Turning an oil state into a renewable-energy leader

The Sunday Times
February 1, 2009
With $15bn to spend, the chief of the project is being besieged by technology firms that want a piece of the action

As Sultan Al Jaber breezed into the room, wearing a flowing white dishdash and distractedly tapping on his iPhone, he looked every bit the harried chief executive. Any notion of a long chat was quickly extinguished.
“No, no,” he said to the suggestion of a quarter of an hour for an interview.
“Just 10 minutes, please.”
Al Jaber, the 35-year-old chief executive of Masdar, Abu Dhabi’s $15 billion alternative-energy company, had a lot of people to see. Or rather, there were a lot of people who wanted to see him. Outside, a horde of energy executives, politicians and hangers-on milled about, hoping to grab a few minutes as he flitted between meetings at Abu Dhabi’s annual alternative-energy summit.
Al Jaber was the host. And for a few days he just might have been the most popular man in the country. It is easy to see why. At a time when billions of dollars are being drawn back from every corner of the economy, Al Jaber has been given a $15 billion cheque by Abu Dhabi’s rulers. His task: to transform the emirate, holder of the world’s fifth-largest oil reserves, into the Silicon Valley of renewable energy.
Masdar is the engine for the ambition. “We want to be the Shell, the BP of renewable energy,” said Al Jaber.
In today’s financial crisis, his is a rare position — ambition that is not held back by a lack of resources. “The world is currently undergoing an economic downturn, but this does not affect us,” he said. “Our appetite is the same. We will be a world-leading, recognised brand by 2020. It’s ambitious, but everything in Masdar is ambitious.”
Since the crown prince Sheik Mohammed bin Zayed Al Nahyan created Masdar in April 2006, Al Jaber has been busy putting the emirate’s money to work. Last year he bought into the largest proposed offshore wind farm in the world, the London Array. He has invested millions in at least 17 renewable- technology companies in America and Europe. He recently signed a deal to help Nigeria reduce natural-gas flaring at its oil platforms, and is a founding member of Australia’s new Carbon Capture and Storage Institute.
In a land that glorifies ostentation — the United Arab Emirates is home to the indoor ski-slope, the half-mile-high skyscraper, man-made islands, and diamond-encrusted mobile phones —
Abu Dhabi’s approach to renewable energy is no different. For the conference’s closing speech, for example, Al Jaber lured Tony Blair for what was rumoured to be a six-figure fee.
To some the frenetic pace looks more scattershot than methodical, more about grabbing headlines than sound business sense. “It’s a feeding frenzy,” said one executive who was hoping to convince Masdar to invest in his company. “They are the only ones who have any money.”
Consider what Al Jaber has dubbed the “heart of the entire programme”, Masdar City. A $22 billion project of astounding, and some would say unrealistic, ambition, the aim is to build from the ground up the world’s first zero-emission city powered completely by renewable energy. Al Jaber has set aside nearly a third of his cash pile — $4.5 billion — to help get the city built. He hopes to find the rest elsewhere: energy companies, debt markets and universities.

The project sparks admiration and scepticism in equal measure. Al Jaber’s vision, however, is clear. “We don’t want to do this alone. We want to bring in partners, foreign direct investment, but smart money. Because this money will come with technology, it will come with talent; it will come with brains,” he said. “We need to position Abu Dhabi for the post fossil-fuel era, to diversify our economy away from oil and into a knowledge economy.”
Al Jaber doesn’t get back to southern California as much as he would like. He spent several years in Los Angeles, where he earned a degree in chemical engineering and a master’s in business. Between classes he fitted in the occasional game of basketball. At an imposing 6 ft 4in, he has the frame for the sport, but said he doesn’t get much time to play these days.
After earning a PhD in economics at Coventry University, he moved back to Abu Dhabi, where he began working for the state-oil company Adnoc. It wasn’t until he moved to Mubadala, the state investment vehicle, that he was handed the job that led to the creation of Masdar. “I was tasked with diversifying the Abu Dhabi economy. It was a very simple thing to do, coming from something we do best, which is energy,” he said. “We saw that the energy markets were evolving, with substantial growth in alternative energy. We could have viewed that as a threat to Abu Dhabi as an oil and gas producer. We saw it as an opportunity.”
After leading a delegation from the emirate on a four-month, round-the-world fact-finding mission to “get to know” the renewables sector, the idea for Masdar was born.
There are several legs to its approach. The flagship is, of course, the city, which Al Jaber hopes will make Abu Dhabi the world’s first true “eco-cluster”, a place where companies and academics can come to develop and test innovations and technologies for the post-oil world. It also has a $250m “clean technology” fund that acts as the emirate’s venture-capital arm, investing in small, promising companies in the alternative-energy industry.
And then there are the larger direct investments in big projects or companies. Masdar recently signed an alliance to develop renewable projects with Eon, Europe’s largest quoted utility. This summer it broke ground in Germany on what will be one of the largest solar-panel plants in Europe.
There will, of course, be missteps. The first big one may have already been made in Britain. Last summer Royal Dutch Shell told its partners in the London Array, a proposed £3 billion offshore wind farm, that it wanted to get out of the project because the economics were looking increasingly stretched.
For Britain’s aspirations of a clean-energy future, it is a flagship project. Without Shell to shoulder up to £1 billion of the building costs, not to mention the risk of bringing the scheme to fruition, the London Array was on the verge of collapse.
Enter Masdar. Two months after Eon and Dong bought out Shell, Masdar took a one-third stake in the project. It looked as if the project was saved. Yet today, only three months after its dramatic intervention, there are fresh rumours that the project could be scrapped.
Ziad Tassabehji, head of utilities and asset management at Masdar, said: “We are doing our best for it to happen but there are a lot of variables that need to be fixed. A feasibility study was done, but many of the assumptions in it no longer apply.” Eon has expressed similar misgivings.
Whatever the outcome, Abu Dhabi has won universal plaudits for diving so wholeheartedly into alternative energy.
As one of the world’s biggest oil producers and highest per-capita polluters, this is an inspiring initiative.
It is up to Al Jaber to make certain that the vision of a desert ecotopia is no mirage. “The reason we are so confident is simply because we have a leadership that has committed itself and its resources to making this a reality,” he said. “When a decision is made here, things happen fast.”