Taqa, Engie, and EWEC achieve financial close for AED 2.3 bn “low-carbon” desalination plant

Good morning, ladies and gents. We have a brisk issue to ease you into the weekend with a couple of big stories making the headlines.

THE BIG CLIMATE STORY- The UAE’s Taqa, French utility company Engie, and the Emirates Water and Electricity Company have achieved financial close for the AED 2.3 bn low-carbon Mirfa 2 Reverse Osmosis desalination plant and Iraq has approved the construction of a USD 520.2 mn 750 MW solar plant with PowerChina in the country’s southern Muthanna province.

^^ We have the details on these stories and more in the news well, below.

THE BIG CLIMATE STORY OUTSIDE THE REGION– Chevron and Exxon shareholders voted against proposals for additional climate reporting and revised emissions reduction targets at the US oil majors’ annual meetings yesterday, showing a marked difference in voting preference versus Europe, where resolutions related to climate change and global warming earned stronger support. Only 11% of Exxon shareholders supported a petition calling for the company to set emissions reduction targets consistent with the 2015 Paris climate agreement, while a similar proposal at Chevron received less than 10% support.

The story made headlines in the international press: Reuters | Bloomberg | Financial Times

---

WATCH THIS SPACE #1- The UAE’s first hydrogen electrolyzer plant? The UAE’s Industry and Advanced Technology Minister Sultan Al Jaber says the country intends to build its first hydrogen electrolyzer plant, Wam reports. The plant is part of over 30 industrial projects worth over AED 6 bn announced during the second edition of the Make it in the Emirates Forum. He did not provide further details about the timeline or financial details of the electrolyser project.

WATCH THIS SPACE #2- Hydrogen-fueled buses could be hitting KSA streets next year: KSA’s Neom Green Hydrogen Company (NGHC) will begin producing green hydrogen for buses and trucks at a new plant by mid-2024, CEO Dave Edmondson told Bloomberg in an interview. A larger facility that will focus on exports is also being developed, Edmondson said. The USD 8.4 bn facility — which aims to produce up to 600 tons of hydrogen per day using wind and solar power — will start exporting the fuel in the form of ammonia in 2026, he said. A third hydrogen facility, set to begin production in 2028 or 2029, will focus on providing energy for local industry, he revealed.

REMEMBER– Saudi Arabia aims to become the world’s biggest green hydrogen producer under efforts to diversify its economy away from oil sales. It hopes its USD 8.4 bn utility-scale green hydrogen facility in Neom will help it become a leader in clean fuel in the coming decades. The plant promises to be the world’s largest utility-scale green hydrogen facility, producing 1.2 mn tons of green ammonia annually. All of the plant’s output is planned for global export, mainly to the EU, specifically Germany, through an exclusive long-term agreement with Air Products.

---

WATCH THIS SPACE #3- Doha Bank explores green bond market: Qatar’s Doha Bank has announced the launch of its Sustainable Finance Framework, which opens the door to issuing various ESG-aligned debt and capital instruments, The Peninsula Qatar reports. The issuances could include bonds and private placements under its Euro Medium Term Note program.

ALSO- Qatar is assessing climate vulnerability: Qatar’s Environment and Climate Change Ministry and the Global Green Growth Institute held a workshop to discuss efforts to ramp up climate vulnerability and action on six different sectors in the country, Al Sharq reports. The workshop addressed the most crucial challenges of climate change in the country and discussed creating a database on the most impacted sectors — including infrastructure, healthcare, water among others — which would allow the ministry to develop a national strategy for the environment and climate change and prepare a national action plan.

---

DATA POINT– A record 1Q for global wind turbine orders: Global wind order intake rose by 27% y-o-y in the first quarter of the year to 23.5 GW hitting a new record, according to analysis by energy consultancy firm Wood Mackenzie. The growing activity was spurred by a new record of 15.2 GW set by China and a record growth in Latin America to 1.7 GW, it said. The US saw a rise to 1.8 GW of activity, more than doubling the 0.8 GW in the corresponding quarter last year. All in all, global orders were up USD 3 bn y-o-y in 1Q, reaching USD 15.2 bn.

No slowdown for China: “China continues to be the overwhelming driver of global activity,” said Wood Mackenzie Research Director Luke Lewandowski. “We do not see that slowing down anytime soon. What is encouraging is seeing certain areas outside of China start to build momentum. Latin America had a record 1Q, thanks to activity in Argentina and Brazil, and the US is seeing renewed confidence and order growth, partially thanks to the Inflation Reduction Act,” he said.

Get Enterprise Climate

***
YOU’RE READING ENTERPRISE CLIMATE, the essential regional publication for senior execs who care about the world’s most important industry. Enterprise Climate covers everything from finance and tech to regulation, products and policy across the Middle East and North Africa. In a nod to the growing geographical ambitions of companies in our corner of the world, we also include an overview of the big trends and data points in nearby countries, including Africa and southern Europe.

Enterprise Climate is published by 5am CLT / 5am Riyadh / 6am UAE Monday through Thursday by Enterprise, the folks who bring you Enterprise Egypt, your essential 6am and 3pm read on business, finance, policy and economy in Egypt and emerging markets.

EXPLORE MORE OF ENTERPRISE ON THE WEB — tap or click here to read EnterpriseAM, EnterprisePM, and The Weekend Edition on our powerful new website packed with reader-friendly features.

Subscribe to Enterprise Climate here or reach out to us on climate@enterprisemea.com with comments, suggestions and story tips.
***

CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Arab-Chinese Business Conference on Sunday, 11 June and Monday, 12 June in Riyadh. The conference will bring together CEOs, business leaders, investors, and entrepreneurs from the Middle East and China to collaborate on new trade and investment initiatives in different sectors, including renewables and minerals. A panel discussion titled Clean Energy and Renewables – Pathways to Emissions Reduction is scheduled on the first day, according to the program (pdf). The second day will focus on the localization of renewable energy and on value chain opportunities in mining.

The UAE will host The Arab Green Summit on Tuesday, 13 June to Wednesday, 14 June in Dubai. The two-day summit will bring together industry players and experts for conversations on climate change and sustainability and solutions for concurrent climate-related issues in the region. Key themes to be addressed during the summit include industry decarbonization, renewable and clean energy potential and implementation, sustainable building and construction and others.

Morocco will host the Bloomberg New Economy Gateway Africa on Tuesday, 13 June to Wednesday, 14 June in Marrakech. The event will bring together stakeholders from the private and public sector to discuss the world’s most pressing topics and assess potential solutions. Those include the impact of a decelerating global economy, spiking food and energy prices, supply-chain shocks and risks of distress among sovereign borrowers.

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

We’re one step closer to the UAE’s third largest RO desalination plant: The UAE’s state-owned Abu Dhabi National Energy Company (Taqa), French utility company Engie, and the Emirates Water and Electricity Company (EWEC) have achieved financial close for the AED 2.3 bn (c. USD 620 mn) low-carbon Mirfa 2 Reverse Osmosis (M2 RO) desalination plant, according to a statement (pdf) to the ADX. The move comes months after Taqa and Engie inked the water purchase agreement with EWEC in February.

What we know: M2 RO will produce 120 mn imperial gallons per day (MIGD) of water once fully operational in 4Q 2025, equating to c. 550k cubic meters per day of potable water. This will make it the third largest RO desalination facility in the country. Taqa will own 60% of the plant, while Engie will hold a 40% share. They will be tasked with the operations and maintenance (O&M) of the plant, with Engie holding a 60% stake in the O&M company and Taqa owning the remaining 40%. EWEC will procure the water supplied from the plant for 30 years.

Where the money is coming from: The project will have 78% of its funding come from debt financing from local and international lenders, including Abu Dhabi Islamic Bank (ADIB), BNP Paribas Fortis, Sumitomo Mitsui Banking Corporation (SMBC), The Norinchukin Bank, BNP

Paribas (BNPP) and KfW IPEX-Bank GmbH.

All under a wider strategy: A pipeline of RO projects should allow EWEC to help realize the Abu Dhabi Department of Energy’s Clean Energy Strategic Targets 2035 to slash carbon emissions by up to 75%, EWEC CEO Othman Al Ali said. “Through our initiatives, we forecast that over 90% of our water production will be from RO technology by 2030, resulting in an 88% reduction in carbon emissions associated with water production,” he said.

Good marketing: M2 RO will leverage highly efficient RO desalination, the statement said, highlighting an efficiency of up to six times more than traditional thermal desalination. Plant operators would be able to lower carbon emissions by decoupling water and power generation processes, allowing them to slash costs and achieve sustainability targets.

But the jury’s still out on how green it is: There has been a debate on the low carbon classification of reverse osmosis plants. Such plants can’t be truly labeled “low carbon” as long as they’re powered by fossil fuels, Saudi Acwa Power’s former CEO Paddy Padmanathan said last year. Fossil fuels are used in around 70% of desalination plants in the Gulf, he said. This method of desalinating water is also highly intensive, requiring 3-10 KWh of energy to produce 1 cubic meter of water, far higher than the 1 KWh used in traditional water treatment plants. It’s unclear how power used for the M2 RO plant will be generated.

More to come? EWEC called on developers last year to bid on building two new low-carbon reverse osmosis water plants. The plants are set to be located on the islands of Saadiyat and Hudayriat and will provide some 455k cubic meters of water a day — enough to supply up to 180k households. EWEC already operates six reverse osmosis desalination plants.

Iraq’s solar drive is getting a boost from China: The Iraqi Cabinet has approved the construction of a USD 520.2 mn 750 MW solar plant with PowerChina in the country’s southern Muthanna province, according to a statement. The first phase of the two-phase project is set to generate 250 MW of solar energy, the statement added. Iraqi Electricity Minister Ziad Ali Fadel had said in April that PowerChina was building a 250 MW solar power plant in Iraq.

It’s been a good run: The appetite for renewables in Iraq has been growing in recent months. French energy giant TotalEnergies said in April that it will develop a 1 GW solar power plant to supply the Basrah regional grid, after it sealed an agreement on a delayed USD 27 bn cluster of energy projects in the country. The French company will invite Saudi Arabia’s Acwa Power to take part in the project. The growing interest came despite Norwegian renewable energy producer Scatec reportedly pulling the plug on two solar projects in the country on the back of lagging procedures and unclear legislation for solar, Iraq Oil Report reported in April.

More to come? An unnamed Saudi firm will build a 1 GW solar plant in Iraq’s Al Najaf city, Minister Fadel said in April. The ministry has already allocated land for the project, he said, without providing further details.

REMEMBER– Iraq wants to ramp up its solar energy generation: Iraq wants to produce 5 GW of solar power in 2023. The country signed solar power agreements over the past two years with several companies, lining up a total generation capacity of 7.5 GW.

Coffee with: Derya Baran, co-founder and chief engineer at RedSea: Baran (LinkedIn) is the chief engineer of agricultural technology startup RedSea and a professor at King Abdullah University of Science and Technology (Kaust). Her work is driven by the theory that local and fresh food can be a feasible reality for over 1 bn people living in desert areas if the right sustainable resources are used.

We sat down with Baran to discuss how RedSea emerged as an agritech player, how its technology works, and their outlook and priorities in the future in the GCC and beyond.

Edited excerpts from our conversation follow:

Enterprise: Tell us about RedSea and its affiliation with Kaust.

Derya Baran: RedSea was founded in 2018 with a mission to use technology to help feed the world sustainably by designing, developing, and delivering one of the world’s most advanced sustainable hot climate agtech platforms. The company is a university spin out from Kaust in Saudi Arabia, where I am a professor of Material Science.

We are currently focused on regional and global expansion and completed our first tech sale in the United States last March – providing our Iyris Heat-Blocking roof to a Florida-based nursery. We plan to commercialize additional technologies, scale operations, and deliver these innovations to farmers in hot climates globally.

E: How does the tech work?

DB: Agriculture is one of the most resource-intensive human activities on the planet with over 70% of global freshwater used to grow food. We take a systems-based approach to sustainable agriculture. Our proprietary technologies span from the crop roots all the way up to the greenhouse roof to enable sustainable farming in hot climates.The crops currently grown by Red Sea Farms — our produce brand exclusively available in Saudi Arabia — include snack peppers, tomatoes, cucumbers, and strawberries. However, our technologies are crop-agnostic.

For example, one of RedSea’s leading proprietary technologies is iyris — a heat-blocking greenhouse roof. This controlled environment agriculture solution blocks a portion of near infrared solar radiation and allows photosynthetic active radiation — the light needed for photosynthesis — to pass through, which reduces heat build-up in the greenhouse and significantly reduces cooling demands. This technology saves significant amounts of energy and water and extends the growing season in hot climates — recent tests in Saudi Arabia, showed over 40% reduction in energy usage and water consumption.

E: You also have an energy-efficient cooling system. How does that work?

DB: Our approach to cooling includes both active and passive cooling systems which can be used as a full stack for maximum energy savings or in isolation. On the active cooling side, our universal evaporative cooling system can run on low-quality, salty water with no desalination needed and no change in infrastructure. Additionally, our deep water culture decreases the load on the cooling system, especially during the heat of the summer through consistent oxygenation of the irrigation water. On the passive cooling side, the iyris greenhouse roof acts as a transparent heat shield, blocking excess heat from entering the greenhouse to save energy and control opex.

E: You say that the system is climate independent. Is your growing method adaptable to different climates?

DB: Farmers growing food in hot climates face many similar challenges. The most obvious challenge is the heat itself. Certain plants will not grow properly or may die completely from the effects of heat damage. Other challenges faced in hot climates often include water scarcity, water salinity, and drought.

If we can deliver technology for growing good quality fruits, greens, and vegetables in hot climates such as the Arabian Peninsula — where fresh water is scarce — then the processes can be replicated in similar harsh and hot environments around the world.

E: What kind of research are you doing to advance agriculture in arid and semi-arid climates?

DB: We have a research and development facility in Kaust where we trial new technologies and crop varieties. Once we are happy with the quality, we then deploy in our Riyadh commercial facility. Part of my job is to review new technologies from the ideation phase up to the prototyping phase to determine the technology’s impact and what might benefit the company commercially.

We have also launched a one-hectare commercial greenhouse facility in Abu Dhabi. The facility directly compares, side-by-side, our roots to roof technology with other technologies currently being used in the GCC.

E: How is RedSea funded?

DB: We have raised over USD 37 mn to date from our global cohort of investors who include Wa’ed, FII, Kaust, RPDC, Savola, Global Ventures, US-based entities AppHarvest, Bonaventure, and UbbenOlsen. We also received a HSBC Green Loan to help fund the building and operations of our new greenhouse facility in Abu Dhabi, which was commissioned in March.

E: How have the company’s priorities shifted over time?

DB: Our core mission has always been to design technologies that will help to feed the world sustainably. Our current priorities have shifted from not only using our technology to enable Red Sea Farms to grow produce, but also to selling our technology to growers in hot climates globally.

The global agtech market is forecasted to grow to USD 7.4 bn by 2030. The next three to five years will be focused on continuing our expansion. Currently, our technology is being used by growers in seven countries, including Spain, Egypt, and Turkey.

More green cooperation between Egypt and Italy? Egypt’s Environment Minister Yasmine Fouad discussed creating private sector partnerships with Italy’s Ambassador to Egypt Michel Quaroni on recycling construction and demolition waste, according to a statement. They also discussed cooperation in biodiesel production through recycling cooking oil and recycling agricultural waste, with Fouad highlighting that the sector is a promising investment opportunity given that the country produces 42 mn tons of agricultural waste annually. Quaroni expressed his country’s interest in managing Egypt’s agricultural waste as a key source of biofuels through several specialized Italian companies.

And there’s more: Fouad also presented opportunities in solid waste, highlighting efforts by the government to implement a new system for managing the sector including the issuance of a new law for waste management and several private sector green incentives. They also discussed cooperation in recycling packaging waste, with Fouad expressing interest in becoming familiarized with Italian technology that could provide alternatives to the use of plastics in packaging.

ALSO- Egypt and Palestine are looking to expand renewables cooperation: Egypt’s Electricity Minister Mohamed Shaker met with President of the Palestinian Energy and Natural Resources Authority Dhafer Melhem to discuss expanding cooperation in renewable energy projects, according to a statement. Melhem expressed interest in exchanging technical knowledge in renewables, and said that the authority is examining the requirements for resuming the transmission of energy through the existing interconnection between the two countries.

---

Oman and Iran talk energy, minerals: Omani Energy and Minerals Minister Salem Al-Awfi met with the Iranian Oil Minister Javad Oji to discuss cooperation in energy and minerals, Asharq Business reports. The meeting took place during a visit by Sultan of Oman Haitham bin Tarik to Tehran this week, where the two countries inked four agreements to boost cooperation in investment, freezones, and energy. The energy agreements signed were “the most prominent,” given Oman’s recent prioritization of hydrogen and renewable energy production,according to economist and head of investments at the Oman National Investments Development Company (Tanmia) Ahmed Kashoub told Asharq.

Oman also met with China to discuss minerals + renewables: Undersecretary of Oman’s Energy and Minerals Ministry Mohsin bin Hamad Al Hadrami met with a delegation of China’s National Development and Reform Commission to discuss economic partnership opportunities in the minerals sector, as well as exploring pathways to utilizing Chinese tech and expertise to localize renewables and green hydrogen-related infrastructure in the sultanate, Times of Oman reports.

The IFC appoints new senior management for the GCC: The International Finance Corporation (IFC) has appointed Abdullah Jefri (LinkedIn) as its new Senior Manager for the Gulf Cooperation Council (GCC) region, according to a statement. Jefri, who will be based in Dubai, will promote private and public sector partnerships in a bid to reduce the GCC’s dependency on fossil fuels while accelerating the adoption of green tech solutions, the statement notes. Before his appointment, Jefri was the IFC’s regional manager for the Levant, where his responsibilities included overseeing the launch of Jordan’s first green bond and providing support for sustainable infrastructure projects in Iraq.

UAE’s Etihad Airways was awarded the Environmental Airline of the Year 2023 by aviation news outlet Airline Ratings, according to the statement. Airline Ratings Editor-in-Chief Geoffrey Thomas pointed to the launch of Etihad Airways’ first SAF-fueled flight, the Boeing 787 — also known as the Greenliner — and the fuel efficient A350 aircraft developed in partnership with Airbus, as examples of the airline’s efforts in reducing emissions.

Etihad has reached its target for emission intensity reduction: The UAE airline’s Sustainability Report 2021-2022 set a target to reduce carbon intensity in its passenger fleet by 20% within 2 years, the news outlet reported. The CO2 emitted per revenue ton kilometer — the metric used to calculate emissions intensity — has already decreased by 26%, Group Chief Executive Officer at Etihad Aviation Group Antonoaldo Neves said. Etihad Airlines also has a target of reducing net emissions by 50% compared to a 2019 baseline by 2035, and reaching net-zero emissions by 2050.

PV modules secured for Egypt’s 200 MW Kom Ombo solar farm: China’s power plant and renewables construction company Zhejiang Thermal Power Construction has signed an agreement with China-based PV manufacturer LONGi to provide PV modules for its 200 MW Kom Ombo solar farm in Egypt, EQ International reports. No financial details were disclosed.

REMEMBER- Saudi renewables giant Acwa Power is developing the USD 165 mn solar farm, and has secured USD 123 mn in green loans from several multilateral lenders. The solar farm is expected to be commercially operational in 3Q 2024 and will power some 130k households in Egypt.

---

Six green projects participating in the Climate Finance Accelerator (CFA) graduated from the UK-backed financial accelerator program in Egypt, according to a press release (pdf). The projects were presented to local and international investors at an event hosted by the British Embassy yesterday for feedback on how to strengthen their project proposals. The six projects have received months of tailored support and analysis from a financial and technical perspective to enable investments, the statement notes. Eight projects were initially selected in January, in addition to one-off capacity building support to the Climate Resilience Fund.

The six initiatives presented:

• Al Dawara for plant-based single-use products.
• Farmtopia for AI use in irrigation.
• IRSC Renewable Energy Solutions for agricultural and financial support to small-scale farmers.
• ReNile for advanced monitoring technologies to promote precision farming.
• Tile Green for eco-friendly building materials from plastic waste.
• Zr3i, a digital agriculture platform focused on precision farming.

About the CFA: Announced prior to COP27 in November, the CFA is a GPB 11.8 mn technical assistance program funded by the UK Energy Department’s International Climate Finance (ICF) initiative as part of the UK's efforts to support climate action on a global scale under the Paris Agreement. The program supports governments in the development of a sustainable pipeline of bankable, low carbon projects in nine countries: Colombia, Egypt, Mexico, Nigeria, Pakistan, Peru, South Africa, Vietnam and Turkey.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• French solar energy provider EDF ENR has established a new subsidiary in Tunisia to help support industrial decarbonisation. (TAP)
• UAE waste management company Beeah Group has signed a non-binding partnership agreement with the International Solid Waste Association and management consultancy firm Roland Berger to develop a global standard for waste recycling. (WAM)
• Qatar Airways has signed a deal with Shell to source 3k metric tons of sustainable aviation fuel at Amsterdam Schiphol airport. (Statement)

The government of Hong Kong (HK) is planning to raise between USD 4- 6 bn from a fresh, multi-currency-denominated green bond issuance, Reuters reports referencing two sources with knowledge of the matter. The timeline of the issuance and the stock exchange where the green note would be listed were not disclosed.

The details: The green note —- which the news outlet quotes the Hong Kong Monetary Authority on for the relevant details —- would be “announced in due course” and would have a three, five or 10-year maturity date. The newswire notes investor demand for the HK government’s USD-dominated tranche totaled USD 9 bn, referencing intel from bookrunners’ statements. A separate term sheet reviewed by Reuters notes the HK government is simultaneously looking to issue a separate RMB-denominated bond with two, five and 10-year tenors. The state is also looking to issue another green bond in the EU debt market, but the details are set to be revealed later on Wednesday, according to Reuters.

Not HK’s first green bond rodeo: The agreement — which the state has yet to pull the trigger on — would be the second green issuance carried out by the country this year after HK raked in some USD 5.7 in green bonds earlier in January, the newswire notes.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• China, the world's biggest source of greenhouse gas emissions, needs USD 38 tn to meet its zero emissions target by mid-2050. (Bloomberg)
• A class action lawsuit has been filed against Delta Airlines for allegedly failing to meet its advertised net-zero operations claim. (Reuters)