Business opportunities within the UAE’s renewable energy industry | PRO Partner Group
Like several Middle Eastern countries, the UAE has traditionally relied on its oil industry to sustain its economic growth and development. With increasing pressures to reduce global dependence on fossil fuels, protect the environment, and pursue climate-change friendly policies, the UAE has positioned itself to become an early adopter of renewable energy sources and technology.
In recent years, the Emirati government has focused on the promotion and transition to renewable energy by creating opportunities for additional investment both from foreigners and Emirati nationals. These policies are expected to provide tremendous growth to the UAE and surrounding region.
How is the UAE adapting to renewable energy demands?
The UAE is home to over 9 million people and receives over 11 million visitors annually. As the nation starts to shift away from oil as a primary energy source, the demand for energy is expected to continue to grow over the next two decades. The city of Dubai alone is projected to double its population as early as 2040.
In 2015, the government introduced the UAE Green Agenda, designed to facilitate the transition of energy sources while keeping up with the increasing demand. The Green Agenda, which establishes green initiatives through the year 2030, has five key strategic elements:
- Building a competitive knowledge economy focused on innovation and diversification.
- Social development and quality of life through better infrastructure and workforce development.
- Sustainability and the preservation of natural resources.
- Clean energy and climate action.
- Promoting a green economy through sustainable resource use and efficient transportation.
The UAE has lofty aspirations for its renewable energy future including increasing clean energy production by 30% by the year 2030 and 75% of all energy coming from renewable sources by the year 2050. To date, the Emirati government has spent tens of billions of dollars on accomplishing its sustainability and renewable energy goals. Some notable projects include:
- USD1.7 billion spent on building Masdar City in Abu Dhabi; a city powered by a zero-waste policy.
- Construction of the Mohammed bin Rashid Al Maktoum Solar Park, one of the largest renewable projects in the world, which will generate 24 million kilowatt hours of clean solar power each year.
- USD27 billion invested in the creation of Dubai’s Green Zone, a free zone specifically designed for R&D companies and CleanTech start-ups.
Opportunities for companies to work in this growing market
The International Renewable Energy Agency (IRENA) is optimistic about the growth opportunities in the UAE. They believe that renewable energy could generate approximately 100,000 additional jobs in the UAE by the year 2030. Companies that understand where opportunities exist can quickly capture market share and upskill their workforce.
Renewable energy is an extremely diverse industry which reaches into numerous applications from solar to wind to nuclear. Solar is set to be one of the fastest growing renewable sources of energy for the UAE due to its geographical location. The country enjoys more than 3,500 hours of sunshine each year. For this reason, the government has mandated that by 2030 all buildings will be outfitted with solar panels. Other areas of focus for the Emirati government include wind power generation, waste-to-energy conversion, infrastructure updates to increase adoption of electric vehicles, and reduction of energy consumption through green building strategies.
While companies that specialise directly in energy generation will be in strong demand, any company that provides services or products that compliment or support renewable energy projects will have enormous opportunities. Some of the top investment opportunities include:
- Construction - Companies that specialise in building and retrofitting of offices, retail space, and residential buildings to green building standards.
- Energy Generation - Solar energy will be top contender in the space with smaller niche markets in wind and wave technology offering alternative energy sources.
- Sustainable Agriculture - Currently, the UAE imports 90% of its food. For this reason, companies that specialise in sustainable agriculture and reduction of food waste will be in high demand.
- Technology - Preserving, tracking, and controlling energy resources becomes more efficient with the use of technology. Technology firms that specialise in bringing innovative technology such as sensors, monitoring systems, decentralised grid operations, and energy reduction controls are anticipated to grow significantly.
How do I set up a renewable energy company in UAE?
The chosen type of formation will depend on how the company will be setup. The formation type will depend on who the company is working with and a number of other factors, but in most cases it is best considering setting up either an LLC or Foreign Branch in the mainland. However, there is also the option to setup a freezone company in, for example, Masdar City (Abu Dhabi Freezone which specialises in company setups that promote sustainability and renewable energy.
A general guidance on the options available to setup a company in UAE, you can consider the options of either a mainland setup or freezone setup. Mainland benefits include, direct access to government departments in UAE, and the ability to directly sell products to UAE. However, it is also possible to setup a freezone company, in for example Masdar City (Abu Dhabi Freezone which specialises in company setups that promote sustainability and renewable energy. Companies in freezones are restricted to work within the freezone itself or with international clients. Mainland Setup can either be 100% foreign owned, or in some cases may still require a local shareholder. A freezone setup will allow 100% foreign ownership. In both cases, there might be certain external approvals required depending on the activity required.
If SPC (Supreme Petroleum Council / ADNOC Approval) is required, then its best to setup in mainland with at least a 1% local shareholder. But this again, will depend on the purpose of the company setup and they are looking to setup.
What are the steps to set up a UAE renewable energy company?
- Identify the correct location, jurisdiction and activity – Mainland, Freezone, Abu Dhabi, Dubai etc
- Prepare the legal constituent documents – MOA, POA, Board Resolution and POA if required
- Trade Name Reservation and Initial Approval with the relevant licencing authority – DED for mainland or Freezone Authority
- Notarising the Memorandum of Association (MOA) – mainland setup
- Obtain lease agreement / commercial space rent that conforms to licence requirement – Ejari or Tawtheeq for mainland, Freezone office space for companies setting up in a Freezone
- Regulatory approvals relevant to the activity and location for example SPC Approval for Energy and Infrastructure companies, Municipality Classification for design, architectural and contracting firms. Ministry of Environment for environmental impact companies.
- Obtaining the Trade Licence and Commercial Registration.
For a more detailed bespoke step plan and specific requirements related to the individual jurisdiction please contact a member of the PRO Partner Group Team below.
Embracing a greener future in the UAE
There are an endless number of opportunities for companies that specialise in or compliment the various fields within renewable energy. For companies that want to build a presence in the Middle East or want to relocate operations to the UAE, now is the perfect time to take advantage of the increasing demands for clean alternative energy. Before you get started, you might consider hiring an expert to walk you through the process of establishing a renewable energy company in the UAE. With their help, you can feel confident that you have access to the right resources to set your business up for success.
How can PRO Partner Group help?
At PRO Partner Group we have built enduring relationships with key government bodies, and we have direct access to government departments, regulatory authorities and freezone authorities with our on-the-ground team of experts in each department.
We can help you decide which is the best licence for your renewable energy business, process all work visas and other necessary documentation and help you through all other aspects of your company setup.
If you need assistance with this or any other related company setup, restructuring, local partner or PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar or KSA, then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at email@example.com or complete the contact form below and we will be delighted to assist you.