Making sense of Masdar

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A concept image of the Masdar/IRENA headquarters.

As the Middle East economies approach maturity, the demand for energy is growing faster than anywhere else in the world. And despite being blessed with hefty hydrocarbons deposits, it’s clear there will be restrictions to traditional power generation in the future, in terms of both cost and carbon emissions. Ironically, it is the region’s mineral deposits that are providing the bedrock for a shift in energy feedstocks. Investment in renewable energy is not cheap, but it is for the long term.

With that in mind, the Masdar concept was launched in 2006, with the aim of covering the full lifecycle of technology from research all the way to commercial deployment. Three years on, and the results are already impressive. But photographs of current progress on the site fail to tell half the story.

In the creation of a completely carbon-neutral city, attention to detail is paramount. Progress at the outset was slow, simply because none of the technology was available on the market. “Masdar City has a very simple code – the best possible environment, with the best possible quality of life for our residents, combined with the aim of being zero-carbon, zero-waste, non-fossil fuel, all totally powered by renewable energy,” says Nawal Al Hosany, associate director – sustainability at Masdar’s Property Development Unit. “It’s a challenge, but an interesting one. Such challenges create innovation, however. We never accept a business-as-usual solution, because it’s simply not going to work in that kind of environment.”

In effect, Masdar has been quietly changing the way that some technology providers have been doing business, and a partnership with the company is now starting to be seen as the ‘green’ seal of approval, simply due to the exacting nature of Masdar’s demands. But has the investment been worth it? “From the long-term perspective, I wouldn’t describe the cost as being expensive, and actually the prices of materials are coming down at the moment,” continues Al Hosany. “Even in a normal market economy, after a couple of years it makes sense. But in an oil economy, it is making sense already.”

The Abu Dhabi government has been a prime mover in the plan to bring Masdar to fruition. As a partnership between the government and the private sector, the city is being developed in line with the emirate’s attempts to diversify into not just an industrial economy but a knowledge-based one as well. Part of that investment is already paying off through the opening of the Masdar Institute of Science and Technology (MIST), which accepted its first intake of students in September.

While development continues apace just outside the UAE capital, Masdar has also been keen to add investment to overseas companies to assist with the development of sustainable technologies. The benefit of such investment not only means that the entity can take a lead in the roll-out of new products, but it also means that the rest of the world can benefit as well.

The major investment vehicle in terms of renewable energy has been the Masdar Clean Tech Fund, a US $250 million venture capital fund that was launched in association with Credit Suisse, Consensus Business Group and Siemens in November 2006. Around $190 million has already been spent in direct investments in clean tech companies, with the remainder earmarked for leading funds that focus on cutting-edge clean technology. The second Masdar Clean Tech Fund is expected soon.

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