Masdar's profitability shows momentum in the Gulf energy transition

The UAE’s leading renewable energy company has demonstrated that commercially viable clean energy ventures can emerge from state-backed initiatives when policy, market conditions, and execution align

AFP

A model of a solar farm at the Masdar City pavilion at the World Energy Summit, Abu Dhabi, January 18, 2012.

Masdar's profitability shows momentum in the Gulf energy transition

Neil Quilliam

last update on 02 Sep 2025

Masdar’s pivot to profitability in 2024 marks a notable development in the Arabian Gulf’s energy transition. The UAE’s leading renewable energy company has demonstrated that commercially viable clean energy ventures can emerge from state-backed initiatives when policy, market conditions, and execution align.

Established in 2006, Masdar was conceived as part of the UAE’s broader effort to diversify its energy mix and position itself as a leader in climate action. For much of its existence, the company operated under a subsidised framework, with profitability taking a back seat to ambition and visibility.

That changed in 2024 when Masdar reported a net profit of AED 412mn ($112mn), reversing a loss of AED 45mn ($12mn) the previous year. The turnaround was driven by disciplined cost management, strategic procurement, and the operational maturity of several large-scale projects.

A reduction in direct costs played a central role in Masdar’s improved financial performance. Advances in solar and wind technologies, coupled with efficiencies across global supply chains, have lowered the cost of deploying renewable infrastructure.

Masdar responded by tightening its cost base and securing long-term power purchase agreements that stabilised revenue flows. These agreements, often supported by sovereign guarantees or structured through multilateral frameworks, provided the financial predictability required to transition from a subsidised model to one that is commercially sustainable.

Masdar’s profitability coincided with its expansion into emerging markets. Over the past two years, the company has extended its footprint across Central Asia, Sub-Saharan Africa, and Southeast Asia. These regions offer favourable regulatory environments and lower project costs, creating opportunities for growth and influence. For example, in Uzbekistan, Masdar is developing a 500 MW wind farm in Zarafshan—Central Asia’s largest to date— with a planned investment of over $600mn.

The timing of Masdar's profitability is instructive. As the UAE prepares for COP30, it is keen to demonstrate progress in its energy transition.

In Azerbaijan, it constructed the 230 MW Garadagh solar PV plant, expected to power 110,000 homes and reduce emissions by 200,000 tonnes annually. In Angola, Masdar signed agreements to develop 2 GW of renewable energy capacity, including solar and hydro projects aimed at supporting rural electrification. In Indonesia, it partnered to build the 145 MW Cirata floating solar plant, the largest in Southeast Asia, providing clean electricity to nearly 50,000 households.

In parallel, Masdar is developing the $6bn Azeezah plant in the UAE—the first integrated facility solar PV and battery energy storage system (BESS) project, designed to deliver clean energy with grid stability and peak demand management—scheduled to come online in 2027.

Why it matters

The timing of Masdar's profitability is instructive. As the UAE prepares for COP30, it is keen to demonstrate progress in its energy transition. Masdar's performance provides a case study in how countries can use state-backed entities to drive clean energy deployment while maintaining commercial viability.

The UAE's regulatory environment has played a critical role in enabling Masdar's growth. Clear policies on tariffs, grid access, and investment protection have provided the company with the stability needed to pursue long-term projects. In addition, the UAE's diplomatic posture has facilitated partnerships and project opportunities abroad, reinforcing Masdar's position in global clean energy markets.

If other countries in the MENA wish to emulate Masdar's success, then they will need to overcome several challenges. The energy landscape across the Middle East remains shaped by long-standing subsidies, which continue to influence market behaviour and affect the pace at which renewables are adopted.

Electricity tariffs in some states remain artificially low, discouraging investment in energy efficiency and distributed generation. Grid infrastructure is often outdated and lacks the flexibility required to accommodate intermittent sources, such as solar and wind. These technical constraints are often compounded by institutional inertia, where legacy systems and vested interests resist reform.

Masdar's profitability coincided with its expansion into emerging markets across Central Asia, Sub-Saharan Africa, and Southeast Asia

There is also a question about scalability. While Masdar has succeeded in transitioning to a commercially viable model, other countries wishing to replicate its success will need to do more than deploy well-placed capital. Scalability will depend on the ability of governments to create environments that support innovation and protect investor interests, whilst developing sufficient local capacity and reducing energy costs for the end consumer. Not all countries in the region can start from the same vantage point as the UAE and will, therefore, need to plan for the long term.

A regional blueprint

The MENA region's energy transition is being shaped by a combination of factors: domestic priorities, technological investments and developments, and a bid by Gulf Arab states to lead the global energy transition. In fact, Saudi Arabia and the UAE are leaders in their own right.

Masdar's experience offers useful lessons for how countries can manage their energy transitions. Strategic patience, operational discipline, and sustained global engagement most certainly need to play a central role. However, it is also important to bear in mind that the energy transition not only presents a policy challenge for all countries in moving away from hydrocarbon-based economies but also offers them new commercial opportunities. Indeed, Masdar has shown clearly that managing the energy transition and pursuing profitability are not mutually exclusive.

As COP30 approaches, Masdar's performance illustrates what can be achieved when ambition is backed by a clear vision, a coherent set of policies, and the will to see projects through to fruition. In the energy and climate space, Masdar serves as a benchmark for what is achievable and a reminder of the work that remains.

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