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Special Report

Renewed faith

June 2012

Abu Dhabi’s carbon-neutral Masdar City project is taking a more pragmatic view of its future

by Mark Lazell
[email protected]

Back in the boom days of 2006 when Abu Dhabi’s renewable energy company Masdar was established, the sky, it seemed, was the limit.

The wholly-owned subsidiary of the emirate’s government-owned Mubadala Development Company has since come a long way, though admittedly not as far as it had expected in those heady days of the middle of the last decade.

The multi-billion dollar project, whose name means ‘the source’ in Arabic, has had its sceptics, their doubts fuelled in their eyes when the scale and pace of the project slowed in the face of deteriorating global economic and financial conditions.

Despite this, the core ambitions of the Masdar project – to develop a commercially-successful renewable energy industry in Abu Dhabi in line with long-term national economic policy – remains essentially unchanged.

Work on Masdar City, a six square kilometre development which could one day host as many as 100,000 people living and working in the world’s biggest clean-technology cluster surrounded by renewable energy companies, technologies and academic research centres, is progressing. The first phase is expected to be completed within six years, by which time the City will have some 8,000 residents and another 12,000 people commuting to and from the site for work.

“To be honest it is probably taking longer than people thought it would in 2006, as a result of world events and the Arab Spring. When you have had the sorts of things happen in this region over the last year and a half the idea of renewable energy looks a long way down the decision tree,” admits Alan Frost, director of Masdar City, one of the five integrated units under the Masdar umbrella (see table).

“We have been a lot more realistic and open in the last year compared to the way we were three or four years ago,” he adds candidly.

Speaking to The Gulf, Frost insists that, despite this, renewable energy and sustainable development remains high on long-term Gulf agendas.

“You only need to look at some of the projects being announced in places like Saudi Arabia, for example the King Abdullah City for Atomic and Renewable Energy,” he says. “My sense is that if people are putting in new cities in the region they will have an eye on making them as sustainable as possible, even if they may not be carbon neutral or powered by renewable energy.”

From his Abu Dhabi base, Frost has witnessed at close quarters what happens when a government throws its weight behind a project identified as strategically important to long-term economic growth.

“Abu Dhabi has pushed the renewable energy and sustainable development barrier pretty hard – some of that is coming through in Urban Planning Council guidelines, in the Estidama rating system [under which buildings must meet certain environmental standards in their designs],” he explains.

Importantly for Mubadala, Masdar represents an opportunity to increase the non-oil share of the economy from about 40 per cent now to more than 60 per cent, as stipulated in Abu Dhabi’s 2030 economic vision, and this is providing impetus for the project.

The first phase of the Masdar Institute – a home-grown research and development (R&D) centre which opened in 2009 in co-operation with the Massachusetts Institute of Technology (MIT) which focuses on alternative energy and environmental technologies – is already functioning with students living on campus. The second phase should be finished by the end of this year.

Meanwhile the first commercial building designed specifically for small and medium-sized enterprises (SMEs) will also be completed in Masdar City by year-end. And construction continues on the flagship Middle East headquarters of German engineering giant Siemens, a 25,000 square metre structure expected to be occupied by the third quarter of 2013. According to Frost, the final stages of tendering for the 35,000 sq m Masdar City headquarters, which will be home to the International Renewable Energy Agency (IRENA), is also under way.

While progress on physical infrastructure development has traditionally dominated interest in the City to date, Frost says real renewable energy-related work is already taking place on site.

“It is way more than just a real estate development, and is not an experiment – it is the creation of a clean technology cluster, bringing in technology players like Siemens and others across technologies we are interested in, in line with Abu Dhabi’s 2030 vision and the creation of a knowledge-based economy,” he notes.

To this end the opening of the Masdar Institute was a major turning point, says Frost.

“Siemens was partly attracted to Masdar City because of its nexus with the Masdar Institute, and we are pushing to bring in other institutions,” he adds.

A master plan for a new campus for Khalifa University for 6,000 undergraduates is currently under study at ?the Urban Planning Council. This would feed Masdar Institute, which ?in theory would provide a steady ?stream of graduates for the likes of Siemens, as well as General Electric, Schneider and BASF, all of whom plan operations in the City.

Masdar Institute is currently collaborating with Siemens to implement a so-called ‘Smart Grid/Smart Building’ Pilot scheme at Masdar. With research funded by the German company the intention is, says Frost, to first install a medium-voltage network and building management systems to enable partners to run a smart grid experiment. The end goal is to develop a commercially-viable power distribution grid which can efficiently integrate renewable energy sources such as wind or solar, whose sources can fluctuate according to prevailing environmental conditions.

Masdar is also pursuing partnerships to develop lighting, electric vehicles and cooling system pilots, says Frost.

“Twenty-five to 30 per cent of energy load in this region is based around lighting. Meanwhile, solar cooling is still quite expensive but accounts for between 50 and 60 per cent of regional energy load,” he explains.

Solar cooling pilots have been running at Masdar for several years, and some of the City’s buildings are even cooled them. “If we can crack this we can make a big difference,” Frost claims.

Masdar is also planning to launch a geothermal cooling pilot scheme. It has already dug two wells 2.5km into the earth’s crust to tap into hot water reservoirs which run deep under the UAE and much of the region. If successful, the hot water would be used to run absorption chillers, basically large fridges which run on heat energy.

“If the pilot works and we reach a scale that works for the City, then a significant amount of baseload cooling could be run on geothermal,” says Frost.

While research projects and pilot schemes are critical to the Masdar ecosystem, ultimately the project’s long-term success will depend on its ability to deliver commercial value to its shareholders as a ‘for profit’ entity Masdar says it is already seeing returns across each unit. Going forward, as well as attracting big hitters like Siemens and General Electric, the City sees the SME sector as vital to achieving future financial objectives.

“How do you create a cluster to appeal to SMEs?” asks Frost. “There has to be a market, a reason for people to be here or they’ll leave after two or three years. It can’t just be based around incentives – laws have got to work, intellectual property has to be protected. There has to be a community of smart, like-minded people,” he says.

A series of high profile visits by world leaders won’t hurt Masdar’s ambitions. German chancellor Angela Merkel included a stop in Masdar on her Gulf tour schedule in May 2010. US vice president Hillary Clinton dropped in last year. And Chinese premier Wen Jiabao passed by at the beginning of this year.

“When you get someone like the German chancellor arriving at Masdar all of a sudden you start to think about not just the large companies like Siemens but also SMEs, and how you might boost trade and other bilateral relations between Abu Dhabi and Germany,” says Frost.

While he naturally welcomes the exposure such visits bring, Frost says technical exchanges out of the public eye hold arguably greater value.

“If I can get the guys out of Tianjin [a renewable energy project in China], or ProjectZero [Denmark] or SymbioCity [Sweden] over here to spend a day comparing notes and sharing ideas, that is probably more interesting for me,” he says.

It is still early days for Masdar, whose backers and partners are eager to prove that renewable energy has a bright future in the back yard of one of the world’s most prolific oil producing states. A lack of a regulatory framework and a limited number of skilled professionals in the field are among the issues it must confront.

Having moved into an era of more managed expectations and goals, Masdar City is treading more carefully and deliberately than it did back in 2006. Timeframes for completion have been relaxed accordingly, with Frost reckoning it could happen “sometime between 2025 and 2030”.

“It will depend on the market. If we return to boom times and things are growing at 10 per cent a year it could be different. We are not going to build ahead of the market – we want to have buildings occupied by tenants rather than empty buildings.”

Masdar’s other business units
Masdar Institute?Independent, research-driven graduate institute developed with Massachusetts Institute of Technology (MIT), focused on advanced alternative energy, environmental technologies and sustainability
Masdar Capital?Provides capital and management expertise to help renewable energy and clean enery technology companies grow
Masdar Power?Invests in, develops and operates renewable, utility-scale power generation projects, with a focus on Concentrating Solar Power (CSP), photovoltaic solar energy and on- and offshore wind energy. Is a joint venture partner in the 100MW Shams 1 CSP in Abu Dhabi
Masdar Carbon?Manages projects that reduce carbon emissions through energy efficiency and waste heat/CO2 recovery, as well as through carbon capture and storage (CCS).

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