UAE’s ENEC and Poland’s Orlen Synthos Green Energy explore potential investments in SMRs

Good morning, friends. We have a brisk issue for you as the news cycle slowdown continues, but first…

FIVE DAYS TO GO until we see some of you at the Enterprise Finance Forum, which takes place 18-19 September (Monday and Tuesday) at the St. Regis Hotel on the Nile Corniche. This flagship forum is the latest in our must-attend series of invitation-only events, where CEOs, bankers, investors, founders, and corporate leaders will meet to discuss the trends shaping the future of banking, finance, NBFIs, and fintech — and of their clients.

What to expect: Join Todd Wilcox (CEO and deputy chair, HSBC Egypt), Akef El Maghraby (vice chairman, Banque Misr), Tarek El Nahas (group head of international banking, Mashreq), Hazem Hegazy (CEO and vice chairman, Al Baraka Bank),Fadi Abi-Nader (VP — One Demand, Global Emerging Markets, Mars-Wrigley), Bahaa Alieldean (senior and managing partner, ALC Alieldean Weshahi & Partners) and many others for talks on everything from what’s driving transformation in the banking and finance sector to how a can bank can transact in uncertain times.

Tap or click here to view the FULL AGENDA with SPEAKERS.

There will be plenty of parking available at the venue for all those attending.

** We are honored to count some of the region’s most important financial institutions as

our partners for this special event. The Enterprise Finance Forum could not take place without the support of our partners including Banque Misr, Al Baraka Bank, FAB Misr, HSBC, Mashreq, Banque Du Caire, CI Capital, Global Corp, Visa, Hassan Allam Utilities, the IFC, and Post for Investment.

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OUR TOP CLIMATE STORY- The Emirates Nuclear Energy Corporation has signed an MoU with Orlen Synthos Green Energy to look into potential investments in small modular reactors for deployment across Europe.

^^ We have more on this story in the news well, below.

HAPPENING TODAY- The Hydrogen Egypt Summit is kicking off today in Cairo. The two-day event will bring together members of the local and global hydrogen industry to discuss optimizing hydrogen and green hydrogen development in MENA, serving as a platform for the local industry to discuss potential investments with global investors, operators, and technology providers.

THE BIG CLIMATE STORY OUTSIDE THE REGION- EU accelerated renewable energy targets are now binding: EU lawmakers have given their final approval to raise the legally binding renewables energy target to 42.5% by the end of the decade, up from 32%. The bill initially faced some backlash from some member states including France, which only agreed to the new law after it received assurances that nuclear energy can be included in renewables targets in some cases, the newswire said. 470 lawmakers voted in favor, 120 voted against, and 40 abstained. The new targets — which include specific goals to increase renewable use in transport and industry — aim to significantly increase investments in wind and solar. EU member countries must still approve the final bill before it officially enters into force.

The approval got ink in the international press: Reuters | AP | The Financial Times

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OVER IN COPLAND- More consultations ahead of COP28: COP28 President-Designate Sultan Al Jaber has asked environment ministers from a number of countries to conduct informal consultations on his behalf on mitigation, adaptation, and means of implementation, along with informal consultations on the Global Stocktake, according to a letter (pdf) by the UNFCCC Secretariat. Egypt’s Environment Minister Yasmine Fouad was among the ministers named in the letter, tasked with the means of implementation pillar. “The COP28 President Designate encourages all Parties and Groups and constituencies to actively

engage with these ministers during the informal consultations,” the letter read.

WATCH THIS SPACE- Egypt and the Netherlands are partnering on a green fuels: Head of Egypt’s Suez Canal Economic Zone (SCZone) Walid Gamal El Din signed a cooperation agreement with a consortium of Dutch-based green hydrogen developers to establish a corridor facilitating the export of green fuels from Egypt to the Netherlands, according to a statement. The unnamed Dutch developers will invest in setting up several green hydrogen plants in the SCZone with plans to funnel the low-carbon fuels through the Port of Amsterdam for export to the EU market, the statement notes. The green fuels would be transported to export markets through subsea interconnectors, with a portion of the green hydrogen allocated for use for ship refueling operations for vessels transiting through the Suez Canal. Last month, Dutch-based chemicals producer OCI Global completed a six-hour refueling operation in SCZone for the world’s first green methanol-powered ship.

The Dutch are also interested in the UAE: The Port of Amsterdam is similarly eying green fuel imports from the UAE, signing an agreement earlier in January with UAE renewables giant Masdar to set up a green hydrogen corridor between the Emirates and the EU.

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WORTH READING- Some aren’t really jumping on the clean hydrogen bandwagon: Some hedge funds are shorting the hydrogen sector pegging it as a losing bet for those looking for a return on their investment in the short term, Bloomberg reports, citing an interview with Argonaut Capital Partners founder Barry Norris. “It’s a complete waste of time, unfortunately,” he said, adding the skepticism arises from a lack of confidence in business models and the amount of capital needed — especially in building electrolyzers — to get projects off the ground and running, Norris said, adding that “to pay back on that capital cost, capacity utilization has to be very high.”

Looking the other way: Norris argues that the only form of hydrogen generation that’s “remotely competitive in terms of cost is that which is produced either by fossil fuels, hydro or nuclear energy,” adding that hydrogen produced by weather-dependent renewable power is risky.

Give it some time, others argue: Impax Asset Management CEO Ian Simm says that while US President Joe Biden’s climate bill was a “potential game change changer” for hydrogen, there was still unpredictability about how the subsidies would be implemented on ground. “There have been times recently when valuations of green hydrogen-related stocks have been priced in an efficient, speedy policy transition to support green hydrogen,” Simm said. “That’s probably been over-optimistic.” Impax, which is among the world’s largest low-carbon fund managers, remains hopeful about hydrogen in the near future. “We’re very bullish about hydrogen with a 10- to 15-year horizon because it’s one of the key ways that we will be decarbonizing industrial heat,” he said. “But in the short term, it’s really hard to see a rapid expansion of demand to a scale that we would invest in”.

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NON-CLIMATE REGIONAL HEADLINES:

• UAE: UAE’s economy grew by 3.8% in 1Q 2023 and is expected to continue to expand. The growth was attributed to the transportation and storage (10.9%), construction (9.2%), and accommodation and food services (7.8%). (Wam)
• Egypt: Qatar Investment Authority is reportedly close to snapping up a portion of Telecom Egypt’s 45% stake in Vodafone Egypt by the end of the month. (Al Borsa)

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CIRCLE YOUR CALENDAR-

Morocco will host the World Power-to-X Summit from Tuesday 19 September to Thursday 21 September in Marrakech. The event brings together policymakers, industry leaders, and innovators in green hydrogen to showcase success stories in the carbon-free industry. It will also explore scaling-up projects throughout the Power-to-X value chain and hold discussions on harmonizing roadmaps of contiguous countries and adjacent regions.

Saudi Arabia will host the MENA Climate Week from Sunday, 8 October to Thursday, 12 October in Riyadh. The four-day summit will discuss climate solutions ahead of COP28. It aims to provide a platform for policymakers, businesses, and others to exchange climate solutions as well as discuss obstacles and avenues in different regions. It considers four major systems-based tracks: energy systems and industry, cities, urban and rural settlements, infrastructure and transport, land, ocean, food and water, societies, health, livelihoods, and economies. You can register here.

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

The UAE is giving a helping hand to the European nuclear sector: The Emirates Nuclear Energy Corporation (ENEC) has signed an MoU with Orlen Synthos Green Energy (OSGE) — a JV between Polish refiner PKN Orlen and Synthos Green Energy — to look into potential investments in small modular reactors (SMRs), Wam reported on Monday.

How it works: Under the MoU, both parties will be provided with an enabling framework for developing SMRs based on GE-Hitachi Nuclear Energy’s BWRX-300 SMR technology in Poland, the UK, and Central and Eastern Europe to create new clean energy capacity to help meet rising demand for electricity. They will work to determine specific areas of cooperation, with ENEC sharing expertise from its development of UAE’s Barakah Nuclear Energy Plant, building operational readiness, and stakeholder management among others.

About the tech: The BWRX-300 is a 300 MWe water-cooler natural circulation SMR promoted as a clean energy source with zero carbon emissions, according to OSGE. It lowers scale and complexity, leading to an SMR that is smarter, safer, faster, and less expensive to build and operate. It can be built within two to three years while achieving c. 90% volume reduction in plant layout. It also uses natural circulation and passive isolation condenser systems for a simple and safe operating rhythm.

Part of an ambitious plan by OSGE: The Polish company is looking to deploy the first SMR in Poland by the end of 2030 to complement the country’s shift to nuclear energy to slash carbon emissions and embark on a gradual coal phaseout. Its partner GE-Hitachi holds exclusive rights to deploy the BWRX-300 technology in the country. OSGE’s strategy sees it partnering with the Canadian energy company Ontario Power Generation, which is building the world’s first power plant with BWRX-300 technology, and the Tennessee Valley Authority (TVA) for a BWRX-300 reactor in Tennesse’s Clinch River.

A consortium comprising French power utility EDF Renewables and Korea Western Power (Kowepco) have broken ground on Oman’s 500 MW Manah solar plant, according to a statement. The solar plant will cost USD 458 mn, with commercial operations commencing by March 2025. Under the agreement reached with the consortium in March, Oman’s Power and Water Procurement Company will purchase the electricity generated under a 20-year power purchase agreement.

And that’s not all: EDF Renewables and Kowepco have also selected Australian engineering services firm Worley as owner engineer for the project. The Australian firm will partner with Wadi Noor Solar Power Company to deliver the facility in a timely manner, according to the statement.

Background: Manah 1 is one half of a larger project by OPWP to build a solar plant with a combined capacity of 1 GW. The combined cost of Manah 1 and Manah 2 will amount to over OMR 300 mn (c. USD 780 mn) and will be the largest in the sultanate. A JV made up of Singapore’s Sembcorp Utilities and China’s Jinko Power were selected to develop the Manah 2 solar plant in March.

A US startup focused on net-zero homes is getting Aramco funds: Mighty Buildings — a US-based construction tech company focused on the delivery of carbon neutral homes — has raised USD 52 mn in a funding round co-led by Saudi oil giant Aramco’s Wa'ed Ventures and Bold Capital with participation by Khosla Ventures, TechCrunch reports.

Where the funds are going: The funds will pave the way for Mighty Buildings to expand in North America and the Middle East, specifically Saudi Arabia, CEO Scott Gebicke told TechCrunch in an interview. It will also back the startup’s launch of a next-generation modular homebuilding kit, he added.

Planning big against traditional building: Gebicke said his startup “competes against traditional building methodologies, such as stick-built single family homes in the US and concrete precast in the Middle East”. “We’re now working with some of the largest developers in the US and in the Middle East to build very large numbers of homes very quickly and scalably in order to address the global housing shortage,” he added.

Boosting up valuation: Sources in the know told the media outlet that the fresh funds, which values the startup at between USD 300 mn and USD 350 mn, brings total funds raised to USD 150 mn.

About Mighty Buildings: The US-based construction tech company aims to create homes using 3D printing, advanced materials and robotics automation, according to its website. It says its walls are made of 60% recycled and sustainably sourced materials and produced with 99% less waste.

About Wa’ed: Backed by Aramco, Wa’ed is a USD 500 mn venture capital seeking investments in tech-based startups under a goal to spread innovation globally, according to its website.

Energy efficient heating technologies are crucial for the energy transition: An often overlooked necessity for a successful global energy transition involves replacing gas-powered heating systems with its more energy efficient alternative — heat pumps. To achieve net zero emissions by mid-century, the global heat pump supply would need to almost triple by 2030, to cover at least 20% of global heating needs compared to the current 10%, the International Energy Agency (IEA) found, adding that an additional USD 15  bn in investments would be required globally to reach that goal. Current heat pumping models are 3-5x more energy efficient than the more commercialized gas boilers, prompting several countries to roll-out policy supporting the critical heat decarbonization technology. In 2022, Europe and the US hit record growth in heat pump sales, and this year is also showing early signs of continued growth, with Germany for example witnessing over 100% growth, the IEA notes.

Heat pumps cool too: Heat pumps are devices that use electricity to move heat from one place to another, meaning they can both pull heat from the outside to warm a building, or push it out to cool the building, the International Renewables Energy Agency (Irena) explains. Similar to the mechanics of an air conditioner (AC), heat pumps use refrigerant to pump hot air from inside a house to the outside, with the difference of having a reversing valve that switches the system from cooling to heating when temperatures drop. Heating and cooling together accounts for about half of global energy consumption and is responsible for more than 40% of energy-related CO2 emissions, according to Irena.

There are different types of heat pumps: There are a variety of heat pump systems depending on what type of source it pulls its heat from. Air-to-air heat pumps are the most common, where the heat pump exchanges the heat between the air around you and the air outside, the New York Times writes. A geothermal heat pump can draw heat from the ground, which would require excavating and drilling a well near the system. A residential building under construction in New York will power its heat pumping system with geothermal energy, reducing emissions by 53%. Air-to-water units are also relatively common, led by demand for heat pump water heaters compatible with radiators and underfloor heating systems, the IEA explains. This may become an option regionally in the future as well, as some countries including the UAE begin to explore geothermal projects. Another source could be leftover heat from industrial processes in a waste heat recovery process that stops low-utility heat from escaping factory furnaces.

And there’s regional interest: American technology and manufacturing company Dalrada Financial Corporation will “focus on the installation and provision of ongoing support services for Dalrada’s range of high-efficiency commercial heat pumps throughout the MENA region,” through its subsidiary Dalrada Technologies Morocco established last month, Morocco World News reported. The subsidiary’s main office will be located in Fez, and will function as an operational and training hub, eventually becoming a building and manufacturing center for Dalrada heat pumps in Morocco, the outlet explains.

Plans are already underway in Morocco: Fez-based Crown Glory Holding partnered with Dalrada Technology Spain to build and install as many as 4.5k energy efficient heat pumps by 2030, according to a statement published last week. At least 150 of the commercial heat pumps are expected to be installed and operational within the first 12 months starting from October of this year, the statement added. Under the agreement, Crown Glory Holding is given exclusive distribution of Dalrada heat pumps in Africa and select neighboring countries, increasing the potential of the company to create its building and manufacturing center for Dalrada heat pumps in Morocco.

Heat pumps could be easily integrated into HVAC systems in KSA + UAE: Heat pumps are versatile when it comes to retrofits into existing Heating, Ventilation, and Air Conditioning (HVAC) systems, NYT writes. Saudi Arabia’s Zamil Air Conditioners Company partnered with Samsung Electronics earlier this year to manufacture, install, maintain and operate HVAC systems with VRF technology — a common heat pumping system — in the kingdom. A green retrofit movement is also underway in the UAE, where 30k buildings across Dubai will be upgraded before the end of 2030 in efforts to reduce energy demand by 30%. Last year, Mubadala-backed Strata partnered with two Germany-based advanced technology companies to develop the world's most energy-efficient residential AC system in the UAE.

And demand will likely increase: Unstable weather conditions including a colder than predicted spring in 2019, heavy dust storms in 2022, increased heat waves and droughts means more time spent indoors, and a bigger reliance on cooling and heating systems. Heat pumps could potentially reduce global CO2 emissions by at least 500 mn tons by 2030, equivalent to the annual emissions of all the cars in Europe, according to the IEA.

UAE, Philippines mull clean energy cooperation: The UAE’s State Minister for Foreign Trade Thani bin Ahmed Al Zeyoudi reviewed with a delegation from the Philippines steps related to develop joint projects in sectors of mutual interest, including clean energy, artificial intelligence, transportation and logistics, Wam reports. They also discussed boosting trade and investment ties between the two countries under a Comprehensive Economic Partnership Agreement (CEPA) which began in February last year.

It’s a takeoff for some waste management projects in Egypt: Egypt signed three MoUs focused on green investments during Egypt’s inaugural Environmental and Climate Investment Forum, according to a statement. The first MoU was signed between Waste Management Regulatory Authority (WMRA), KIT Innovation HUB, and Green Build Egypt on waste management cooperation. Under the MoU, the three parties agreed to set up a pilot project for recycling construction and mining waste in New Cairo and the New Administrative Capital. Another agreement was signed between the Arab Organization for Industrialization (AOI) and Germany’s INTEC Rubber Powder and RECOM Patent & License to set up a joint venture for tyre recycling in the country. The third agreement was signed between Green Planet and UAE’s Zero Carbon Ventures for a pilot project focused on the treatment of organic waste and transforming it into income-generating products, according to the statement.

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A platform for everything EV in the UAE: A new EV content platform — EVLife.ae — has been launched under support from Al Futtaim Electric Mobility Company to provide access to reliable news on e-mobility to customers in the country, according to a statement. The editorial platform, which will have content published in both English and Arabic, will cover developments related to e-mobility globally as well as host how-to guides for first time EV buyers, news on related governmental regulations, and interviews with industry experts.

REMEMBER- All under an EVs push by the UAE: The UAE aims to transition to green mobility by increasing the share of EVs to 50% of all vehicles on the country’s roads by 2050. In July, the UAE’s Cabinet approved the National Electric Vehicles Policy, which aims to “build a national network of electric vehicle chargers, organize the market of electric vehicles, promote associated industries to ensure lower emissions, lower energy consumption, and maintain the quality of roads.” The policy will contribute to reducing energy consumption in the transport sector by 20% through its Green Mobility Project.

OTHER STORIES WORTH KNOWING ABOUT THIS MORNING-

• KSA’s Barakah secures funds for food waste solution: Saudi-based foodtech startup Barakah has raised USD 1.5 mn in a seed-funding round under plans to expand its food waste product offering in cities in the Kingdom beyond Riyadh and Jeddah. (Statement)

France’s EDF launches carbon capture and storage subsidiary: France’s state-owned energy giant EDF has set up a new carbon offset subsidiary Oklima to develop carbon capture and storage (CCS) projects in both France and abroad, Reuters reports. One of Oklima’s projects will focus on carbon sequestration — the process of capturing and storing CO2 by planting trees, rewilding wetlands, or storing carbon underground in rocks, the newswire explains. The subsidiary has over 200 kilotonnes (kt) of carbon projects currently under development. EDF plans to certify the emissions reduced through its CCS projects with France’s low carbon label developed by the Ecological Ministry. The label takes into account both direct and indirect emissions.

REMEMBER- Not everyone is onboard the CCS train: Some climate experts warn that a focus on carbon capture will leave the door open for polluting industries to expand their fossil-fuel production and use by setting targets for CCS instead of fossil-fuel phase out.

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Amazon is buying 250k tons of carbon credits from Occidental’s Texas plant: Amazon is making its first investment in direct air capture technology by committing to purchase 250k tons of removal credits over 10 years, Reuters reports. Amazon will purchase the credits from a direct air capture (DAC) plant in Texas owned by 1PointFive — a wholly-owned subsidiary of US oil and gas company Occidental Petroleum. The plant is being developed by Occidental Petroleum’s subsidiary Oxy Low Carbon Ventures. Amazon will use the purchased credits to help meet its net zero carbon emissions by 2040 target. The price of the carbon credits were not disclosed, but developers of DAC technology have said that the cost is currently “in the mid-to-high-triple digits in dollars per metric ton,” according to Reuters. Last month, the US Department of Energy (DOE) announced it is providing over USD 1 bn in federal grants for projects in Texas and Louisiana aimed at removing over 2 mn metric tons of carbon emissions annually by scaling up DAC technology.

Occidental has some plans in our region too: Adnoc partnered with Occidental Petroleum last month to explore potential investments in carbon dioxide capture and storage (CCS) hubs in the UAE and US. Under the agreement, Adnoc and Occidental will evaluate the development of direct air capture (DAC) facilities in the UAE — including what could be the first megaton DAC project outside of the US — to potentially absorb as much as 1 mn tons of carbon dioxide annually.

REMEMBER- DAC is the least efficient amongst CCS methods: DAC technology refers to the removal of CO2 directly from the atmosphere at any location, as opposed to carbon capture, which involves absorbing CO2 at the point of emission. Capturing carbon from the air proved to be too energy intensive for it to play a significant role in reaching global climate goals, a future energy scenario modeled by Shell revealed earlier this year.