Barakah Plant $2.42 Bn refinancing recognized as Green Loan Facility, reinforcing its integral role in rapid decarbonization of UAE power grid
12.03.24
- Barakah Plant project refinancing loan with two leading UAE banks, Abu Dhabi Commercial Bank PJSC (ADCB) and First Abu Dhabi Bank PJSC (FAB), is the first in MENA Region and Asia to be recognized as a green loan facility.
- Positions Barakah Plant and the wider nuclear sector at the forefront of clean financing instruments for proven baseload technologies to accelerate the clean energy transition
- Refinancing through UAE Banks is a powerful driver for In Country Value Program in the UAE to support the Net Zero Economy
- Green refinancing through prominent UAE banks underscores Barakah Plant’s continued prevention of millions of tons of carbon emissions annually for at least 60 years
The AED 8.89 Bn ($2.42Bn) refinancing of the Barakah Nuclear Energy Plant project, announced in 2023, has now been recognized as a Green Loan Facility. This important classification underscores nuclear energy’s major contribution to powering the UAE’s green economy and energy transition strategy through clean, carbon emissions-free electricity.
Through the Barakah Plant, the Emirates Nuclear Energy Corporation (ENEC) is spearheading the decarbonization of the UAE’s energy intensive and heavy industries now to accelerate the nation in reaching the goal of Net Zero by 2050. The Barakah plant, when fully operational, forecasted for later in 2024, will generate 40 terawatt-hours (TWh) of electricity per year while simultaneously preventing the release of 22.4 million tons of carbon emissions.
The role of the Barakah Plant in generating clean electricity has a cascading impact, unlocking ESG funds for local Abu Dhabi companies through the Clean Energy Certificates program, thereby enhancing their competitive advantage and ability to command a green premium for products and services.
The Barakah Plant project’s green loan status makes it the first in the MENA region and Asia, and the second nuclear project globally to successfully complete the evaluation process following the 1 Bn Euro green loan awarded to EDF for the maintenance of its nuclear fleet in 2022. Previously, ESG-labelled nuclear sector finance deals have focused on Green Bonds, with the first of these issued to Canada’s Bruce Power in 2021.
This important classification highlights the growing global recognition that nuclear plants are clean sources of electricity, with great potential to expand into new areas such as clean hydrogen and ammonia generation. The fact that nuclear plants are a proven energy source, with many generating for at least 60 years, offers a stable finance proposition for banks.
Through three operating reactor units and the 4th nearing commercial operations, the Barakah Plant has already generated more than 60GWh of clean electricity, while preventing nearly 30,000 Kilotons of carbon emissions.
His Excellency Mohamed Al Hammadi, ENEC’s Managing Director and Chief Executive Officer commented: “The recognition of the Barakah refinancing as meeting Green Loan status requirements firmly establishes nuclear energy’s role in the clean energy transition. We are breaking new ground as one of the first nuclear plants globally to be backed by green loan funding, as we sustainably power the UAE through constant and abundant clean electricity. Through Barakah, we are advancing the research and development for clean energy solutions such as clean molecules, clean hydrogen production and Small Modular Reactors (SMRs), further highlighting the potential and broad range of applications of nuclear energy in decarbonizing heavy and energy intensive industries. This will have long-term economic and social benefit for the nation as we enhance advanced industries, create thousands of jobs and develop a wider supply chain to ensure sustainable growth.”
The announcement was made following a ceremony at ENEC’s headquarters in Abu Dhabi, which was attended by His Excellency Mohamed Al Hammadi, MD and CEO of ENEC, Mr Nasser Al Nasseri, CEO of Barakah One Company, Eng. Abdulla Abdul Aziz AlShamsi Group Chief Business Officer for ADCB, Ludovic Nobili, Head of Corporate & Investment Banking Group, Martin Tricaud Group Head of Investment Banking and Abdulla Aljneibi, Global Head of Government, Sovereigns and public sector for FAB.
Nasser Al Nasseri, CEO of Barakah One Company said: "Barakah One Company has continuously strived to use innovative and collaborative routes to financing the Barakah project, back from the start of the program, through the Joint Venture created in 2016 and onwards to today, where we have four units operating and close to full fleet commercial operations. The Barakah Plant project demonstrates that nuclear energy is not only green, but is a proven, bankable technology. Today’s announcement demonstrates that banks and finance houses are seeing the benefit of nuclear energy as financially sound projects for financing, with a steady stream of revenue generated for decades, and sets the foundations for the financing of the many nuclear projects set to come online in the coming decades. It has been a pleasure to arrange this financing with ADCB and First Abu Dhabi – reinforcing Abu Dhabi’s role in leading – and financing - the global net zero economy."
An independent, globally recognized Second Party Opinion provider, confirmed that Barakah’s refinancing is aligned with Green Loan principles by assessing three core elements. These include Barakah’s sustainability credentials, its positive contribution to the United Nations Sustainable Development Goals, and the credit facility’s alignment with Barakah’s overall Environmental, Social, and Governance (ESG) profile.
The refinancing was completed in July 2023 with of two leading UAE banks, Abu Dhabi Commercial Bank PJSC (ADCB) and First Abu Dhabi Bank PJSC (FAB) for the Barakah One Company, the financing and commercial subsidiary of ENEC. The existing loan facilities were refinanced through a competitive market process and converted into green loan financing in partnership with FAB as Senior Green Coordinator and ADCB as Green Loan Coordinator.
The Refinancing through two of the UAE’s largest banks supports the UAE’s mission to drive In Country Value as a central component of the Net Zero Economy. Eng. Abdulla Abdul Aziz Al Shamsi, Group Chief Business Officer for ADCB, said: “The Green Loan classification of this Barakah loan facility is a key milestone for the UAE’s energy sector and reflects the increasingly important role of nuclear energy as a source of clean electricity. As the UAE economy continues to grow, ADCB is committed to working with its customers across all sectors to help them succeed on their path to net zero. We are incredibly proud of our partnership with ENEC and look forward to further deepening our relationship in the years ahead.”
Martin Tricaud, Group Head of Investment Banking for First Abu Dhabi Bank, said: “We congratulate ENEC in achieving Green Loan Facility status for its plant. Emissions reductions are a collaborative process and First Abu Dhabi Bank is dedicated to playing our part to support the UAE’s commitment to Net Zero by 2050 through green-finance partnerships like this. We recognise our responsibility to support our clients’ green projects on their path towards net zero and value this landmark opportunity to facilitate ENEC’s climate-action goals.”
First Abu Dhabi Bank, a pacesetter in sustainable financing, is also the first MENA bank to set financed emissions targets across hard-to-abate sectors including oil and gas, power generation, aviation and steel. In November, FAB announced it had covered 90% of its targets for corporates across eight sectors. The bank, currently rated among the region’s highest ESG performers, is also among the top 15 banks for Green Loans globally and has committed to facilitate more than AED 500 billion (USD 135 billion) to sustainable and transition financing by 2030.
ADCB’s climate strategy is underpinned by a core belief that the transition to a low carbon economy is a historic opportunity for the UAE. As a signatory to the “UAE Climate-Responsible Companies Pledge” with the Ministry of Climate Change and Environment (MOCCAE), ADCB is committed to the UAE’s Net Zero by 2050 Strategic Initiative. The Bank further demonstrated its support for climate action with a strategic decision in November 2023 to join the UN-convened Net Zero Banking Alliance (NZBA), an industry-led global initiative to align the lending and investment portfolios of financial institutions with the imperative of limiting global warming to 1.5°C, in line with the Paris Agreement.
The Barakah Plant continues to create significant economic value in the UAE as well as positive impact on the local supply chain and the creation of thousands of highly qualified job opportunities for UAE Nationals. The Plant is one of the largest nuclear energy plants in the world, with four APR-1400 units. It is the largest source of clean electricity in the region that is decarbonizing hard-to-abate sectors, whilst supporting the UAE’s strategy to become a net-exporter of LNG by 2030.
As part of the next phase of the UAE Peaceful Nuclear Energy Program, ENEC late last year launched ENEC ADVANCE, a program focused on the latest nuclear technologies to accelerate global decarbonization and the clean energy transition, while supporting and strengthening the UAE’s path to Net Zero. The program will evaluate the latest technologies in the advanced SMRs and microreactor categories, which can generate clean molecules, such as hydrogen and ammonia.