This week, folks in the UK celebrated a tremendous milestone for wind energy. The London Array, the largest offshore wind farm ever built, went officially online. With an initial capacity of 630 MW, the wind farm already produces enough electricity for half a million homes. Once its second phase comes to fruition, the farm will produce an even gigawatt of power, all from hundreds of turbines in the Thames Estuary, out of sight of land.
The London Array is interesting in its own right, but the involvement of the UAE’s Masdar makes the project even more fascinating. Longtime readers know we’ve been covering Masdar for years, others may be scratching their heads and asking – why would a middle eastern energy company, overflowing with oil wealth, be investing in renewables?
TriplePundit was lucky to be granted an exclusive interview with Masdar CEO, Dr. Sultan Al Jaber to find out the answer to that question and to understand more about Masdar’s future plans.
TriplePundit: Last week, you officially launched the London Array, the world’s largest offshore wind farm, a project in which Masdar is a part owner. Why is Madsar developing offshore wind in the United Kingdom?
Dr. Sultan Al Jaber, CEO of Masdar: For decades the United Arab Emirates has been at the forefront of the global energy industry. Today, the UAE has the seventh-largest proven reserves of both crude oil and natural gas in the world. But it is through our strength in the hydrocarbon sector that we are diversifying our economy to include new sectors. We are leveraging our hydrocarbon resources to move away from an economy focused on resource extraction towards an economy focused on resource enhancement. One of those sectors is renewable energy, which we see as a logical extension of our energy leadership. We are developing renewable energy and clean technology projects at home and abroad. As such, we entered the London Array consortium in 2008 because we saw an excellent opportunity to work with a team of global energy leaders to bring forward a project backed by the stability of strong UK government support – and just as importantly, a strong offshore wind resource.
3p: Will Masdar be developing additional offshore wind projects in the UK?
SAJ: Masdar is always interested in pursuing projects where regulatory and economic conditions are favorable, and where strong renewable energy potential exists. The UK is definitely one of those places. The UK government has set a target of reducing domestic CO2 emissions to 34 percent below 1990 levels by 2020 and generating 15 percent of all energy from renewable sources by 2015. To meet these targets, the country has established a policy framework which incentivizes large-scale renewables deployment. These incentives, along with others currently under consideration by the UK government, will continue to make offshore wind development in the UK an attractive proposition.
3p: Where else is Masdar setting its sights?
SAJ: The various projects in our current renewable energy portfolio—in the UAE, Spain, Mauritania, the Seychelles and now the UK—as well as the projects in our development pipeline, demonstrate that the world is Masdar’s market. We have invested over $1.7 billion of equity in renewable energy projects around the world, including over $100 million in the United States. We will work wherever the right mix of economics and regulatory frameworks are present. But we see an excellent opportunity in the Middle East. Not only is there excellent renewable energy potential—mostly in the form of solar, but also in wind—countries throughout the region like Saudi Arabia and Jordan among others have enacted ambitious programs to encourage renewable energy investment. Masdar is a first-mover in the region and in just six years we have gained the unique experience to be able to share our knowledge and develop renewables throughout the Middle East and North Africa.
3p: Projects like London Array are still expensive when compared to conventional power projects. How can we bring down the cost of renewable energy?
SAJ: In the last few years we have seen a precipitous drop in the price of renewable energy, particularly in solar and wind. Solar PV module prices have fallen by 80 percent in the last five years and the price of wind turbines has fallen nearly 30 percent in that same timespan. Renewables are already at or near grid parity in some parts of the world. But to shrink the price gap between renewables and conventional energy we must continue to innovate and encourage long-term policies that create economies of scale.
On the innovation front, for example, we are already seeing 6-megawatt wind turbines that could be deployed offshore to drastically increase wind farm output per dollar spent. And in terms of policy, we need clear and stable long-term policies that not only incentivize renewable energy investment but also streamline it. It took over ten years to plan, permit and approve the London Array while construction took less than two.
3p: What is next for Masdar?
SAJ: From large projects like London Array and Shams 1, to smaller projects like those in Mauritania and Seychelles, 2013 has been a big year for Masdar, especially in terms of our clean energy projects. But we are not done yet. We plan to announce the launch of additional clean energy projects in the near future. Big things are also happening in Masdar City, our sustainable urban development and technology cluster in Abu Dhabi. The city’s first commercial buildings – the Siemens Middle East headquarters and the Incubator Building – will be opening their doors soon and we are making solid progress on the Masdar and International Renewable Energy Agency headquarters building. We are proud of our progress thus far and look forward to the exciting challenges that lie ahead.