Saudi Arabia's Acwa Power and Azerbaijan's Ministry of Energy broke ground on a 1.125 billion Saudi riyal ($300 million) 240-megawatt wind power plant that will contribute to the Central Asian country’s target of generating 30 per cent of its energy through renewables by 2030.
The greenfield independent power project, located 45 kilometres north-west of the capital Baku, is expected to be completed by the fourth quarter of 2023.
It will contribute around 3.7 per cent of energy to the country's total national grid capacity and power 300,000 households, while offsetting 400,000 tonnes of emissions, Acwa Power said on Friday.
Azerbaijan, which largely relies on natural gas to meet its energy needs, has committed to reducing its greenhouse gas emissions by 35 per cent by 2030 and is fast-tracking public-private partnerships to develop wind projects in the country.
The ground-breaking ceremony was attended by officials and executives including Prince Abdulaziz bin Salman, Saudi Arabia's Minister of Energy, Azerbaijan President Ilham Aliyev; Parviz Shahbazov, Azerbaijan's Minister of Energy, and Mohammad Abunayyan, chairman of Acwa Power.
“The wind project reflects the strategic partnership between the Saudi Arabia and Azerbaijan in various fields, especially the energy sector,” Prince Abdulaziz said.
“In addition to the two countries' long-term diplomatic and economic relations, cooperation between them has been strengthened in recent years as Azerbaijan became a member of Opec+."
Azerbaijan has significant untapped potential for renewable energy, with a relatively sunny and windy climate, plus sizeable hydro, biomass and geothermal resources, according to the International Energy Agency.
“We are pleased to see that private companies from outside Azerbaijan invest in our country. These investments leverage global expertise by sharing international best practice, support human capital development and enable knowledge transfer into the country,” Mr Shahbazov said.
Last April, Masdar, a subsidiary of Abu Dhabi strategic investment arm Mubadala Investment Company, announced plans to develop a 230MW solar project in Azerbaijan, as the clean energy company continues to expand its renewables portfolio.
In September, Saudi Arabia announced plans to deploy 50 per cent of its investments in renewable and sustainable power sources. In October, Crown Prince Mohammed bin Salman inaugurated the Middle East Green Initiative summit, a programme that aims to contribute to clean fuel solutions that will affect the lives of more than 750 million people around the world.
At the ground-breaking ceremony, Acwa Power also signed a preliminary agreement with Azerbaijan's Ministry of Energy for an offshore wind project.
“Beyond the project's role in supporting the Azerbaijani government's efforts to raise the share of renewable energy in the energy mix, we aim to further generate long-term value for the country by developing local content and talent through acquiring the skills and capabilities necessary to achieve the vision and objectives of the Azerbaijani government in the renewable energy sector,” Acwa Power's chairman Mr Abunayyan said.
Acwa Power, which is listed on the Tadawul stock exchange, operates in 13 countries in the Middle East, Central Asia, Africa and South-East Asia. It has a portfolio of 66 assets with a total investment of $67.2bn producing 42.8 gigawatts of power and 6.4 million cubic metres per day of desalinated water.
The kingdom’s sovereign wealth fund – the Public Investment Fund – is the biggest stakeholder in Acwa Power, with a 50 per cent share of the company. The company has eight other stakeholders, including the Saudi Public Pension Agency and the World Bank's International Finance Corporation.