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UAE Makes Second Major UK Wind Farm Deal Expanding Renewable Energy Role

offshore wind farm
Iberdrola will co-invest with the UAE's Masdar in UK and other other wind and renewable energy projects (Iberdrola)

Published Dec 5, 2023 8:21 PM by The Maritime Executive

 

The UAE announced plans for its second large investment in the UK offshore energy sector forming a partnership with Iberdrola which is set to develop one of the largest wind farms in the UK sector. This initiative which is part of a broader cooperation between the UAE’s Masdar and Spain’s Iberdrola follows a similar agreement announced days ago for the UAE to invest with RWE in another of the UK’s largest wind farms and is part of a broader strategy by the UAE to enhance its image by investing in renewable energy projects ranging from Germany to Poland, the USA, Indonesia, Kazakhstan, and elsewhere.

HE Dr Sultan Al Jaber, the UAE Minister of Industry and Advanced Technology and Chairman of Masdar, is also serving as the President of the COP28 conference taking place currently in Dubai. They are seeking to use the conference to highlight the UAE’s emerging role as a global investor and developer in renewable energy projects.

Under the agreement signed today on the sidelines of the COP28 conference, Masdar will acquire up to a 49 percent stake in the East Anglia Three wind farm that Iberdrola is developing. Masdar highlights that it will become a co-developer sharing the risks of the project which is now under construction and expected to be fully commissioned in the fourth quarter of 2026 providing up to 1.4 GW of energy. Through a subsidiary, Iberdrola already has the first phase of the project at the site which is part of the East Anglia Hub macro-complex, which is expected to provide a total of 3.3 GW.

Iberdrola secured a 15-year agreement firm the UK government for the site's third phase project in July 2022. The contract provides for a price of £37.35 per megawatt hour which is half the new UK maximum price in the next round auction of £73 per megawatt hour and illustrates the challenges facing the offshore wind industry. Analysts believe the UAE is taking advantage of the current troubles in the industry to expand its role taking risks but also demonstrating confidence in offshore wind energy.

The final terms of the agreement for the investment in East Anglia Three will be reached by the first quarter of 2024 and part of a larger transaction that will see the two companies work together to jointly invest in future offshore wind and green energy projects in Europe and elsewhere. Masdar last year acquired a stake in Iberdrola’s Baltic Eagle wind farm being built in Germany. They noted that exploration is already underway for additional projects. The two companies anticipate the total value of the investments could reach €15 billion.

Masdar highlights that it has been active in the UK and Europe for more than a decade investing in projects including the London Array and Hywind, which is Scotland’s first floating wind farm. The company, which is jointly owned by Abu Dhabi National Oil Company (ADNOC), Mubadala Investment Company, and Abu Dhabi National Energy Company (TAQA), reports it is targeting a renewable energy portfolio capacity of at least 100 GW by 2030 and an annual green hydrogen production capacity of up to 1 million tonnes.

Iberdrola’s Executive Chairman, Ignacio Galán notes the growing opportunities in offshore wind and renewable energy. He highlighted that this week at COP 28 a total of 118 governments pledged to triple renewable energy capacity by 2030.