Oil-rich Gulf nations are looking to prop up renewable energy projects in Britain
While sovereign wealth funds are bailing out Western banks, oil-rich Gulf nations are looking to prop up renewable energy projects in Britain. The British wind project will receive an influx of cash from Abu Dhabi.
The Abu Dhabi Future Energy Company, also known as Masdar, is a renewable energy initiative of the United Arab Emirates. The company announced on Thursday that it was forming a joint venture with Germany’s E.ON to invest in alternative energy projects.
As a first step, Masdar bought 40 percent of E.ON’s stake in London Array, the large offshore wind project in the Thames estuary that Royal Dutch Shell unexpectedly abandoned last May.
The $4.75 billion project quickly became known as London’s “disarray” after Shell pulled out, but Masdar’s investment could now ensure the project goes forward as planned.
London Array is planned to have 341 turbines with an installed capacity of over 1 gigawatt and it will generate enough electricity to power a quarter of London’s homes. Located about 20 miles off the coast of Essex, in the middle of the Thames estuary, it will be the world’s largest offshore wind project.
As a result, Masdar will own 20 percent of the project, and E.ON will own 30 percent. Dong Energy A/S of Denmark owns the other 50 percent of London Array.
When in service, the wind project should account for 1 percent of the Britain’s electricity, or one-tenth of the government’s goal to provide 10 percent of the nation’s electricity from renewable sources within the next decade.
For Prime Minister Gordon Brown, Masdar’s investment is a welcome lifeline for the project. The links to Abu Dhabi, the second-largest oil producer in the Persian Gulf, were not lost on him either.
“I very much welcome Masdar’s decision to invest in renewable energy in the U.K.,” the prime minister said in a statement. “This is an excellent example of the partnership we need between oil-producing and oil-consuming countries to develop new energy sources and technologies, diversifying their economies and reducing our dependence on carbon.”
Dr. Sultan al Jaber, the chief executive of Masdar, said that the “offshore wind market will be a major force in the future and this is a very opportune time for us to enter this developing segment of the renewable energy market.”
Masdar and E.ON, Germany’s biggest utility, said they planned to work on a variety of projects across the broad spectrum of renewable energy. The chief executive of E.ON, Dr. Wulf Bernotat, said his company planned to invest 6 billion euros, or roughly $10 billion, by 2010 “to help move renewable energy projects from boutique to an industrial scale.”