Interview : Mohamed Jameel Al Ramahi
What are Masdar’s investment priorities in adding suitable types of power to its regional energy mix?
MOHAMED JAMEEL AL RAMAHI: Our focus is on expanding our MENA portfolio, as this market promises to be very active, largely driven by government generation targets and compelling economics. We see great potential in the UAE, while Saudi Arabia, which is planning to expand its renewable capacity by several GWs in the next five years, is expected to be the GCC’s largest market. We have also established presences in Oman, Jordan, Egypt and Morocco, which are generating interest. Solar photovoltaic (PV) will be a main contributor to the project pipeline, while onshore wind will play a growing role in certain countries, particularly Egypt. In this context, our growth will be in greenfield projects through tenders, direct developments and acquisitions.
To a great extent, clean energy has become mainstream. Local investors are focused on solar PV, given the high quality of the region’s solar radiation. Meanwhile, wind corridors in countries like the UAE are scarce, making wind power less appealing in the UAE, whereas in Saudi Arabia, it can be extremely competitive in some cases. Opportunities in renewables are enabled by environmental factors, whether sun radiation or the speed and consistency of the wind, and these are critical to a project’s sustainability and efficiency. Likewise, the cost of building one MW of wind or solar power has dropped dramatically in the past decade, which has made them competitive and driven down tariffs, as technologies have become much more efficient. Coupled with a supportive regulatory framework and transparent processes, these factors will continue to reduce costs and expand regional capacity in the future.
To what extent has the bankability of renewable energy grown, and what has driven its appeal?
AL RAMAHI: Lenders must be comfortable with the technology. Nowadays, they are familiar with tier-1 solar PV and wind turbines, but less so with new innovations. For example, offshore wind farms had been difficult to bank before we built our London Array project in 2013. Commissioned in 2017, our floating offshore wind project Hywind Scotland uses floating substructure technology that lenders are not familiar with. So we fully funded it with equity rather than project financing, helping to open the market for other investors. Similarly, in 2013 at our first concentrated solar power plant, Shams 1 in the Western Region of Abu Dhabi, lenders were not comfortable with dry cooling, which we used due to the limited availability of water. Financing for renewables is also enabled by market regulations. For instance, in the UAE lenders are comfortable with supporting these projects because of the UAE’s credit worthiness and the structure of power purchase agreements. Oversubscription to our projects, such as our Sharjah waste-to-energy plant, testifies to this. Overall, the bankability of renewables has improved markedly.
How can the adoption of new methods and technologies help to increase energy efficiency?
AL RAMAHI: The bottom line is that cities and the behaviour of their residents will determine everything we do going forward. We need to think about how we can ensure that urban communities expand sustainably, especially as they are already the largest consumers of power, predominantly for cooling and desalination in MENA. As a result, we need to look at water and electricity management if we are to make a meaningful impact on efficiency. We can change users’ habits by first understanding their consumption patterns, which is why we use sensors to collect data and identify inefficiencies at Masdar City. We are developing the city as a space to test new technologies that are often more difficult to deploy in mature urban developments, due to local regulations and population sizes. Showing that tangible improvements can be achieved in the harsh climate of the UAE sends a powerful message that sustainable urban development is possible anywhere.
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