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Masdar, the Middle East’s biggest renewable energy company, has laid out how it plans to lift its wind and solar capacity to 100 gigawatts by the end of the decade — roughly equivalent to the total power generation of the UK.
The Abu Dhabi-based group would become one of the biggest renewable energy companies in the world if it achieves its target with more capacity than rivals Iberdrola of Spain, Engie of France or RWE of Germany.
The group, part owned by Adnoc, the state oil group, Taqa, the state water and power business, and sovereign investment fund Mubadala, plans to continue its global investment spree.
It has announced nearly €6.5bn of deals in Spain and Greece this year.
In the US, it has closed a deal for Terra-Gen, one of the country’s largest renewable players, while in the UK it has a 49 per cent stake in the £11bn Dogger Bank project, which will be the world’s largest offshore wind farm when construction is finished.
Mohamed Jameel Al Ramahi, chief executive, said the company will continue to invest significantly in the Middle East, Europe and the US, the world’s second-largest renewable energy market after China.
Al Ramahi said in an interview with the Financial Times: “By 2030, the Middle East will probably be 30 to 35 per cent of our power. Europe I would say 20 per cent. Also 20 to 25 per cent in the US, and then of course Asia. That is the distribution in terms of geography.”
He added the group was seeking an equal split between solar and wind power projects.
While renewable projects in Europe are priced at a premium, Al Rahami said Masdar will invest wherever energy markets are open and welcoming to direct foreign investments.
“When I look at my growth and my target, if I want to achieve 100GW, I cannot ignore Europe and I cannot ignore the US,” he said.
Italian company Enel has a target for 154GW of renewable energy in the same timeframe as Masdar, but has recently begun an asset sales programme to reduce its debt.
With its acquisitions this year, Masdar has focused on acquiring not only assets, but experienced teams in the US and Spain, with the intention of building regional platforms. “More important than the size, is the team,” said Al Rahami, referring to the Terra-Gen deal.
He noted competition has increased in the renewables sector as private equity firms and other financial investors had entered in recent years. “I see it as very positive,” he said, adding it was not so long ago that banks would not finance renewable projects.
“But obviously it does increase the valuation of these assets. And that could be problematic in the sense that when private equity wants to exit, they sell to another party, and if that party loses money, then it goes into reverse, the market adjusts and the money starts going somewhere else.”
Renewable energy, he said, is ultimately a utility business which should make single-digit returns. “We are not financial investors [at Masdar]. Of course, we do put a lot of capital at work, but we are a strategic investor and our returns are always compressed because we are a utility. We are not going to recycle these projects after four or five years.”
