Acwa Power signs wind power project purchase deal with Uzbekistan

Kungrad farm is expected to offset 2.4 million tonnes of carbon emissions per year and power 1.65 million homes

Saudi Arabia's Acwa Power has signed three major development agreements with Uzbekistan. Reuters

Saudi Arabia’s Acwa Power has signed a power purchase agreement with the National Electric Grid of Uzbekistan for three wind power special purpose vehicles to develop the country's $2.4 billion Kungrad wind farm.

The farm, located in the north-western Karakalpakstan region of Uzbekistan, is expected to offset 2.4 million tonnes of carbon emissions per year and power 1.65 million homes when the project is completed, Acwa Power said in a filing to the Tadawul stock exchange on Sunday.

The power purchase agreement covers three wind power plants in the Kungrad district with a capacity of 500 megawatts each and was signed on December 23, the company said.

The contract covers the development, construction and operation of the project, with a contract duration of 25 years from the completion of construction.

The financial impact of the contracted revenue is expected once the project reaches its Project Commercial Operating Date (PCOD) in the third quarter of 2027, Acwa Power said. Under a long-term power purchase agreement, this date is when the commissioning tests have been passed and the facility starts to generate power to earn revenue.

The power purchase agreement builds on the company's “heads of terms agreement” in August to develop the largest single onshore wind project in Central Asia in Uzbekistan's Karakalpakstan region with a total capacity of 1.5 gigawatts.

Valued at about $2.4 billion, the project is expected to achieve financial close by the end of 2023 and be fully commissioned by the first quarter of 2026, Acwa Power said in August.

The company also signed a $10 billion investment co-operation agreement to jointly develop gas-to-power, renewable energy and green hydrogen projects in Uzbekistan over a five-year period starting in 2023.

The agreements come as Acwa Power continues to expand its global portfolio. Earlier this year, the company said it was teaming up with Oman’s OQ energy company and Air Products to create a multi-billion-dollar green hydrogen-based ammonia production unit in Oman's Salalah free zone. It is also leading a consortium to develop a 1.1-gigawatt wind project worth $1.5 billion in Egypt.

Saudi Arabia's sovereign wealth fund, the Public Investment Fund, is the biggest shareholder in Acwa Power, with a 50 per cent stake. It also has seven other stakeholders, including the Saudi Public Pension Agency.

The company raised $1.2 billion from its listing last year, making it one of the biggest share sales in the energy sector after Saudi Aramco's initial public offering on the Tadawul in 2019, which raised a record $29.4 billion.