EMs’ energy transition gets a USD 1.5 bn boost from IFC + ADFD

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WHAT WE’RE TRACKING TODAY

TODAY: Emerging markets get a boost for their energy transition from the IFC and ADFD

Good morning, friends, and welcome to another finance heavy day with some key updates from the UAE. Let’s jump right in.

THE BIG CLIMATE STORY- The International Finance Corporation signed an agreement yesterday with state-owned Abu Dhabi Fund for Development to jointly co-invest USD 1.5 bn in the energy transition for emerging markets, while Dubai Islamic Bank raised USD 1 bn in its second green sukuk issuance.

^^We have chapter and verse on these stories and more in the news well below.

THE BIG CLIMATE STORY OUTSIDE THE REGION-

There’s no single story dominating the global climate conversation this morning, but there are a couple of conversations being had:

#1- The European Commission published rules yesterday that pave the way for some nuclear-derived hydrogen to count towards the EU’s renewable energy generation targets. Hydrogen produced in facilities utilizing low-carbon sources — potentially including nuclear — could count towards these targets, as long as producers sign long-term PPAs with renewable energy providers. This follows months of debate between pro-nuclear countries like France and countries seeking to exclude nuclear-based fuels from EU renewables targets, including Germany. (Reuters | Euronews)

#2- Net-zero pledges by some of the world’s largest companies will reduce their emissions by just 36% — a far cry from climate targets required to maintain the 1.5°C global warming threshold, according to a report by Corporate Climate Responsibility Monitor and the NewClimate Institute published yesterday. Some 24 of the world’s biggest companies assessed in the report — collectively raking in USD 3 tn in revenues in 2021 — have inadequate climate targets and future carbon neutrality plans that are “exaggerated, false and misleading,” the report concludes. (Bloomberg | AFP)

WATCH THIS SPACE- Will Egypt’s national hydrogen strategy be unveiled soon? The Egyptian government’s national hydrogen strategy could be materializing by the end of 1Q 2023, two sources with first-hand knowledge of the process told EnterpriseAM. One source revealed the government is expecting to unveil the highly anticipated strategy between the end of February and early March, and another source familiar predicted the strategy to be finalized and released sometime in March.

REFRESHER- The strategy is a key milestone for developers who have signaled interest in Egypt’s world-scale hydrogen program, which would demand the investment of some USD 40 bn in renewable energy alone to generate the 40 GW of power needed if every project now on the drawing board makes it to implementation. The state has inked framework agreements worth c. USD 85 bn for green hydrogen and ammonia plants.

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THE DANGER ZONE- Some plug-in hybrid electric vehicles (PHEVs) are producing up to 7x the emissions they claim and have less range than advertised, according to research commissioned by European clean transport campaign Transport & Environment (T&E). A study conducted by Austria’s Graz University of Technology found that some PHEVs — like the BMW 3 Series — produced more than 3x as many emissions as they claimed on city and commuter routes even when fully charged. The Peugeot 308 and Renault Megane produced 20% more emissions than claimed on a 55 km commute, and researchers found that all but one of the PHEVs tested had less range on a single electric charge than advertised. When tested on an empty battery, the PHEVs produced 5-7x as much emissions as claimed, T&E said. The study concluded that PHEVs should be taxed for their actual emissions rather than their advertised or claimed emissions.

What are PHEVs? PHEVs use a combination of gasoline and electric motors, allowing drivers to switch between an internal combustion engine and battery-power. They conventionally have large, chargeable batteries that can be charged and provide more mileage than conventional hybrid models.

COME TO OUR NEXT ENTERPRISE FORUM-

We’re excited to unveil our next C-level event in Cairo: The Enterprise Exports & FDI Forum, where we will take a deep dive into two of the most critical topics affecting our community.

Interested to learn more about how Egypt is planning on drumming up foreign direct investment (FDI) for all these green hydrogen, solar and wind agreements? Exports and FDI have never been more important to Egypt’s economy — or its businesses — than in the wake of the float of the EGP and the country’s positioning as a regional renewable energy hub. We think there’s a unique chance to build an export-led economy that makes Egypt a magnet for FDI and all the benefits that will come with it.

Want to join the conversation? Drop us a line on events@enterprisemea.com.

CIRCLE YOUR CALENDAR-

The UAE will host the World Environment, Social and Governance Summit from next Tuesday, 21 February to Thursday, 23 February in Dubai. The summit will host discussions on reducing carbon emissions and the urgency to incorporate ESG. Stakeholders from various fields will address the financial and strategic implementation of ESG.

Egypt will host the CSR Forum from 2-5 March at Somabay, Hurghada. The event aims to further discussions put forth during COP27 and boost private and public sector cooperation on climate action. You can register for the event here.

The Arabia CSR Awards is accepting applications until Friday, 30 June. The awardwinners will be announced during a ceremony on Wednesday, 4 October.

The first MENA Solar Conference is accepting applications from published researchers specialized in PV technology until Sunday, 30 April. The Dubai Electricity and Water Authority will be hosting the conference from 15 to 18 November, in conjunction with the Water, Energy, Technology, and Environment Exhibition and the Dubai Solar Show 2023. Researchers can submit their papers here.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

A shot in the arm for emerging markets’ energy transition

IFC, Abu Dhabi Fund for Development agree to USD 1.5 bn co-investment in EM energy transition: The International Finance Corporation (IFC) signed an agreement yesterday with state-owned Abu Dhabi Fund for Development (ADFD) to jointly invest USD 1.5 bn in the energy transition for emerging markets, IFC Director General Makhtar Diop said, according to Reuters. Diop made the announcement at the World Government Summit, an annual meet-up of government leaders that kicked off in Dubai yesterday and is running until Wednesday. No details were provided on the timeframe of the USD 1.5 bn co-investment or which economies it will specifically target.

The co-financing will boost IFC investment in green hydrogen in particular, Diop said in an interview with BloombergTV yesterday (watch, runtime: 04:32). The IFC has been upping its investment in renewables in the last few years and is working with multiple stakeholders — including the IEA and representatives of capital markets — to “pave the way for a greener economy,” he added. “We’ve been accelerating this because we believe that with the challenges we’re facing with climate change, there’s no option but to invest in renewable energy.”

We’ve seen the IFC upping its MENA renewables investment recently: The IFC plans to allocate 35% of its investments to green sectors — including MENA renewables — its MENA head of regional operations Sufyan Al Issa said in December. Egypt in particular holds significant potential, along with the GCC, Morocco and Jordan, Al Issa noted. This followed news that the IFC is co-financing renewables projects of roughly 1 GW that are being launched by UAE firm Al Nowais’ subsidiary Amea Power in Egypt, also announced in December. The IFC, Dutch development bank FMO and Japan International Cooperation Agency (JICA) will collectively provide USD 500 mn for a 560 MW solar plant, while the IFC, three commercial banks and the Japanese Bank for International Cooperation will provide USD 500 mn for a 505 MW wind farm. The IFC is also co-financing Tunisia’s 100 MW Kairouan solar plant, along with the African Development Bank (AfDB) and the Clean Technology Fund (CTF), estimated to cost some USD 100 mn.

ADFD has also been supporting growth in renewables: ADFD provides international aid in the form of concessionary loans to economic and social development projects. When it comes to renewables, ADFD is an anchor investor in the International Renewable Energy Agency’s (IRENA) Energy Transition Accelerator Financing (ETAF) platform, to which it contributed USD 400 mn when ETAF was launched at COP26 in 2021. More recently, it also co-financed Masdar’s 230 MW solar plant in Azerbaijan, which reached financial close in August.

UAE’s Dubai Islamic Bank nets USD 1 bn in second green sukuk issuance

The Dubai Islamic Bank (DIB) raised USD 1 bn in its second green sukuk issuance, according to a statement. The 5.5-year notes were sold at 102.4 bps over five-year US treasuries with an annual return of 4.8%. This follows DIB’s maiden green bond issuance in November when the lender raised USD 740 mn. This is the Middle East’s largest ever green issuance by a financial entity, DIB CEO Adnan Chilwan said, according to Khaleej Times.

There was strong investor appetite: The issuance was a little over 3x oversubscribed, with the sale showing “overwhelming” investor interest, Chilwan said. Appetite was particularly strong from investors in the Middle East, Europe, and Asia, the statement noted. DIB’s maiden sukuk issuance was also a little over 2x oversubscribed, drawing more than USD 1.6 bn in orders from would-be investors, we noted in November.

Where is the money going? No details were revealed about how the funding will be used but it is reasonable to infer that the USD 1 bn will be used to fund projects pertaining to renewable energy, energy efficiency, sustainable transport, and other green projects much like the first issuance.

This follows another important issuance in KSA this week: Over in KSA, Saudi Arabia’s sovereign wealth fund the Public Investment Fund sold USD 5.5 bn of green bonds last week. PIF will use the funds from its second issuance in four months to finance or refinance green investments.

The regional green + sustainable bond market is hot: GCC green and sustainable bond and sukuk issuances saw massive growth in volume and value last year, with some USD 8.5 bn raised from 15 issuances — a sizable increase from the USD 605 mn raised from six issuances in 2021. And more is expected down the MENA pipeline as Egypt wants to roll out USD 500 mn in green bonds before the end of the fiscal year — which ends in July 2023.

Advisers: Standard Chartered Bank acted as sole sustainability structurer. Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital, Mashreq, Sharjah Islamic Bank, Standard Chartered Bank and the Islamic Corporation for the Development of the Private Sector were named as advisers, the statement notes.

Geely’s EV brand Zeekr raises USD 750 mn in series A fund round

Geely’s EV brand Zeekr raises USD 750 mn in fresh funding: Zeekr — Chinese automotive manufacturer Geely’s luxury EV brand — raised USD 750 mn in a series A funding round from five investors, according to a company statement. Zeekr is now valued at USD 13 bn, according to the statement.

Who participated in the round? Investors on board included Chinese-based battery manufacturer and Tesla supplier Contemporary Amperex Technology Ltd, China’s state-owned Yuexiu Industrial Fund, Tongshang Fund, the Xin’an Intelligent Manufacturing Fund, and an angel investor.

Where is the money going? Zeekr will use the proceeds to boost tech research and fuel global expansion plans. The company has plans to launch its all-electric SUV Zeekr X along with an expansion into Europe in 2023, the statement notes.

Gearing up for IPO: Zeekr’s wrap up on this round comes two months after it filed for an initial public offering in the US, which saw it reportedly seeking proceeds in excess of USD 1 bn at a USD 10 bn valuation, Reuters reported last December citing three sources with knowledge of the matter.

About Zeekr: Founded in 2021, the brand currently has an EV inventory comprising 2 entirely electric vehicles — the Zeekr 001 and Zeekr 009 — and has sold some 72k EVs in 2022 alone, according to its website.

Hot on the heels of Geely announcing the rollout of new EVs in MENA: Egypt’s Abou Ghaly Motors is introducing Chinese automaker Geely’s Geometry C EV to the Egyptian market. No timeline for the rollout in Egypt and MENA was disclosed.

Wind energy giants racking up losses — even as the business grows

Wind giants GE, Vestas and Siemens Gamesa racked up losses last year on the back of rising maintenance costs, Renew Economy Australia reports. Warranty provisions — compounded by supply chain risks, rising inflation and reduced power installations — dipped into the revenues of the wind behemoths, with forecasts for the coming year expected to fall short as well.

Offshore and onshore wind losses: GE reported that its renewable energy business GE Vernova had racked up losses of USD 2.2 bn in 2022, largely due to warranty provisions from its wind division. The company forecast it would record an additional USD 200-600 mn in losses this year from the division. Similarly, Danish wind turbine manufacturer Vestas reported revenues of just under EUR 14.5 mn last year — compared to an outlook of EUR 14.5-15.5 bn. Vestas also saw wind turbine orders in GW decline by 19%. Wind turbine manufacturer Siemens Gamesa recorded a quarterly loss of EUR 884 mn at the end of last year, despite increased growth.

Failures and repairs are costing the wind giants: Siemens Gamesa reported additional costs due to “failures and repairs of components” in legacy onshore wind turbines with warranty provisioning leading to a net loss of EUR 940 mn. Similarly, Vestas reported warranty provisions as a continued problem for the company for the twelfth consecutive quarter with longstanding problems with repairs and upgrades to its blades contributing to a lack of profitability. In the US, GE has reported that supply disruptions, rising metal prices as well as the war in Ukraine have made it difficult to turn a profit.

MENA renewables giants are still expanding wind portfolios regardless: Saudi Arabia’s Acwa Power is aggressively expanding, growing their renewables portfolio to 58 GW from 1 GW in less than a decade — including a 10 GW wind project in Egypt, positioned to be one of the world’s largest wind farms. Emirati renewables giant Masdar is building Asia’s largest wind farm — a 500 MW facility — in Uzbekistan.

And they’re targeting western acquisitions: Saudi Arabia’s Public Investment Fund acquired a 9.5% stake in German offshore wind developer and operator Skyborn Renewables in December. Handelsblatt (German) reported that Siemens Energy could get a potential investment from Qatar Investment Authority ahead of its full acquisition of Siemens Gamesa. Abu Dhabi-based sovereign wealth fund Mubadala Investment Company acquired an undisclosed stake in Skyborn last October, in addition to US offshore project Bluepoint Wind.

Saudi Arabia is courting bidders on five mining exploration sites

KSA’s Industry and Mineral Resources Ministry (MIM) launched the pre-qualification stage for five mining exploration sites in the kingdom, according to a statement. The sites are rich in a variety of minerals including gold, copper, zinc, and lead, the statement notes. The qualification stage will be followed by a proposal stage where international bidders will provide pitches for managing the social and environmental impacts. Licensing for the five sites is expected to be completed by 2Q and 3Q 2023, the Saudi Gazette reports.

Saudi Arabia is pushing its mining industry forward: The kingdom signed an MoU with Standard Chartered Bank last week to assess the requirements for sustainable investments in its mining sector, with a focus on accelerating projects and investments in mining and mining value chains — including green metals and battery components. MIM signed an MoU last month with the Diriyah Gate Development Authority to regulate the country’s mining businesses and exchange geophysical and geotechnical data, as part of determining locations to mine materials.

Dewa is looking at using hydrogen in the UAE’s mobility sector: Dubai’s Water and Electricity Authority (Dewa) signed an MoU with the Emirates National Oil Company Group to conduct a feasibility study to explore the potential of using hydrogen as a fuel in the UAE’s mobility sector, according to Wam. Under the agreement both parties will collaborate on the construction of a hydrogen fueling station in Dubai as part of the Dubai Green Mobility Initiative for 2030.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

Six Singaporean companies — including utility company Daily Life Renewable Energy (DLRE) and software developer Graymatics — have been tapped by Abu Dhabi to develop smart city pilot projects to increase energy efficiency across the emirate. The pilot for which DLRE was selected will include a focus on using renewables to power public recreation centers. (The National)
Saudi Telecom (stc) and Ericsson have joined forces to recycle e-waste in KSA. The partnership falls under the Ericsson Product Take-Back Program and includes the collection and transportation of stc’s decommissioned equipment to limit its environmental impact through recycling. (Statement)

Can moondust or sunlight reflection mitigate the effects of global warming?

Scientists are exploring if scattering moondust or deviating sunlight can help cool the Earth and mitigate the effects of global warming, according to two separate studies by the Center for Astrophysics | Harvard & Smithsonian and the University of Utah and The Degrees Initiative.

Chemo for global warming: Nonprofit research organization The Degrees Initiative is working together with the United Nations’ The World Academy of Sciences to disburse upward of USD 900k to 81 scientists in the Global South to study solar radiation modification. The process — likened to chemotherapy for global warming — involves reflecting sun rays back into space by releasing aerosols like sulfur dioxide in the upper atmosphere to reduce the effects of climate change. It’s unclear how or whether solar shields would affect solar energy assets.

Creating a shield with lunar dust: The Center for Astrophysics | Harvard & Smithsonian and the University of Utah study is exploring the potential of using moondust to create a shield in Earth’s orbit. The idea — triggered by observing how rings around host stars intercept light from the central star and then radiate it — posits that scientists could create a sun shield by placing astronomical dust in an orbit between the sun and the Earth, potentially blocking a large amount of sunlight without significant mass.

CALENDAR

FEBRUARY 2023

21-23 February (Tuesday-Thursday): World Environment, Social and Governance (ESG) Summit, Dubai, UAE.

MARCH 2023

7-9 March (Tuesday-Thursday: Middle East Energy Exhibition, Dubai World Trade Center, Dubai, UAE.

14-16 March (Tuesday-Thursday): Arab Aviation Summit (AAS), Al Hamra International Exhibition & Conference Centre, Ras al Khaimah, UAE.

15-19 March (Wednesday-Sunday): Qatar International Agricultural and Environmental Exhibition, Doha, Qatar.

22-24 March (Wednesday-Friday): K.ey - The Energy Transition Expo, Rimini Expo Centre, Emilia-Romagna, Italy.

22-24 March (Wednesday-Friday): UN 2023 Water Conference, New York, NY, United States.

APRIL 2023

6 April (Thursday): Arabia CSR Awards 2022 Clinic (online).

MAY 2023

1-4 May (Monday-Thursday): Arabian Travel Market, Dubai, UAE.

2-7 May (Tuesday-Sunday): Salon International de l’Agriculture au Maroc (SIAM), Meknes, Morocco.

16-18 May (Tuesday-Thursday): Seatrade Maritime Logistics Middle East, Dubai, UAE.

29-31 May (Monday-Wednesday): Electric Vehicle Innovation Summit, Abu Dhabi, UAE.

JUNE 2023

Bloomberg New Economy Gateway Africa Conference, Marrakesh, Morocco.

1-3 June (Thursday-Saturday): Envirotec and Energie Expo, Tunis, Tunisia.

13-14 June (Tuesday- Wednesday) The Arab Green Summit, Palazzo Versace Dubai, Dubai, UAE.

SEPTEMBER 2023

Chariot Limited and Total Eren’s feasibility study on a 10 GW green hydrogen plant in Mauritania to be completed.

OCTOBER 2023

2-4 October (Monday-Wednesday): WETEX and Dubai Solar Show, Dubai, UAE.

4 October (Wednesday): Arabia CSR Gala Awarding Ceremony, UAE.

NOVEMBER 2023

30 November - 12 December: Conference of the Parties (COP 28), Dubai, UAE.

EVENTS WITH NO SET DATE

End-2022

KSA’s Neom wants to tender three concrete water reservoir projects to up its water storage capacity by 6 mn liters.

2023

Early 2023: Egypt’s KarmSolar to launch KarmCharge, the company’s EV charging venture.

1Q2023: Oman will award two blocks of land for green hydrogen projects in Duqm, Oman.

Mid-2023: Sale of Sembcorp Energy India Limited to consortium of Omani investors to close.

Phase C of the 900-MW of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai to be completed.

Saudi Basic Industries Corporation (Sabic) steam cracker furnace powered by renewable energy to come online.

4Q2023: Oman to award four blocks of land for green hydrogen projects in Thumrait, Oman.

2024

End-2024: Emirati Masdar’s 500 MW wind farm in Uzbekistan to begin commercial operations.

QatarEnergy’s industrial cities solar power project will start electricity production.

First 1.5 GW phase of Morocco’s Xlinks solar and wind energy project to be operational.

2025

Second 1.5 GW phase of Morocco’s Xlinks solar and wind energy project to be operational.

UAE to have over 1k EV charging stations installed.

2026

1Q 2026: QatarEnergy’s USD 1 bn blue ammonia plant to be completed.

End-2026: HSBC Bahrain to eliminate single-use PVC plastic cards.

Iraq’s Mass Group Holding wants to invest EUR 1 bn on its thermal plant Mintia in Romania to have 62% of run on renewable energy, while expanding its energy capacity to at least 1.29k MWh.

2027

MENA’s district cooling market is expected to reach USD 15 bn.

2030

UAE’s Abu Dhabi Commercial Bank (ADCB) wants to provide AED 35 bn in green financing.

UAE targets 14 GW in clean energy capacity.

Tunisia targets 30% of renewables in its energy mix.

Qatar wants to generate USD 17 bn from its circular economy, creating 9k-19k jobs.

Morocco’s Xlinks solar and wind energy project to generate 10.5 GW of energy.

2035

Qatar to capture up to 11 mn tons of CO2 annually.

2045

Qatar’s Public Works Authority’s (Ashghal) USD 1.5 bn sewage treatment facility to reach 600k cm/d capacity.

2060

Nigeria aims to achieve its net-zero emissions target.

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