In recent years, a trend of clean energy empire-building has been underway in Europe. 

In this space, most major EU economies have a national champion. Italy’s Enel, Spain’s Iberdrola; Norway’s Orsted; France’s EDF; and Germany’s RWE are notable examples.

Having channeled investment towards renewable power generation, these European giants have each established a significant renewable energy footprint. They rightly have a reputation as some of the pioneers of the energy transition.

But they are now being outmaneuvered.

Six thousand kilometres to the east of Enel’s HQ in Rome, a UAE-based company is quietly rewriting the rulebook of clean energy investing.

It stands unrivalled in three areas – coverage, creativity, and controversy. And despite their low-profile rise to date, this year they will not be able to escape the limelight.

Coverage

The name of the company is Masdar, Arabic for 'The Source'. Also known as the Abu Dhabi Future Energy Company, it was established in 2006 by the UAE government to support the economy’s transition away from fossil fuels.

A period of prolonged relationship-building and strategy setting meant the Masdar project took time to gain momentum. But in recent years, its growth has been astronomical.

The company has quadrupled the size of its renewable energy portfolio in three years. Now, it boasts a portfolio of over 20 gigawatts of renewable energy assets. If Masdar were a country, it would be the 25th largest in terms of solar and wind power.

But most notable about Masdar is not the number of gigawatts, but the geographical diversity of those gigawatts.

Masdar will build renewable energy projects where its Western rivals are unwilling to venture.

Their projects span forty counties, including numerous developing markets such as Mauritania, Seychelles, and several Caribbean islands. By comparison, Enel has projects in 26 countries; Iberdrola in 16 countries; Orsted in just 5.

These projects are not small-scale, either: in Africa, Masdar leads the way, having acquired what is now the continent’s largest renewable energy developer, Infinity Power.

A key mission statement for Masdar is to 'expand energy access to those who need it most’. In this regard, they are truly walking the walk.

It is a truly global empire.

Creativity

Masdar also deserves the plaudits for the innovation and risk appetite that shapes its investment strategy.

Europe’s clean energy giants have typically played continued to develop projects involving proven renewable technologies in which they have longstanding experience. Iberdrola is highly concentrated in solar power, Orsted in wind.

In contrast, Masdar is funneling capital into technologies that are so nascent, they barely have a name.

Firstly, sustainable aviation fuels. It is seen as a nascent market not expected to gain commercial scale until at least the 2030s. And yet Masdar is not shying away. The company last year announced a partnership with oil company Total and engineering company Siemens to develop a pioneering method for clean aviation fuel from methanol. It could be transformational for the aviation sector if the project yields the desired results.

Secondly, green hydrogen. Masdar has announced a target to produce 1 million tonnes of low-carbon gas by 2030. Given how early-stage this market is, achieving this goal would mean Masdar would own nearly ten percent of global green hydrogen production by the end of the decade.

Finally, there is the futuristic ‘Masdar City’, located in Abu Dhabi. This urban project has been making the headlines for years as a hub of low-carbon innovation. Indoor vertical farms, carbon-absorbing building materials, and long-duration energy storage are among the range of cutting-edge technologies on display. Such is Masdar City’s prestige, the International Renewable Energy Agency (IRENA) opted to set up its global headquarters there.

This creative approach to addressing climate change – with a unique investment strategy of venture capitalists and infrastructure funds – puts Masdar’s dynasty in a league of its own.

Controversy

However, despite these laudable ambitions, the Masdar empire is entangled in a saga, and it is due to reach a climax later this year. 

The saga involves the company’s chairman and one of its owners.

Sultan Ahmed Al Jaber can be thought of as ‘Mr Masdar’. Taking the position of CEO at the company’s inception, the current chairman has been at the centre of everything Abu Dhabi’s clean energy company has achieved.

And, as the UAE’s climate envoy to the United Nations for nearly a decade, Al Jaber was influential in landing the country the role of the host nation for this year’s UN’s Climate Change Conference, COP 28, later this year.

But ‘Mr Masdar’ also occupies a much more controversial role: Al Jaber is also CEO of the Abu Dhabi National Oil Company (‘Adnoc’). This presents an uncomfortable reality: the figurehead of Abu Dhabi’s renewable energy push also sits atop one of the world’s largest oil companies.

And Masdar’s fossil fuel links became even more obvious in early 2023 when Adnoc themselves acquired a 24% stake in Masdar.

This came just months after the UN elected Al Jaber as the President of COP 28.

It is an uncomfortable situation for the UN. And it has not gone unnoticed that the world's largest annual climate event is being led by the chief executive of a $16B oil giant: 130 lawmakers from the US and EU wrote to the UN earlier this year calling for his removal from the post.

But the protests are not expected to reverse the decision. A main reason for that: Al Jaber, through his association with Masdar, can claim to be first and foremost a pioneer of the energy transition, and someone helping Abu Dhabi to diversify its economy away from its current focus on oil.

It is in this respect that the importance of Masdar, once again, overshadows its European rivals. It is not just a corporate renewable energy venture; it is the political mouthpiece through which the UAE, and its leaders, claim they are meaningfully trying to decarbonize their economy. 

At COP 28, the low-carbon credentials of a nation, therefore, rest on Masdar’s shoulders.

The moment of truth

This all means that, as COP 28 descends on Abu Dhabi later this year, the Masdar story (minus the recent acquisition of Adnoc) will be showcased by the UAE’s leaders to global political leaders and UN delegates.

Whether its impressive dynasty of clean energy projects is enough to convince conference participants that Abu Dhabi is serious about decarbonizing remains uncertain.

What is certain, however, is that Masdar’s empire-building will continue at pace. The thirty billion dollars invested so far is just the beginning. Masdar is seeking to own 100 gigawatts of renewable capacity by 2030, whilst also wanting to remain at the forefront of some of the most cutting-edge clean technologies.

It is critical that these ambitions come to fruition. Otherwise, Adnoc’s spectre will continue to harm the reputation of Masdar and the UAE. For now, at least, the source of 'The Source' remains oil.