Saudi Arabia’s Al Rushaid Group, whose interests span construction and engineering sectors, signed a joint venture agreement with France’s Optimum Tracker to build components and systems of solar plants in the kingdom, as the Arab world's biggest economy continues to diversify its energy-mix.
The venture will receive an initial investment of 200 million Saudi riyals (Dh195.61m) and will be based in the Eastern Province, aiming for gradual capacity of "no less than 150 megawatts", the Saudi Arabian General Investment Authority (Sagia), the government body that facilities foreign direct investment in the country said on Sunday.
The two companies will combine their expertise in designing and engineering services, focusing on manufacturing of mounting system structures for solar photovoltaic panels. The new plant will look to export at least 30 per cent of its production to countries across the region and create 1,000 jobs in Saudi Arabia, Sagia said, without specifying the split of investment between the partners or the eventual cost of the plant.
“Our country is undergoing a significant economic transformation and energy demand at home and abroad is growing rapidly, leading to the emergence of renewable energy as one of the most important strategic sectors in line with Saudi Vision 2030,” said Ibrahim Al Omar, governor of Sagia. “This new joint venture reflects our increasing focus on promoting opportunities and facilitating international partnerships to drive the growth of this strategic sector.”
Saudi Arabia has been moving away from burning crude oil to generate power, first switching to gas-fired plants and, subsequently, moving towards wind and solar schemes as it seeks to free up its crude for the export market. The kingdom recently revised its renewable energy target to 27.3 gigawatts to be achieved by 2024, from the previous figure of 9.5GW.
Around 70 per cent of renewable schemes in the kingdom will be backed by the sovereign investment vehicle, the Public Investment Fund, while the remainder will be awarded through the Renewable Energy Project Development Office within the energy ministry.
Saudi Arabia is also set to become the biggest wind power market in the Middle East in the next decade. It will account for almost half of the region's wind capacity additions by 2028.
The government is keen to involve private sector in achieving its renewable energy ambitions.
Renewables is a key “enabler of sustainable growth” in the country and provides opportunities for both local and international investors, Mr Al Omar said.
The venture is a step forward in “localising an important component of solar plants in Saudi Arabia in line with the kingdom Vision 2030,” said Rasheed Al Rushaid, vice chairman and president of Al Rushaid Group.
The two companies, he said, will aim for a “quick and seamless start of manufacturing and commercialisation of solar trackers”.
Saudi Arabia, Opec's biggest oil exporter, is radically transforming its economy under Vision 2030, an overarching social and economic agenda driven by Crown Prince Mohammad Bin Salman. Weaning its economy off oil, part-privatising state entities and opening the non-oil sector for investment are among the key pillars of reform programme. In October, the kingdom climbed 30 places in the World Bank's Doing Business 2020 report, becoming the most improved economy globally.
The latest joint venture agreement builds on the positive momentum the country has seen this year in terms of foreign investment. More than 250 overseas businesses were granted investor licences in the third quarter, a 30 per cent increase on the same period last year, according to Invest Saudi's Fall 2019 investment highlights report.
In January, Saudi Arabia said it plans to spend 100 billion riyals this year and next, as part of a new industrial strategy, creating 1.6 million jobs and attracting as much as 1.6 trillion riyals in investment by 2030.
