to have a 25% global market share of low-carbon hydrogen by 2030 and has several hydrogen projects underway. It is eyeing a large share of key export markets, including Japan, South Korea, and Germany.

Currently, Masdar is assessing a green hydrogen opportunity in the UAE and will look for other projects globally. ADNOC has a 43% stake in Masdar's green hydrogen business with Mubadala holding 33%, and TAQA 24%.

"Green hydrogen projects are emerging, but it will take some time before we see the first commercial project, may be in three to four years from now," said Muharrami.

"To date, discussions on offtake for green hydrogen has mainly been with related entities from Japan and Germany."

Masdar may also provide some green hydrogen to ADNOC's oil and gas operations, Muharrami said.

"While the offtake discussion for green hydrogen has been focused mainly on the international arena, we are also assessing potential demand from ADNOC for their existing operations of oil and gas facilities," he added.

Platts, part of S&P Global, assessed Hydrogen UAE PEM Electrolysis (including capex) at $5.7035/kg Dec. 15, unchanged on the day.