GCC investment spree continues as Mubadala buys stakes in German and US wind outfits

Good morning, wonderful people — and welcome to another busy news day as we prepare to slide into the weekend across most of MENA.

THE BIG CLIMATE STORY- UAE’s Mubadala is jumping on the GCC renewables acquisition spree: The Emirati sovereign wealth fund acquired undisclosed stakes in German offshore wind developer Skyborn Renewables and US offshore project Bluepoint Wind yesterday. Neither party put a price tag on the value of the transactions.

ALSO- Qatar inaugurated the world’s largest electric bus depot ahead of the FIFA World Cup, which runs 20 November through 18 December.

---

SIGN OF THE TIMES- BP is acquiring US-based renewable natural gas (RNG) producer Archaea Energy for some USD 4.1 bn in equity and debt, the two firms announced (here and here). BP will pay USD 26.00 per Archaea share — a 38% premium to Archaea’s average share price over the past month. The move comes as BP looks to accelerate the growth of its biofuels business as it tries to diversify away from fossil fuels. The two want to close the transaction by the end of this year.

SOUND SMART- RNG is upgraded biogas — gas produced from as organic matter decays. It can be captured from garbage dumps, wastewater treatment plants, food production, food waste, and animal popp, among other sources. Go deeper here or here to learn more. Burning it still produces CO2, but in most cases RNG plants can be built in a way that makes the facilities and the RNG they produce net negative.

*** Take our EV survey: Are you an ex-petrolhead shopping around for your first electric vehicle? EV-curious and wondering what all the fuss is about? Or are you not ready to say goodbye to that sweet smell of benzene as you wait at the gas station?

*** We want to hear from you: We’re taking the pulse on how the region feels about MENA’s EV transition. Take a few minutes to fill out our short survey. We’ll be back with the results in a couple of weeks.

COUNTDOWN TO COP (17 days to go)-

Some 150 electric buses are coming to COP, courtesy of GM and Mansour: General Motors (GM) and Al Mansour Automotive signed an MoU with Egypt’s Foreign Ministry to provide 150 EVs to transport COP27 participants around Sharm El Sheikh. The two are COP27’s exclusive mobility partners, they said in a statement (pdf).

---

THE BIG CLIMATE STORY OUTSIDE THE REGION-

US President Joe Biden has doled out USD 2.8 bn in grants to spur electric vehicle manufacturing and domestic mineral production, according to a White House statement yesterday. Twenty manufacturing and processing companies will receive the grants to domestically extract and process lithium, graphite and nickel — in short, minerals needed to produce EV batteries. The projects of the selected companies will “develop enough lithium to supply over 2 mn electric vehicles annually”, the statement reads. (Reuters | CNBC)

Shocker: Global climate goals aren’t cutting it. The nationally determined contributions (NDCs) of the Paris Agreement signatories need to be six times as ambitious than they were as of September, according to a report (pdf) by the World Resources Institute published Wednesday. The signatories’ current pledges would reduce global greenhouse gas emissions by only 7% from 2019 by 2030. That figure needs to hit 43% to align with the Paris Agreement, which aims to curb global temperature increases at 1.5°C. (Bloomberg | Reuters)

One bright spot: The EU is making strides on its renewables goals. The EU generated a record 12% of its energy needs from solar and 13% from wind energy between May and August this year, saving the bloc an estimated EUR 99 bn, the European Commission said in its 2022 State of the Energy Union report (pdf). The bloc also increased the share of renewables in its electricity mix to 43% in 2Q 2022, compared to 36% from fossil fuels.

2022 will likely be a record year for the continent’s PV market, according to the report. Hydroelectricity is doing less well, with its contribution to the electricity mix falling from 14% to 11% over the summer of this year compared to previous years “due to drought-related low water levels in rivers and reservoirs.”

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 at 4am 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.

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

***

---

THE DANGER ZONE- Remember BP’s underreported flaring in Iraq? The country’s environment minister says it’s driving up cancer in the country. Iraqi Environment Minister Jassem Al Falahi admitted that gas flaring is linked to the country’s surging cancer rates in BBC’s Hardtalk program on Monday. A leaked Iraqi government report seen by the BBC “blames air pollution for a 20% rise in cancer in Basra between 2015 and 2018,” the newswire noted last month.

What’s flare gas? It’s excess gas — primarily consisting of methane — that is emitted and burnt during oil production. It’s common in Iraq, a country without the resources to process excess gas in flare gas-to-energy projects.

Want more on MENA’s flare gas problem? Check out our recent explainer.

---

CIRCLE YOUR CALENDAR-

The International Exhibition of Renewable Energies Clean Energies and Sustainable Development will run from 24-26 October in Oran, Algeria. The event will focus on the role of startups in the green transition and the bankability of renewable energy projects.

Spanish renewables firms to visit Morocco: The Spanish Institute for Foreign Trade (ICEX) is accompanying a delegation of 10 Spanish renewable energy companies to Rabat on Tuesday, 25 October, ICEX said last week. On the Moroccan side, renewable energy companies Masen, Institut de Recherche en Energie Solaire et Energies Nouvelles (Iresen), Fenelec, and Gaia Energy will be among those welcoming ICEX and Spanish stakeholders. The event aims to establish links between the countries’ private and public renewable energy players.

ADIPEC will run from 31 October to 1 November in Abu Dhabi, UAE. Some 40 ministers from around the world, including eight from MENA, will attend the event. Those include energy and oil ministers from the UAE, Kuwait, Bahrain and Egypt. Discussions will partly focus on the transition toward carbon neutrality, a statement picked up by Zawya details. You can register as an exhibitor here, and as an attendee here.

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

UAE’s Mubadala goes big on wind energy: Abu Dhabi-based sovereign wealth fund Mubadala Investment Company acquired stakes in German offshore wind developer Skyborn Renewables and US offshore project Bluepoint Wind, state news agency WAM reported yesterday. Neither party put a price tag on the transactions or would say how many Mubadala bought.

From the US to Europe, the GCC investment in western green assets has become a trend in recent months. Among the recent examples: Kuwait’s Agility Ventures — along with US VC firm Fifth Wall — poured USD 40 mn in US-based EV charging station company Loop Global. Similarly, Abdul Latif Jameel Energy’s subsidiary FRV invested in German solar-as-a-service provider Ecoligo. Qatar Investment Authority (QIA) led a EUR 250 mn series D investment round for Paris-based biotech company Innovafeed, and also completed a landmark EUR 2.4 bn acquisition in major German utilities provider RWE in a debt-to-equity swap.

This isn’t the SWF’s first renewables acquisition this year: Mubadala, has assets under management of about USD 284 bn, was part of a BlackRock-led consortium that agreed to invest USD 525 mn in Indian renewable energy firm Tata Power Renewables in April. It also linked up with TAQA and Adnoc to announce in June the purchase of a stake in Emirati renewables player Masdar.

Background to the Mubadala buy: US-based infrastructure investment fund Global Infrastructure Partners (GIP) held 100% of Skyborn Renewables, which it had acquired (pdf) in September. Bluepoint Wind is also partially owned by GIP, according to WAM.

What is Skyborn Renewables? Skyborn, formerly known as WPD Offshore prior to GIP’s acquisition, has wind energy projects generating some 7 GW of clean energy to date, and 30 GW of offshore projects in the pipeline. The company has a considerable footing in Europe and the Asia Pacific markets, with projects in countries including Germany, France and Taiwan.

What is Bluepoint Wind? Bluepoint Wind is a 1.7 GW offshore wind energy project. Located off the coast of New Jersey and New York, the project is partially owned by offshore wind energy company Ocean Winds East, a JV between Spanish-headquartered renewable energy company EDP Renewables, Engie, and GIP.

Mubadala’s sustainability-driven assets in MENA include: Taweelah Reverse Osmosis Water Generation Plant, Abu Dhabi-based low-carbon research and development urban district Masdar City, and the Naqa’a Desalination Company.

Qatar inaugurated the world’s largest electric bus depot on Tuesday as it gears up to host the World Cup next month, according to the Qatar News Agency. The 400 sqkm Lusail bus terminal has capacity for nearly 500 buses and is the latest addition to the Transport Ministry’s public bus infrastructure program, which is being rolled out to provide greener transportation during the World Cup.

Officially the world’s largest: The terminal received a Guinness World Records certificate for being the world’s largest electric bus depot, Qatari media reported yesterday.

Almost 250 buses can charge at the same time: The depot has 248 electric charging stations for e-buses, as well as 24 stations for bus rapid transit (BRT) e-buses.

It appears to be the first solar-powered bus depot in MENA: The buildings will be powered through 4 MW of solar power generated every day through some 11k solar PV panels, making it the first solar-powered bus depot in the region, Qatar’s Transport Minister Jassim Al Sulaiti said. The facility won’t be fully powered by the sun’s rays though, with the ministry saying last year that a power station will also provide conventional energy.

This is one part of a wider bus electrification program: Under the government’s public bus infrastructure program, eight bus stations, four depots and more than 650 charging points are being set up, in part to support transportation during the World Cup. The program, which will eventually see some 1k electric buses in use across the country, is being rolled out by Swiss electrical equipment manufacturer ABB, which secured the contract to design, supply, test and commission charging infrastructure in 2021.

EU signs “first of its kind” green partnership agreement with Morocco: Morocco and the European Union have agreed to establish a “green partnership,” a move that will see the two sides strengthen cooperation on renewable energy and clean technology. The agreement was signed by European Commission deputy head Frans Timmermans and Morocco’s Foreign Minister Nasser Bourita in Rabat on Tuesday, and is the first of its kind that the EU has agreed with a partner country, the EU Commission said.

What we know so far: There are few details about what the partnership will entail, but AFP quoted the MoU as saying it will “foster the transition to a decarbonised industry through investment in green technology, renewable energy production, sustainable mobility, and clean production in industry.” It will also include developing joint projects in clean energy, green finance and a circular economy, as well as sharing best practices, Timmermans was quoted in a 2021 EU statement as saying.

The EU is desperate to fulfill its energy needs through MENA: The EU has been scrambling to find new energy supplies from the MENA region to replace Russian oil and gas whose supplies have been heavily curbed on the back of the war in Ukraine. The bloc has been looking to close agreements with gas exporters in the Eastern Mediterranean, the Gulf and North Africa as it faces the loss of most of the 155 bn cubic meters of Russian gas it imported last year as well as Russian crude which it will begin to embargo in December.

And Morocco's ambitious renewables game aims to export energy to Europe: Morocco plans to generate 10.5 GW of solar and wind energy from just its Xlinks renewable energy project by 2030. This far outstrips regional rival Egypt’s Benban solar park’s 1.8 GW. When completed, the project is expected to supply 8% of the UK’s electricity needs by exporting 3.6 GW of electricity.

It will also help the EU import natural gas from Nigeria: Morocco, Nigeria and Ecowas last month signed an MoU to establish a USD 25 bn natural gas pipeline linking the two countries that will enable Nigeria to export gas to West Africa and Western Europe.

The agreement has been in the works for over a year: Morocco and the EU announced their intention to set up a green partnership in 2021.

It expands the approach of the European Green Pact: “The Green Partnership with Morocco will be one of the EU’s first initiatives with a partner country that will aim to advance the external dimension of the European Green [Pact] through action on the ground,” noted the June 2021 EU statement. The pact is a set of policy initiatives by the European Commission that aims — among other things — to make the EU climate neutral in 2050.

My name is Aly El Tayeb (LinkedIn) and I’m the CEO and co-founder of Egypt’s Shift EV.

After completing a dual degree at MIT I worked at US-based tech company Corning before joining grid scale storage battery startup Form Energy. I worked there for three years alongside a super star team that included the former vice president of energy at Tesla. There, I fell in love with building companies from scratch. Coupled with my deep interest in climate change, I partnered up with my co-founder Amr Helmy (Linkedin) to build Shift EV.

We built Shift EV to address the electric vehicle gap in Egypt and emerging markets.

What we do is convert delivery fleets into EVs in a matter of days — at no up-front cost. We developed a retrofitting process utilizing locally manufactured batteries that can turn any conventional vehicle into an EV.

It takes less than a few hours per vehicle to do the conversion. We take an assembly-line approach to convert fleets of minivans and tricycles and will soon do pickup trucks and microbuses— which are both essential to Egypt’s last-mile delivery and passenger fleets — into EVs. The conversion time goes down with every production cycle by 20-30%. I think we can easily get below an hour per vehicle. That goal is within reach.

Pushing down carbon emissions: When you switch from gasoline to electricity for a minivan, you offset 0.3 kilograms of CO2 per km. Our vehicles have traveled around 200k kms, and expect to cover between 750k-1 mn kilometers by the end of 2022. We also limit carbon emissions by retrofitting cars instead of manufacturing vehicles from scratch. Steel chassis produce emissions at an average of nearly 18 tonnes of carbon dioxide per vehicle. By retrofitting vehicles you give them a second life and extend their time on the road while eliminating emissions.

We raised a total of USD 9 mn during our series A funding round. The round was funded by Union Square Ventures, Algebra Ventures, Wamda, and the Oman Technology Fund.

We used the funds to scale our production and deploy more vehicles. In 4Q2022, we’re going into large scale serial production. For anyone who works in manufacturing automotives, they know that production ramp is when the magic really happens.

Future funding plans: We’re probably going to be raising again by the end of this year or the beginning of 2023 to expand our retrofitting rate to thousands of vehicles per year. Future funding will fuel our expansion plans and help us make inroads in other countries. We want to show that electric retrofitting doesn’t just work for one country or one chassis type.

Lobbying the gov’t and financial institutions: In the near term, we want to launch the retrofitting industry and turn it into an industry with full regulatory framework and end to end financing. We’re operationalizing with our financial partners a model similar to the power purchase agreement (PPA) model in renewable power, where customers pay off savings and not upfront. We’re currently doing this with our customers and partner financial institutions. We’re also focused on upping the amount of kilometers covered by the retrofitted vehicles we deploy. We worked with the Industry and Trade Ministry to develop a new industrial code for retrofitting technology because it’s separate from traditional automotive activity and we’ve been issued the first industrial register. The Interior Ministry also set up a new process to license electro-fitted vehicles which is a massive milestone for the industry and for us as a company.

Expansion plans: In the medium term, we will be focusing on scaling to deploy thousands of vehicles. We’re also planning on expanding into a couple of African countries. We think that’s a huge potential and relatively simple from a customer and manufacturing standpoint given the shared customer base and current trade treaties – most of our manufacturing is planned in Egypt. If we scale to the tens of thousands, I think we’re going to open the path accelerate the transition to electric mobility by decades.

Long term goals: As utilization of electric vehicles continues to grow, there’s going to be a need to start replacing batteries on existing vehicles. We want to make batteries a subscription for every single EV. Our long term strategy is to keep EVs on the road longer. EVs are often retired after 10 years of operation due to batteries’ loss of range. What we want to do is replace these faulty batteries to make it easy for the consumer to continue operating the vehicle with a very low cost.

To relax and switch off from work, I travel, build stuff, and connect with friends and family. You’d be surprised how little extra time one gets during the production ramp [laughs], but when I do have some time, I love to travel. I’m between the US and Cairo. I spend a lot of time in New York. Travelling enables me to see things in different ways and stay immersed in two cultures that I care deeply about.

I’m a huge nerd; the last great thing I read was Dune by Frank Herbert. I recognize that reading Dune at my age is a little bit too late, but I was blown away. I don’t think I have had a book in my hand that I couldn’t leave like Dune for a while. There are seven volumes. It gets weird towards the end. So, I wouldn’t recommend the last couple of volumes, but the first three volumes are so spot on and so interesting. I think I read them in like two or three days [laughs.]

KUDOS- Guinness World Records has confirmed Dubai Electricity and Water Authority’s (DEWA) desalination plant as the largest in the world, the authority said on Sunday. The solar-powered Jebel Ali complex has a production capacity of 2.2 mn cubic meters per day. Upon its completion in 2025, the project will have the capacity to store almost 27.3 mn liters of water from underground basins, “making it the largest emergency potable water storage in the world.”

Egypt’s Environment Ministry has issued a tender for two private waste management facilities in Qena in cooperation with the European Commission, the German Development Bank (KFW), and the Swiss government, the ministry said in a statement Tuesday. The tenders are for a sanitary landfill and a waste treatment facility.

ALSO-The UAE and Romania signed an MoU on climate change mitigation and another on food security, UAE state media outlet WAM announced in a statement on Tuesday.

Pimp my ride, the sustainable, Egyptian way: Unhappy with surging fuel prices, Egyptian teacher Ali Al Saeed decided to convert his 1985 Fiat into an EV, Reuters reported on Monday. Despite the hefty cost of the electric battery (nearly six times the USD 510 car’s price), the investment was worth it, Al Saeed says. He used to fuel up nearly every other day — a hefty financial burden that soon proved to be unsustainable (in more ways than one). Thanks to his new investment, charging his car costs him around USD 0.50 for almost every 100 km traveled.

Al Saeed may prove to be an early trendsetter for EVs in Egypt — the country’s House of Representatives earlier this week approved a bill that will push green vehicle assembly and adoption.