Abu Dhabi Company Reinvents Itself

Abu Dhabi’s Taqa is moving swiftly to reinvent itself as a utility-focused company while moving away from fossil fuels. It serves as a useful example of a company making somewhat of a dramatic pivot in its business model rather than pursuing more incremental changes. Set up in 2005 at a time of rising oil prices, Abu Dhabi stock market-listed Taqa quickly began to expand across the globe, acquiring oil and gas assets in Canada, the US, the UK, Netherlands and Asia, along with power and water assets in Africa. But the spending spree left the company with a $24 billion debt pile 10 years later, forcing it to restructure and sell some oil assets. More recently, Taqa’s strategy has focused on becoming a utility-focused player, viewing energy transition pressures as an opportunity for further growth. “Our future is as a utility business with a large, regulated asset base and long-term contracted generation plants at its core,” Taqa CEO Jasim Husain Thabet tells Energy Intelligence. Thabet was appointed CEO a year ago when state-owned Abu Dhabi Power Corp. (ADPower) and Taqa merged to create one of the largest utilities in the wider region, with total assets worth around $51 billion at the end of 2020. As part of the deal, ADPower transferred most of its power and water generation, transmission and distribution assets to Taqa in return for shares (EIF Feb.5'20). Earlier this year, Taqa unveiled its 2030 sustainability strategy that involves curbing its exposure to oil and gas while expanding in power generation, seawater desalination and renewable energies (IOD Mar.25'21). The rationale is simple, Thabet said: “In the United Arab Emirates and around the world, we are witnessing the energy transition and decarbonization of how we live and operate." Utility-Focused Growth Taqa is developing the world’s largest solar power project, the 2 gigawatt Al-Dhafra solar photovoltaic (PV) scheme in Abu Dhabi, as part of its broader plans to build out its renewables capacity. Late last year, the utility and its partners -- Abu Dhabi’s Masdar, France’s EDF and China’s JinkoPower -- reached financial close on the project (NE Dec.24'20). Presently, Taqa has 23 GW of mostly gas-fired power generation capacity and 913 million gallons per day of water desalination capacity, and its oil and gas business produced 118 million barrels of oil equivalent per day in 2020. Taqa is now “focused on using this asset base and cash flow to support our growth strategy, which is focused on our utility business in the UAE and internationally," Thabet said. Energy Transition Is 'Good Business' Energy transition and environmental, social and governance issues have become focus areas under its 2030 strategy -- in line with Abu Dhabi’s broader clean energy ambitions. But reducing emissions while meeting demand, of course, poses obstacles. “The challenge is that energy transition requires time and pragmatism, as alongside our responsibility to reduce emissions is also the responsibility to continue to provide the energy and water people need,” Thabet said. Even with an investment push into more renewables and energy-efficient water production, Taqa sees conventional sources still playing an important role for some time. This is prompting Taqa to place a greater focus on optimization to ensure existing operations are as efficient and clean as possible, Thabet added. In this vein, the company’s first sustainability report, to be published later this year, will help the company identify targets to reduce greenhouse gas emissions, among other related topics. Portfolio Growth Plans Going forward, Taqa is committed to growing its power generation portfolio from 18 GW to 30 GW in the UAE and adding up to 15 GW globally. Renewable energy and solar PV in particular are projected to comprise 30% of the company’s portfolio by 2030, from 5% currently. Thabet also recognizes the importance of demand-side management, recently highlighted in the much-discussed International Energy Agency Net Zero scenario (NE Jun.10'21). “We plan to grow new services in this space to enable the public and private entities to realize energy efficiencies,” he said. To support its plans in the Abu Dhabi home market, Taqa has entered partnerships with key state players such as Abu Dhabi National Oil Co. and offtaker Emirates Water and Electricity Co. to “bring together the strengths and expertise across the value chain to maximize growth and potential,” Thabet said. Yousra Samaha, Dubai