Hydrogen

Q&A: Engie targets Mideast Gulf efficiency, renewables

Q&A: Engie targets Mideast Gulf efficiency, renewables

Dubai, 2 June (Argus) — As Mideast Gulf countries race toward ambitious net-zero goals, global utility Engie is refocusing its presence in the region, doubling down on core markets like the UAE and Saudi Arabia. Engie is ramping up renewables, flexible power and grid-stabilising tech while maintaining a balanced approach to its legacy thermal and desalination operations, in line with a 2045 net zero target. The company was bullish on green hydrogen just a few years ago, but is now taking a more cautious approach as technology and economics evolve slower than expected. Argus spoke to Engie's Gulf Co-operation Council (GCC) flexible power managing director Niko Cornelis on the sidelines of the World Utilities Congress in Abu Dhabi. What role does Engie envision for itself in the region's transition to net zero? The ambitions for Engie in CO2 emissions reduction and net zero are stricter than the ambitions in the region. But we feel supported by the governments that have similar goals, even if the timelines sometimes differ. We are a developer, which means we are developing different projects in the energy and water sectors and support the countries in these fields. If you look at our scope here in the UAE, we have thermal and desalination assets and we see shifts driven by the government to move towards low-carbon emitters in the future. This means that for our thermal assets, we are looking at upgrades to be more efficient. For new projects, we are focusing on the development of renewables, battery energy storage systems (BESS), low-carbon thermal power generation and desalination switching entirely to reverse osmosis (RO), which is five to seven times more efficient — particularly if pulling electricity from on-site renewables. You mentioned efficiency multiple times. Will there be a pause in building new projects to work on upgrading the efficiency of existing assets? We would not shut down existing thermal sites and build renewables instead. It does not work like that. We bid on different projects launched by the governments and we have become way more active in the renewables field, in a break with the past. But rebuilding an asset to make it more efficient is not viable. So we can instead look at existing assets, see if there are technology improvements etc that may have a direct impact on efficiency. When building a new combined-cycle gas turbine (CCGT) asset, we typically try to incorporate the latest technology to achieve the highest possible efficiency — nowadays 60-65pc versus 50-55pc for assets developed in the 1990s or 2000s. But in addition to efficiency, grid stability is also crucial. Therefore, from our perspective, we also want to focus on ways to stabilise the grids — which we refer to as flexible power (flex power) and can be through batteries and open-cycle gas turbine (OCGT) projects. Flex power is the safety net — it ensures reliability as we transition to a cleaner, more renewables-based energy system. And it allows for the secure safety of power supply to customers. With Engie's recent divestment from certain assets in Kuwait and Bahrain, how does this realignment reflect the company's broader strategic vision in the GCC? For a few years now, Engie's strategic vision has generally been as follows. We have a lot of activities in a lot of countries, which have not always been that structured. What we prefer to do is work where we are strong. That means instead of working in all these countries, we want to limit the number of countries where we are active. Where we want to have a more consolidated portfolio and a bloated platform in order to support the government and these countries. That is the general view. If you translate it to the region, you see for instance that in Kuwait we have one gas asset. But if we consider our wider 2045 net zero ambition, this cannot happen overnight. There needs to be an incrementally decreasing CO2 footprint in the country while renewables scale up. If you take Saudi Arabia or the UAE, there is a huge portfolio of renewables and BESS projects there. And with the strong basis we already have in these countries, we are looking at huge growth. Here, our role as an industrial player across the entire value chain allows us to perform much more effectively. Can you elaborate on Engie's collaborative efforts with regional partners in advancing green hydrogen projects? What we have seen over the past two to three years is that while there were huge ambitions for green hydrogen, they were often based on optimistic assumptions about technological advances and cost reductions. For green hydrogen to truly scale, we need a viable offtake market — one that is prepared to absorb the premium costs that green hydrogen currently commands. This remains one of the biggest missing pieces in the ecosystem. So what you see is a slower-than-expected evolution while the costs are still high. Could you share updates on Engie's upcoming GCC projects currently in development or pre-financial close stages, and what timelines you are aiming at? We were one of the three short-listed bidders for the 1.5GW Al-Khazna solar PV independent power producer (IPP) project in Abu Dhabi and are hoping for a successful outcome. Should we be awarded the project, we anticipate it will come on line between the second and third quarters of 2028. Over the past year, we have significantly strengthened our focus on developing renewables and flexible power assets. The project is targeting commercial operations by July 2028. Over the past year or so, we have expanded the capacity at the Sohar 1 power generation and desalination plant in Oman. Sohar 1 was originally a 585MW CCGT plant with 150,000 m³/d desalination capacity, whose power purchase agreement (PPA) expired in May 2022. Engie maintained the plant in preservation mode and, after successful debt restructuring, secured a new PPA in October 2024 for 405MW of OCGT capacity. The plant resumed commercial operations on 28 March. Looking at affordability, it is better to extend current contracts than build new projects. Engie also secured a 15-year extension and reconfiguration of the Shuweihat 1 power plant, in partnership with Taqa and Sumitomo. Transitioning from a cogeneration facility to a 1.1GW open-cycle gas plant, Shuweihat 1 will provide fast, flexible reserve capacity critical to integrating Abu Dhabi's growing renewable energy portfolio. The conversion optimises existing infrastructure, minimises carbon intensity and enhances grid stability, reinforcing Engie's role as a leader in supporting the UAE's net zero ambition. Commercial operations are set for 2027. With regional competition growing in clean energy and hydrogen, how is Engie positioning itself to remain a preferred partner for governments and sovereign funds across the Gulf? We recognise that the Gulf's ambitions for clean energy are accelerating — and competition is intensifying. What sets us apart is a simple but powerful approach — we position ourselves not just as a project developer, but as a long-term strategic reliable partner aligned with national visions like the Saudi Vision 2030 and the UAE's Net Zero 2050. In clean energy, we are scaling at pace. Across the region, we are building gigawatt-scale renewables while expanding in BESS and grid flexibility solutions, which are critical to decarbonising at scale. Our 2045 Net Zero target is underpinned by a pragmatic roadmap — not only growing renewables, but also decarbonising molecules and investing in solutions like carbon capture, utilisation and storage (CCUS). This resonates with governments and sovereign investors that are looking for partners capable of delivering growth and climate ambition. Ultimately, we see ourselves as an extension of the region's aspirations — flexible, innovative and firmly committed to creating lasting value for the Gulf. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.