The United Kingdom's massive push into renewable energy will draw heavily on investments from the UAE and other Gulf countries, said the country's energy minister in Abu Dhabi yesterday.
Britain is committed to reducing greenhouse gas emissions by 34 per cent by 2020, and the transformation of the energy sector will cost about £200bn over the next decade, according to Greg Barker, the minister of state for energy and climate change.
The requisite green energy capacity will be built by the private sector, and parliament will this week pass an energy bill aimed at encouraging investment.
"The latest energy law [is] going to substantially expand the number of investments coming to Britain, of which we expect a very substantial number to be from the Gulf," said Mr Barker on the eve of the World Future Energy Summit.
The bulk of the UK's renewable energy will be drawn from wind farms, and Abu Dhabi has already bought into its burgeoning wind sector. Masdar, the government-owned investor, owns a stake in the London Array, the world's largest offshore wind farm.
"The London Array is just the beginning," said Mr Barker. "I'm really delighted at the way in which the investment relationship between a number of actors from Abu Dhabi and the UK is developing."
After a 17-month construction period, the array's wind turbines are starting to feed electricity into the grid, and Masdar's appetite for investing abroad remains undiminished.
"The UAE is investing in the future of energy by working with investment partners and governments, like the United Kingdom, to build sophisticated, large-scale renewable energy projects," Sultan Al Jaber, Masdar's chief executive, said yesterday.
The new energy bill will guarantee investors a minimum return from their power projects by setting generous electricity prices paid for clean energy. Electricity providers will be able to add billions to consumer bills to meet the expense.
Other than cutting carbon emissions, the UK's energy plans are intended to reduce dependence on fossil fuel imports. Britain relies heavily on natural gas from abroad, and this has prompted the government to give the green light to domestic shale gas extraction.
The production of gas found in deep-lying shale rock formation has resulted in a supply surge in the United States, and shale exploration is under way in the UK.
"We certainly want to make sure that we fully exploit all of our domestic energy sources, whether they'd be renewables or fossil fuels," said Mr Barker.
The UAE's investments in the UK's energy sector are not restricted to renewables, and Abu Dhabi National Energy Company, known as Taqa, recently added to its oil production base in the British North Sea by striking a $1bn deal with BP.
Taqa is one of the Abu Dhabi investors looking for opportunities abroad, and Abu Dhabi and Ankara this month signed an agreement to enable a multibillion dollar deal to build power plants in Turkey.
"Abu Dhabi has recognised that they are an energy economy, that they are not just a fossil fuel producer. They have a much more 21st-century take on the global energy economy, and are determined to be a participant in every sector of that," said Mr Barker.
Abu Dhabi's engagement in the UK's energy sector comes after decades of activity by UK companies in the UAE's oil and gasfields. Shell and BP are both pumping crude from the Abu Dhabi onshore reservoirs, and are keen to continue producing in the emirate after the current concession is renewed next year.
"It's a two-way stream as far as investments are concerned," said the minister.