People visit Masdar City, near Abu Dhabi, United Arab Emirates, as Dubai hosts the COP28 UN Climate Summit. -AP
Abu Dhabi renewable energy company Masdar aims to raise $3 billion in the coming years through its Green Financing Framework, a senior official said.
The proceeds will be used to fund Masdar’s capital in new solar, wind or battery storage projects, Niall Hannigan, Masdar’s chief financial officer, told Khaleej Times in an interview. “Getting climate finance right presents a huge opportunity to increase renewable energy capacity around the world,” he added.
Earlier this year, Masdar announced the successful completion of its first green bond issuance of $750 million in 10-year senior unsecured notes. “Appetite was exceptionally strong (subscription was more than 5.6 times oversubscribed), demonstrating confidence in the industry and the financial strength of Masdar’s business and strategy,” Hannigan added.
“Bonds are just one example of a wide range of financial instruments that companies can use to unlock capital to support socio-economic progress and deliver a sustainable future for communities around the world. They free up a new pool of liquidity for greenfield wind, solar and battery projects, without exposing that liquidity to the risk of developing economies. Addressing the inequality in climate finance between the Global South and North is critical, and green bonds will go a long way toward developing much-needed renewable energy projects around the world,” Hannigan said.
Masdar is making significant progress towards its goal of reaching 100 GW of gross renewable energy capacity by 2030. “Driving this is our growth strategy, which includes leveraging climate finance mechanisms such as green bonds, investing at home and abroad , in both developed and developing economies, support technological innovation and pursue targeted mergers and acquisitions, along with new and abandoned growth opportunities. “We are investing in onshore and offshore wind, solar, geothermal, waste-to-energy and more,” Hannigan said. “We are also excited about potential green hydrogen offerings to support the energy transition and are forming partnerships with global industry leaders to explore investment opportunities in pioneering hydrogen projects,” she added.
Masdar recently published its outlook on tripling renewable energy capacity, which found three key areas to accelerate clean energy deployment: increasing supply chain capacity, strengthening the infrastructure network, and changing the way we consume energy. “Taken together, it is clear that partnerships – between investors, developers, suppliers and the public sector – are crucial to keeping the world on track to triple renewable energy capacity and limit warming in line with the Paris Agreement,” he stressed. Hannigan.
Niall Hannigan, CFO, Masdar
Masdar’s CFO emphasized that unlocking climate finance, particularly in developing economies, is critical if we are to have a chance of keeping climate change below 1.5 cents. “There are four areas that need to be addressed to support the development of renewable energy and accelerate decarbonization programs around the world. The first of these is the requirement for clearly defined energy transition policies, supported by transparent and stable regulatory frameworks; This is essential to foster an attractive investment climate for green projects. The second obstacle to implementing renewable energy programs is inadequate grid infrastructure. There is no business case for developing clean energy projects if the grid does not have the capacity to accommodate the additional capacity. While the responsibility for building networks typically falls to governments, we are now seeing models that support private sector participation in network infrastructure development. Governments and regulators must also ensure that policy frameworks provide for currency risk, both in terms of exposure to currency depreciation and challenges related to both convertibility and repatriation. Lastly, the country’s underlying credit rating and risk perception is also a potential hurdle that needs to be addressed to ensure the clean energy sector can secure financing and attract investment,” Hannigan said.
Masdar seeks to navigate and overcome these challenges through innovation and collaboration with governments, regulators, banks and credit agencies, among others, to support clean energy development in developing economies. “An example of this is Uzbekistan, where collaboration with the government and the private sector is enabling Masdar to develop the 500 MW Zarafshan wind project, Uzbekistan’s first wind project and the largest of its kind in Central Asia. This collaboration will also enable Masdar to develop significant renewable energy capacity across the African continent. At COP28, we signed agreements to advance major investment plans in six sub-Saharan countries, including a 150 MW solar PV project in Angola,” Hannigan said.
At COP28, Masdar announced a 10GW growth plan in six countries in sub-Saharan Africa and, together with Iberdrola, will co-invest €15 billion in offshore wind and green hydrogen projects in Germany, the United Kingdom and the United States.