Masdar investments grow

Masdar will expand its solar power and wind energy business over the next decade to become a major player in clean energy, its executives say.

Panels at Masdar's solar power plant.

Masdar plans to conclude a number of venture capital deals this year and will expand its solar power and wind energy business over the next decade to become a major player in clean energy, its executives say. The Abu Dhabi clean energy company expects to make several of these investments in the UAE to help the Federal Government achieve the national goal of generating 7 per cent of total power output from renewable energy by 2020, or 1,500 megawatts, enough power for nearly 2 million homes.

The firm, which is wholly owned by Mubadala Development, the strategic investment arm of the Abu Dhabi Government, closed a US$265 million (Dh972.5m) clean technology fund last week with global banks and technology firms. The manager of the Masdar Clean Tech Fund, Alex O'Cinneide, said the company was seeking to make "medium-sized" investments in start-ups that were well managed. "We're definitely interested in investing in the region," he said. "I think we will look at probably making approximately five to six investments this year. That would be good for us."

Masdar's renewable energy division has spent the past six months mapping its 10-year investment programme in renewable energy, said Frank Wouters, the associate director of Masdar Power. "It is a relatively bold plan," he said. "We want to grow and become a substantial worldwide player in several fields. For now, we have chosen solar and wind as the focus." Masdar Power was not considering investing in tidal-energy projects or bio-energy, although it would closely follow the study of micro-algae at the Masdar Institute of Science and Technology, he said.

Observers said that in the four years since the company was founded, Masdar had become one of the most high-profile investors in renewable energy. "Masdar is a heavyweight investor in the sector - active in wind and solar in its own right, in both manufacturing and project development, and in venture capital and private equity finance for the clean-energy sector," said Angus McCrone, the chief editor of Bloomberg New Energy Finance.

Masdar's clean-energy fund was already one of the biggest new investors in late-stage clean-energy companies, and he estimated it would grow two or threefold. Masdar's focus on solar power rests with two technologies, photovoltaic panels and concentrated solar power, or CSP, which uses sunlight concentrated by mirrors to boil water and produce steam for driving turbines. The firm is expected to open a 100mw CSP plant in Madinat Zayed next year. The plant could be scaled up significantly in the future.

While the potential for wind power in the UAE was limited, Masdar would pursue projects in Al Gharbia region and in Fujairah amounting to less than 100mw, Mr Wouters said. Some of Masdar's biggest investments in renewable energy have been in Spain, where the government has created a "feed-in tariff" that guarantees solar power producers long-term contracts to sell their electricity to the national grid. But the US remained an attractive target, Mr Wouters said.

"It's one of the best countries; they have a lot of land, a lot of sun and wind and, of course, growing demand," he said. But he also cautioned that the US was a complicated market with different laws across states and hundreds of regulatory bodies that deal with electrical codes. "In that respect, you have to look at it in a different shade." @Email:[e-mail]