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While Abu Dhabi continues to buttress its credentials as an aspiring leader in green technologies with new investments, the emirate is already beginning to reap the benefits of previous similar policies and is hoping that initial successes will pave the way for further renewable energy projects.

On July 12 Abu Dhabi's Aabar Investments purchased 4% of Tesla Motors, a leading producer of electric cars. Aabar, whose largest stakeholder is the International Petroleum Investment Company (IPIC), which in turn is wholly owned by the government of Abu Dhabi, bought the stake from Stuttgart-based Daimler AG, of which Aabar is a major shareholder.

It is the first joint strategic project the two companies have undertaken together since Aabar acquired 9.1% of the share capital of Daimler in March 2009 for $2.7bn.

Khadem Al Qubaisi, the chairman of Aabar Investments PJSC, said in a statement, "When we acquired our stake in Daimler in March we identified a number of potential areas for cooperation between our two businesses. One of these was a desire to focus on the development of electric vehicles and projects aiming at the reduction of carbon dioxide emissions."

Given Abu Dhabi's foray into all things green in recent years – which includes Masdar City, a carbon-neutral city development where electric-powered pod-cars are expected to play a key role in transportation – the investment is seen a strategic fit with the emirate's environmental ambitions.

Abu Dhabi has set itself the goal of becoming a paragon for renewable energy and clean technologies through its Masdar Initiative, a multibillion dollar, multi-faceted investment in alternative energy established in 2006 that is expected to deepen and support the entire future energy value chain. The capital has also stated that it wants to generate 7% of its electricity from renewable energy sources by 2020.

It was policies such as these, as well as some skilful political oratory, that helped the UAE to become the new headquarters of the International Renewable Energy Agency (IRENA), the first intergovernmental agency focused on the promotion of environmentally friendly initiatives.

On June 30, IRENA's 136-member body watched as Germany and Austria, the UAE's rivals to host the fledgling agency, agreed to step aside to allow the headquarters to be set up in rent-free offices in Masdar City. During its start-up phase the new organisation will have a staff of approximately 120 people, recruited from the best international institutions from across the world. However, it is expected that more employees will be needed as the agency develops, which means staffing numbers will climb to 250.

Fittingly, the news of this landmark decision to house a UN body outside of the developed world came just a month after the emirate enjoyed its first output from alternative energy.

On May 30 at a ceremony at Masdar City, officials connected a 10-MW solar panel plant to the electricity grid. The project is ground breaking for the Middle East and supporters believe the $50.3m project is testimony to the argument that solar energy is a viable method of powering, at least in part, the emirate's electricity needs.

It is important to note that although the current project is small in comparison to some other countries, such as Germany, it will still generate a considerable amount of electricity. The 17,500 MW-hours of power it will create each year will help play a role in fuelling the emirate's expanding economy. Roughly speaking, one megawatt is enough electricity to power between 500 and 1000 homes, so the output is a welcome boost.

Of course, there are also the environmental benefits to the project. According to Masdar officials, instead of releasing 15,000 tonnes of carbon dioxide a year into the atmosphere, the electricity generated by the solar panels will be carbon free. When compared to the carbon dioxide emitted by cars it is equivalent to taking 3300 petrol-guzzling cars off the emirate's roads.

It may be early days in Abu Dhabi's use of solar power but now that the first project has been a success it opens the door to others. "The connection of this plant marks an important milestone in the development of Masdar City and in our emirate's history," said Sultan Al Jaber, the CEO of Masdar. "We believe this is just the first delivery of the rich potential of solar energy, and we will continue to deliver clean sources of energy to Abu Dhabi and beyond."

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