US among 'fastest' growth markets for Masdar as it expands capacity

Abu Dhabi clean energy company recently closed the acquisition of a 50 per cent stake in Terra-Gen

Masdar Americas chief executive Philip Haddad. Bloomberg

Masdar's joint ownership of US clean renewable energy power producer Terra-Gen will support the company's ambitious expansion plans in the US, one of its "fastest" growth markets, a senior executive said.

The Abu Dhabi clean energy company closed its 50 per cent stake acquisition of Terra-Gen Power Holdings – one of the country's largest independent renewable energy producers – on Tuesday. The size of the deal, one of Masdar's largest transactions, was not disclosed.

“I think it's testimony to the commitment that Masdar has to the US market,” Philip Haddad, the chief executive of Masdar Americas, told The National.

“It's the beginning of a cornerstone for us,” Mr Haddad said, adding that the company would like to be upwards of 10 gigawatts of energy in the US within the next few years.

“This investment puts us on the path to continue to execute on our strategy."

Before the deal, Masdar's US portfolio of utility scale wind, solar and storage assets had a capacity of more than 1.4 gigawatts.

Terra-Gen's portfolio includes 3.8 gigawatts of wind, solar and battery storage projects across the US. It is also developing more than 12 gigawatts of wind, solar and battery projects in the US, with sites in California, New York and Texas. The company's project pipeline includes 386 megawatts of Texas wind and California solar energy, and 512MW-hours of California energy storage facilities. Commercial activity is expected next year.

Mr Haddad said for Masdar to grow, it has to invest in platforms that have competent management, an existing operating base and a realisable pipeline.

“To develop a renewable project takes many years and you have to have certainty that these developments that are on the ground are going to actually come to fruition at some point, and do so in any creative way,” Mr Haddad said.

“That's why we are focusing right now on in front of the metre utility scale platforms, just like Terra-Gen. And we believe that over time, you know, with this acquisition and with the pipeline … it will be one of the ways for us to achieve our growth goals in the US.”

Masdar signed the agreement to acquire the Terra-Gen stake from Energy Capital Partners in March. Following the joint acquisition, global infrastructure manager Igneo Infrastructure Partners retains its existing 50 per cent stake.

Growth in the US and beyond

Masdar first entered the US market in 2019. Its US portfolio also comprises four utility-scale wind projects in Texas and New Mexico, and five solar projects in California.

“Masdar is growing, and the US is our biggest gross market," Mr Haddad said. “It is one of our – if not our – fastest growth market, and an investment of this size, this kind of exposure that Masdar is taking in the US is a testament to that commitment."

He credited the growth to a favourable US business environment, and particularly the 2022 Inflation Reduction Act, which includes provisions to help the country achieve net-zero emissions by 2050. Mr Haddad said the extension of the tax credits under the bill provided important incentives for developers and operators, and allows for innovative opportunities.

“I think the IRA is a precedent-setting piece of legislation that positions the United States in general as being, number one, showing its commitment to decarbonisation and meeting its goals. Number two, it enables developers and investors to put substantial capital to work towards renewable energy,” he said.

“There are a lot of challenges still surrounding the roll-out of renewable energy, but whether it's supply chain or tariffs … one of the very important ingredients is the IRA. And Masdar, just like everyone else, has taken advantage of this enabler that is available to the ecosystem in the renewable energy market in the US.”

Masdar's completion of the Terra-Gen deal comes a week after President Sheikh Mohamed's official visit to Washington, where he and US President Joe Biden discussed partnerships between the UAE and the US in clean energy and other sectors.

The two countries announced the Partnership to Accelerate Transition to Clean Energy (PACE) Initiative in 2022 as part of efforts to establish long-term energy security. The initiative hopes to deploy 100 gigawatts of clean energy globally by 2035 to push forward the transition to clean energy.

"Certainly the context of the bilateral relationship is an important one, we've been growing in the US and investing in the US before that initiative, and we certainly fit within the wider pace [of the] plan," Mr Haddad said.

Masdar's growth in the US comes amid its continued expansion globally as it aims to establish 100 gigawatts of capacity in its renewable energy portfolio by 2030.

The company last week announced it will acquire Spanish renewables business Saeta from Brookfield for $1.4 billion to help strengthen its position in the peninsula. That followed a separate $1.88 billion partnership with acquisition of Spanish utilities company Endesa and a $3.53 billion proposed acquisition of Greek manufacturer Gek Terna, one of the largest in the EU renewables sector.