Taqa CEO: UAE's climate transition to accelerate with closer ties between energy players

Jasim Husain Thabet says utility company's sustainable strategy has won the backing of investors

Taqa chief executive Jasim Husain Thabet says there will always be a need for oil and gas but the energy transition is 'happening'. Fatima Al Marzooqi / The National

The UAE’s energy transition is in motion and will accelerate further by adding additional partnerships between utility players and energy companies, said Jasim Husain Thabet, head of Abu Dhabi National Energy Company, also called Taqa.

Mr Thabet told a virtual seminar at International Energy Week in London that there would always be a need for oil and gas but the energy transition is “happening”, with the UAE an early trailblazer investing in sustainable solutions.

“We have not shied away from that,” he said, pointing to the UAE’s investment in nuclear energy as an example of these efforts.

“For me, the energy transition is happening, I believe it will accelerate further with partnerships — utility players, energy companies need to become much closer to industries and end users and that will help us accelerate,” he said.

Mr Thabet pointed to Taqa’s joint efforts with Abu Dhabi National Oil Company to decarbonise the oil major’s offshore operations as an example of the UAE's energy sector adapting to the transition.

“We’re building a high voltage DC [direct current] subsea cable that will provide uninterrupted, reliable, clean power to their offshore oil and gas facilities,” Mr Thabet said.

“So, we're adapting and the oil and gas companies are taking into consideration how they can be greener and more sustainable.”

The UAE's strategy to reduce carbon emissions by 2050 was unveiled in October last year, with Dh600 billion set to be invested in clean and renewable energy sources over the next three decades.

Samar Al Hameedi, vice president of sustainability at Adnoc, told the delegates that while the UAE sits at the heart of the hydrocarbon industry, it has made climate action pillar of national economic strategy as well as its domestic and foreign policy.

“The UAE’s action on climate spans decades,” she said.

“The country has introduced multiple national low carbon energy initiatives, making it a regional leader with many firsts.”

Ms Al Hameedi also stressed the need for partnerships across the energy sector in the Emirates to accelerate the decarbonisation drive.

“We have already established agreements with key partners in terms of how we can decarbonise our entire value chain as we grow and as we expand,” she said, and added that leveraging the capabilities across the UAE through the agreements it has with Taqa and Masdar “really expand the hydrogen potential” for Adnoc and the UAE.

Last year, Adnoc and Taqa, one of the largest listed integrated utility companies in the Europe, Middle East and Africa region, joined Mubadala Investment Company to become shareholders in Masdar in a move that will help increase the clean energy company's renewable power capacity to more than 50 gigawatts by 2030, with the aim of creating a “global champion in renewables and green hydrogen".

Meanwhile, under Taqa’s 2030 strategy unveiled in April last year, the company committed to investing Dh40bn in infrastructure development as it looks to add about 27 gigawatts of power capacity by 2030 and expand its renewables portfolio — something Mr Thabet said investors were reacting positively to.

Despite the more sustainable focus, Mr Thabet said the company’s two bond issues last year as well as its “strong balance sheet” were attracting investor interest.

“The investment community is reacting very strongly to the transition and the long-term business and we have an investment grade of A- from Fitch. So that stands,” Mr Thabet said.

“Alongside the strategy, it's also the operating and the business model that we have and the strong balance sheet and contracts in place.

“As a utility player, we have long-term power and water purchase agreements and healthy returns on our regulated assets in our transmission and distribution networks, which we have concessions in the UAE and Abu Dhabi, which really gets strong stable and predictable earnings.”

Taqa more than doubled its 2021 profit after revenue grew during the period on higher oil prices.

Net profit attributable to the equity holders for the full year rose to about Dh6bn, from Dh2.8bn the previous year, the company said this month in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

Mr Thabet said investor interest in the sustainable shift is high, something evident through the high demand for its two bond launches last year.

The first bond raise of $1.5bn in May last year was “six times oversubscribed from local and international investors … reflecting their belief and our strategy, which is to be a champion of low carbon power and water,” Mr Thabet said.

Taqa also raised about $700 million together with Emirates Water and Electricity Company through its first green bond to diversify funding sources this year.

The company plans to use proceeds of the deal to refinance existing debt of Sweihan PV Power Company, the entity set up to build, own and operate Noor Abu Dhabi solar power project.

“It's the biggest plant in a single site under operation,” said Mr Thabet, “and that green bond was almost two times oversubscribed.”

Sarah Akbar, chief executive and chairwoman of Kuwait's Oilserv, said the UAE was leading the transition to renewable energy thanks to its 2050 road map.

“They are way ahead of the rest of the gang. Saudi [Arabia] is next and they have developed the road maps and they have specific projects that are in the working, for example, the hydrogen projects, carbon sequestering carbon dioxide emission control and so on.”

She said other countries are “just lagging behind”, with Kuwait working on its road map now.

The wider issue, she said, was the lack of regulation in place in the region to ensure the transition to net zero goes smoothly, with incentives needed to encourage more companies and consumers to make a shift in how they operate, including the adoption of electric vehicles.

She also called for more work to be done to “arrive at an economical scenario where decarbonising becomes economical and beneficial”.

“We need to do more research and development to make these processes really cost-efficient and smooth.”