ACWA Power, PIF unit jointly invest $3.25bn in three solar projects

The new solar projects, which will be jointly owned with ACWA and PIF’s Badeel, will have a combined production capacity of 4.55 GWac

by Gulf Business

May 22, 2023

Saudi Arabia’s ACWA Power and a unit of the Public Investment Fund (PIF) have signed power purchase agreements with the Saudi Power Procurement Company to develop and operate three new solar projects in the kingdom.

The new solar projects, which have a combined value of $3.25bn (SAR12.2bn), are part of the National Renewable Energy Program (NREP) which is led by the Ministry of Energy, with PIF mandated to develop 70 per cent of NREP’s target capacity.

“The three new solar projects are part of PIF’s commitment to developing 70 per cent of Saudi Arabia’s renewable energy by 2030, in line with the National Renewable Energy Program,” said Mohammed AlBalaihed, head of energy & utilities at the PIF.

“Renewable energy is one of PIF’s priority sectors, with a focus on unlocking the capabilities of promising sectors and enabling the private sector to enhance Saudi Arabia’s efforts in diversifying the economy.”

ACWA Power and PIF’s unit the Water and Electricity Holding Company (Badeel) will jointly own the solar projects, which are expected to have a combined production capacity of 4.55 gigawatts (GWac) of renewable energy, powering around 750,000 households.

“The Ar Rass 2, Saad 2 and Al Kahfah projects have a capacity of approximately 2,000 megawatts (MWac), 1,125MWac and 1,425MWac of renewable power respectively,” ACWA Power and Badeel said in a joint statement.

Saudi Arabia aims to increase the share of renewables in its energy mix to around 50 per cent by 2030 with the remainder being supplied through high-efficiency gas-fuelled power plants. The kingdom’s wealth fund PIF is currently developing a total of five projects, with a cumulative capacity of 8GW and more than $6bn in investments from the fund and its partners.

The fund’s renewable projects – Sudair, Shuaibah 2, Ar Rass 2, Al Kahfah, Saad 2 – seek to enable and support Saudi Arabia’s private sector through requirements for significant local content contribution and the procurement of equipment, supplies and services through local supply chains.

ACWA Power’s portfolio of solar projects in the kingdom now stands at 11, with a combined capacity of 12GW following the addition of the three new projects. This brings the utility firm’s total renewable capacity portfolio to 23.4 GW.

ACWA’s growing portfolio

Meanwhile, ACWA and Badeel signed an agreement to develop the largest solar power plant in the Middle East. The 2,060 MW solar project is located in Al Shuaibah in Saudi Arabia’s Mecca province and is expected to be ready in Q1 2025.

The electricity generated from the project is expected to power 350,000 homes. ACWA is receiving support on sustainable energy projects from Saudi Arabia’s Shareek program, which aims to encourage firms to invest in developing new industries inside the kingdom.

The company is developing sustainable energy across the Middle East and Central Asia. Last month, ACWA signed a $123m financing package to develop the 200 MW Kom Ombo solar project in Egypt.

The Kom Ombo solar project will be located less than 20km from Africa’s biggest solar park, the 1,465 MW Benban complex – another ACWA development – and is expected to be commercially operational in January 2024. Once fully functional, the solar plant is expected to serve 130,000 households.

The utility firm also secured $174m from the Asian Development Bank in April to develop the Bash and Dzhankeldy wind power plants in Uzbekistan. Together, Bash and Dzhankeldy will be the largest utility-scale wind power development in the Central West Asia region.