Saudi Arabia's private utility Acwa Power and Water and Electricity Holding Company (Badeel), have signed power purchase agreements worth 12.187 billion Saudi riyals ($3.25 billion) with the kingdom’s Saudi Power Procurement Company.
The agreements to develop and operate three major new solar photovoltaic independent power producer projects are part of the kingdom's push to achieve its renewable energy target, Acwa said in a statement to the Tadawul exchange where its shares are traded.
The three projects – the Ar Rass 2, Saad 2 and Al Kahfah – will be jointly owned by Acwa and Badeel, a fully-owned subsidiary of Saudi Arabia’s sovereign investment arm, Public Investment Fund.
“Signing of three Power Purchase Agreements marks a significant milestone for Acwa Power, representing the largest single transaction for solar projects in our company's history,” said Marco Arcelli, chief executive of Acwa Power.
“This achievement illustrates our firm commitment to a sustainable future for Saudi Arabia and beyond.”
The new plants aim to produce a combined capacity of 4.55 gigawatts of renewable energy, enough to power approximately 750,000 households.
The Ar Rass plant will have a capacity of 2 gigawatts when finished. Saad 2 will produce 1.125 gigawatts while Al Kahfah will have 1.425 gigawatts of capacity upon completion.
Financial close for all three projects is expected by the third quarter of this year, Acwa said.
The solar projects are part of the kingdom’s National Renewable Energy Programme, which is led and supervised by the Ministry of Energy. It mandates the PIF to develop 70 per cent of NREP’s target capacity.
Saudi Arabia, the Arab world’s largest economy, is developing several new renewable energy projects as it aims to boost its clean energy capacity and become carbon neutral by 2060.
The facility, which is expected to begin commercial operations in the fourth quarter of 2025, will be the “largest of its kind in the Middle East”, the companies said at the time.
Saudi Arabia is also building the world’s largest green hydrogen-based ammonia production plant in Neom – the kingdom's planned futuristic city.
“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,” said Mohammed Al Balaihed, head of energy and utilities at PIF.
Investment in renewable energy technology globally hit a record of $1.3 trillion last year.
However, that figure must rise to about $5 trillion annually by 2030 to meet the key 2015 Paris Accords target of limiting temperature increases to 1.5°C above pre-industrial levels, Abu Dhabi-based International Renewable Energy Agency said in its World Energy Transitions Outlook 2023 preview in March.
Renewable capacity must grow from about 3,000 gigawatts currently to more than 10,000 gigawatts in 2030, an average of 1,000 gigawatts annually, it said.
Acwa Power, which is present in 12 countries in the Middle East, Africa, Central Asia, and South-East Asia, has 68 projects in operation, advanced development, or construction – with an investment of $68.27 billion and the capacity to generate 44.4 gigawatts of power and manage 6.2 million cubic metres per day of desalinated water.
With the addition of three new projects, Acwa’s portfolio of solar projects in Saudi Arabia has risen to 11 – with more than 12 gigawatts of combined PV capacity.
Acwa Power's total renewable capacity portfolio in the country has risen to 23.4 gigawatts.