TAQA to Invest Over 20 billion to Expand UAE’s Water and Electricity Networks till 2030

Abu Dhabi National Energy Company (TAQA), one of the largest listed integrated utilities in Europe, the Middle East and Africa, on Monday said that in order to facilitate the development of future projects and associated infrastructure networks, it was planning to invest $20.42 billion until 2030 towards power and water capacity expansion and UAE-based transmission and distribution networks.

This figure includes the previously committed spend of AED 40 billion between 2021 and 2030 to grow its UAE transmission and distribution networks, the company said while announcing the financial results for the first nine months of 2023. The updated investment plan also targets a higher share of renewables within its portfolio by 2030.

Building upon its 2021 growth strategy, the revised growth targets see TAQA aiming for 150 gigawatts (GW) of gross power generation by 2030, up from the previous target of 50 GW, with around 65% of its generation capacity coming from renewable power sources.

Previously, TAQA had committed to a target of 30% but with its leading stake in Masdar’s renewable energy operations, the Group has upgraded this target. On a standalone basis, Masdar’s clean generation capacity is expected to reach 100 GW by 2030. In terms of net power generation capacity, TAQA is set to reach 50 GW by 2030, up from its current net capacity of 17 GW.

TAQA is also ramping up its growth targets for water generation with a plan to increase the Group’s water generation capacity to 1,300 MIGD, with two-thirds of this capacity coming from the highly efficient and low carbon reverse osmosis (RO) technology. Currently, TAQA’s desalination capacity sits at just over 1,180 MIGD.

Earnings

TAQA delivered a solid financial performance driven by strong and stable returns from its long-term contracted utilities business whilst it has remained focused on delivering its growth strategy.

The Group revenues were $10.75 billion, unchanged versus the prior-year period, as higher pass-through bulk supply tariffs and transmission use of system within the transmission and distribution segment offset a decline in oil and gas revenue.

The adjusted EBITDA was $4.17 billion, down 11%. This fall was led by a decline in contribution from the oil and gas segment on the back of lower realised oil and gas prices and reduced production.

However, the net income (TAQA’s share) was $4.08 billion, an increase of $2.31 billion, driven by a one-off gain of $2.94 billion recognised on the acquisition of a 5% shareholding in ADNOC Gas, in part offset by a one-off $330 million deferred tax liability associated with the introduction of UAE corporate income tax from 1 January 2024.

Net income excluding these one-off items was $1.47 billion, 17% lower than the prior period, mainly due to lower contribution from the oil and gas segment. The capital expenditure was $900 million, 34% higher than the prior year, as project execution picked up pace in the transmission and distribution segment. Free cash flow generation was $2.78 billion, 20% lower compared to the previous year. The decline was driven by lower contribution from the oil and gas segment. The gross debt was $16.8 billion, unchanged on the amount outstanding at the end of 2022.

Unwavering Commitments

TAQA’s CEO and Managing Director Jasim Husain Thabet said that TAQA remained unwavering in its commitment to creating long-term shareholder value, delivering a steady performance on the back of strong returns from the Group’s utility business despite headwinds caused by fluctuations in commodity prices and the enforced shutdown of our production in Iraq.

TAQA continued to deliver on its growth agenda with project execution across the transmission and distribution segment, further supported by a pick-up in regulated capital expenditure.

“During the third quarter of 2023, we reached financial close on a $2.2 billion sustainable water supply project, in collaboration with ADNOC. As a low- carbon power and water champion and in line with TAQA’s Green Finance Framework and ESG Strategy, we also completed the secondary listing of our dual-tranche bonds onto the ADX, including our first TAQA-issued green bond,” he said.