Adnoc Eyes Masdar Stake in Mega Abu Dhabi Renewables Deal

(Bloomberg) -- Abu Dhabi's state oil company is considering an investment in renewable energy developer Masdar, in what could be one of the green power industry's largest deals this year, people familiar with the matter said.

Abu Dhabi National Oil Co. is in preliminary talks to acquire a significant minority stake in Masdar, according to the people, who asked not to be identified because the information is private. It's interested in the company's solar parks, wind farms, waste-to-energy projects and electric vehicle charging networks, the people said.

A transaction would help Adnoc, one of the world's biggest energy producers, diversify its portfolio into more carbon-neutral assets. Any deal would add to a consolidation drive in oil-rich Abu Dhabi, which has already seen mergers among some of its largest sovereign wealth funds and financial institutions.

State-owned utility Abu Dhabi National Energy Co., known as Taqa, had also previously studied a potential investment in Masdar, the people said.

Net-Zero Goal

Masdar, owned by Abu Dhabi sovereign fund Mubadala Investment Co., was started under the leadership of Sultan Al Jaber, who's now chief executive officer of Adnoc and climate envoy for the United Arab Emirates. Masdar has invested more than $7 billion since its founding in 2006 to become one of the largest clean energy developers in the world, with assets across the Middle East, Europe, Africa and the U.S.

No final decisions have been made, and there's no certainty Adnoc's discussions will lead to a deal, the people said. Representatives for Adnoc, Taqa and Mubadala declined to comment. A spokesperson for Masdar didn't immediately respond to a request for comment.

The UAE is considering setting a goal to reach net-zero carbon emissions by the middle of the century, part of a global push to limit temperature increases. Acquiring a Masdar stake would allow Adnoc, whose portfolio is mainly hydrocarbons, to funnel its fossil fuel profits into alternative energy sources.

Adnoc is still investing heavily in oil. The company is spending billions of dollars to boosts its crude production capacity by about a fifth to 5 million barrels a day by 2030.

Renewable power is the fastest-growing sector in global energy. In much of the world, it's now cheaper to build and run a new solar or wind farm than to run a power plant that burns fossil fuels. At the same time, the world is set to get an increasing share of energy from electricity. With drivers around the world switching to electric cars, a huge amount of new power supply will be needed to keep all those batteries charged.

Developers like Masdar are in high demand from companies that want to expand into renewable power. The UAE firm has several projects -- including in Iraq, Uzbekistan and Saudi Arabia -- designed to ensure its growth for years to come.

Taqa, controlled by Abu Dhabi sovereign wealth fund ADQ, also plans to cut its exposure to oil and natural gas, partly to attract more international investors. The company wants to boost the portion of its power produced from solar and wind to 30% over the next decade.