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UAE invests in UK’s struggling wind farm market

Offshore Wind
Offshore Wind

The United Arab Emirates has snapped up a 49pc stake in one of the UK’s largest wind farms despite soaring costs throwing the industry’s future into doubt.

Masdar, a company controlled by the Gulf state and chaired by the president of the Cop28 climate talks, has bought a minority stake in the East Anglia Three offshore wind farm from Spanish developer Iberdrola.

It is the second such deal struck by the UAE in as many weeks. State-backed Masdar bought 49pc of the £11bn Dogger Bank South project in the North Sea last week. That project is built by German-owned RWE.

Sales of UK wind farms are being propelled by the disastrous finances of many UK projects after they entered into historical deals to sell their electricity at prices that no longer make sense.

Companies accepted so-called strike prices of less than £40 per megawatt hour (MWh) in deals made a few years ago. Strike prices are the maximum price that the Government guarantees to pay for the power produced, meaning revenues are effectively capped.

Iberdrola, the largest utility in Europe and one of the two largest globally, agreed a strike price of £37.35 for East Anglia Three in early 2022.

However, the sector has since been hit by rampant inflation that has driven up costs by more than 40pc. Those who accepted the older, lower prices risk making big losses.

The Government has now been forced to offer new wind farm developers a strike price of £73, signifying the scale of the financial challenges for those locked into lower priced deals.

Masdar’s investment reinforces the growing overseas ownership of the UK’s key renewable energy assets. The UAE company’s investment dates back a decade when, with partners, it launched the 630MW London Array offshore wind farm, which was the world’s largest at the time.

Its Global Offshore Wind Division last year acquired London-based Arlington Energy, the battery energy storage system developer that has put over 170MW of assets into operation.

Off the coast of Scotland, Masdar has also developed the world’s first floating offshore wind farm, the 30MW Hywind project.

Masdar is chaired by Dr Sultan Al-Jaber, the UAE Minister of Industry and Advanced Technology, who is currently chairing the Cop28 talks in Dubai. Dr Al-Jabar is also the chairman of International Media Investments (IMI), the UAE investment vehicle financing a bid for The Telegraph.

Masdar’s owners include two Emirati oil companies – the Abu Dhabi National Oil Company (ADNOC) and the Abu Dhabi National Energy Company (TAQA). Both also operate oil and gas platforms in the North Sea.

Dr Jaber said: “Masdar and Iberdrola are advancing renewables in Europe and around the world.”

Iberdrola’s executive chairman, Ignacio Galán, said: “By combining our renewables experience and financial strength with those of Masdar, we can deliver more secure, competitive and clean energy, quicker.”