ABU DHABI FUNDS UK OFFSHORE WIND

“Masdar” is Arabic for “the source.”

In the case of a just-announced multi-billion dollar investment in a UK offshore wind project, Masdar Initiative money could be the source of the Gordon Brown Labour government’s redemption. By assuring the funding of the London Array, planned to be the world’s biggest offshore wind installation, the money reinforces a crucial cornerstone of the Brown government’s bold move, now compromised by world economic woes, from traditional power generation sources to wind.

Alone, the London Array represents 10% of the Brown government’s goal to get 10% of UK power from New Energy sources by 2010.

As with so many other offshore wind projects in the UK, the U.S. and Europe, development has been slow because of rising costs and planning complexities. The British press had taken to calling it the “DisArray.”

The Masdar Initiative is an Abu Dhabi-funded project with anounced plans for $15 billion in New Energy investments that include Masdar City, the world’s first carbon neutral city.

Masdar’s deep pockets offer strong reassurance the London Array project will go forward. It is an especially crucial deal because capital is everywhere presently in flight.

Gordon Brown, Prime Minister, UK: "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."

The deal appears to be part of a much grander partnership between E.ON, a German utility with announced plans for €6 billion (~$8 billion) in New Energy investments over the next 2 years, and Masdar, which seems to have seen the light with regard to wind.

Sultan Al Jaber, CEO, Masdar: "London Array is an important investment for Masdar into the wind sector. We believe 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…"

The Masdar Initiative's first New Energy investments were in the solar industry. It could be Al Jaber has realized it is smarter at present to invest in wind power and wait just a few more years until evolving technology brings the price of solar energy-generated electricity down to grid parity.

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Abu Dhabi’s Masdar fund buys stake in £2.5bn Thames Estuary wind farm
Sarah Arnott, 17 October 2008 (UK Independent)
and
Midedle East Oil Invests in British Wind Project
Jad Mouawad, October 16, 2008 (NY Times)
and
Thames windfarm project gets boost
Chris Bryant, October 16, 2008 (UK Financial Times)

WHO
E.ON (Wulf Bernotat, CEO); The Masdar Initiative (Sultan Al Jaber, CEO); Abu Dhabi Future Energy Company; Dong Energy; Gordon Brown, Prime Minister, UK

WHAT
Masdar bought 20% of the London Array, planned to be the biggest offshore wind installation in the world, from E.ON for an undisclosed multi-billion dollar amount.

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WHEN
- January 2008: The Masdar Initiative was launched by the Abu Dhabi Future Energy Company, an agency of the Abu Djabi government.
- 2010: Building the London Array scheduled to begin.
- 2012: Stage 1 of the London Array, 175 turbines, expected to be operational.

WHERE
The London Array will be in the Thames River Estuary, 12 miles off the Kent and Essex coasts, and serve the metropolitan London power market.

WHY
- Officially, the purchase is for 40% of E.ON’s 50% ownership of the project.
- Dong Energy owns the other 50% of the project.
- Projected cost of the London Array is £2.5 billion ($4.3 billion). When it was first planned, 5 years ago, the projected cost was £1.25 billion ($2.16 billion).
- Royal Dutch Shell pulled its share of the funding for the project because of sharply rising costs.
- The London Array: 341 turbines over 90 square miles. Final capacity: 1000 megawatts (1 gigawatt).

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QUOTES
- Sultan Al Jaber, CEO, Masdar: "Through this project, we hope to build a partnership with the UK Government to drive the future growth of the renewable energy sector for the benefit of both our economies."
- Wulf Bernotat, CEO, E.ON: “[The London Array has important challenges…[but] the lessons we learn will be vital for the development of the next generation of offshore projects."