Is Qatar eyeing a renewables revolution?

This month, football fans will turn their attention to Qatar as the Middle Eastern state hosts the World Cup.

FIFA's decision to host the World Cup in a sweltering country the size of Yorkshire has attracted a huge amount of discussion since it was picked 12 years ago. But, for Qatar, the timing could hardly be better.

Countries worldwide are in the midst of an energy supply crisis, driven by a return of economic activity after Covid-19 and Russia’s invasion of Ukraine. Hosting the World Cup will give fossil-fuel-rich Qatar, which has the world’s third-largest proven natural gas reserves and thirteenth-largest oil reserves, the chance to promote itself on the world stage. When it isn't fielding tough questions about the rights of workers and the LGBT community, that is.

The World Cup also gives Qatar the opportunity to tell those in the energy industry what it is doing in renewables, both inside and outside its borders.

Overseas investment

The $450bn Qatar Investment Authority sovereign wealth fund last month ramped up its efforts to be seen as a major investor in the energy transition.

On 1st October, it announced it had invested €2.4bn in RWE to support the German utility’s ‘Growing Green’ strategy. The deal was for just under 10% of RWE’s share capital and the funds supported RWE’s acquisition of the renewable energy arm of US utility Con Edison.

Mansoor bin Ebrahim Al-Mahmoud, CEO of QIA, said that is showed QIA was “actively investing in companies that can have a positive impact on society and shape the future of sustainability by making energy transition a reality”.

The timing coincides nicely with the World Cup, but this is not the QIA’s first major investment in or alongside an overseas renewables player.

For example, in January 2021, QIA set up a development vehicle with Italian utility Enel targeted at investing in renewables projects in sub-Saharan Africa; and it also invested $125m in energy storage company Fluence, which is a joint venture between Siemens and AES, in late 2020.

That is not to say renewables is QIA’s only priority in its corporate M&A deals: it bought 5% of the share capital of car maker Porsche in September.

But it is fair to say that QIA will look to invest in sectors it sees as attractive where it can partner with established names, which may be utilities like RWE and Enel or industrial players like Siemens or Porsche.

The Qatar Investment Promotion Agency has taken a similar approach by linking up with Iberdrola in May to jointly work on innovative solutions to challenges, including digitalisation in smart grids, renewables integration, and energy efficiency.

It is also instructive to look at the approach of the Abu Dhabi sovereign wealth fund Mubadala, which owns Masdar Clean Energy. Last week, Masdar acquired UK energy storage developer Arlington Energy, and Mubadala bought offshore wind newcomer Skyborn Renewables.

QIA and Mubadala / Masdar are different firms pursuing their own strategies, so we should not read too much into the similarities. Even so, this is a good reminder of the attraction to Middle Eastern sovereign wealth investors of backing firms with large development pipelines and teams of skilled people, rather than individual flagship assets.

Inward investment

The other aspect of Qatar’s renewable energy plans is within its own borders.

The country has long been reliant on cheap natural gas to power its electricity mix, but it has committed to steps to achieve net zero. We should caveat this by pointing out that it only has a population of 2.9million, and so any strides it can make towards net zero will have less impact inside its borders than what it can do outside.

The country is aiming to double renewables capacity by 2024. This just means doubling solar to 1.6GW by completing two new projects, and a sunny Middle Eastern country such as Qatar could be doing much more. This is a stepping stone on its ambition to achieve 2GW-4GW installed renewables by 2030.

But perhaps there is more to come in the power-to-X sector.

For example, we have seen QatarEnergy commit to build a $1bn plant to make blue ammonia; and it last month announced it was taking full control of solar company Siraj Energy by buying the 49% that it did not previously own from Qatar Electricity & Water Company.

Qatar appears to be taking steps to shift its energy mix and investments away from its total reliance on fossil fuels. But it will take more to convince us of its long-term green plans, after the World Cup media circus has moved on.