Saudi Arabia signs renewable energy deals worth $8.3bn with Acwa Power consortium

Agreements for seven new solar and wind projects will produce 15 gigawatts of electricity

Acwa Power is the main developer on the new green energy developments in the kingdom. Reuters

Saudi Arabia has signed agreements worth more than 31 billion riyals ($8.3 billion) for seven renewable energy projects with an Acwa Power-led consortium to boost the kingdom’s green energy capacity.

Power purchase agreements for new solar and wind energy projects with 15 gigawatts capacity signed by the state-owned company Principal Buyer in the presence of the Saudi Energy Minister Prince Abdulaziz bin Salman are part of the country’s National Renewable Energy Programme, the Saudi Press Agency reported on Sunday.

“The signing of these agreements represents the largest capacity globally signed for renewable energy projects in a single phase,” SPA said.

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“It confirms the kingdom's continued leadership in developing renewable energy infrastructure and achieving globally competitive costs of electricity production per kilowatt-hour, due to efficient financing and development models, as well as growing investor confidence in the Saudi investment environment.”

Acwa Power is the main developer for the developments in partnership with the Public Investment Fund-owned Water and Electricity Holding Company (Badeel), and Aramco Power, a subsidiary of state-controlled oil and gas giant Saudi Aramco.

Solar panels at Saudi Arabia's King Abdulaziz City of Sciences and Technology. Reuters

Principal Buyer is responsible for preparing feasibility studies and tendering electricity generation projects, SPA added.

So far, it has launched renewable electricity generation projects with a total capacity of 43 gigawatts. Of these, Principal Buyer has already signed power purchase agreements for projects with a capacity of 38 gigawatts. The remaining 10.21 gigawatts have already been connected to the national grid.

Saudi Arabia expects the capacity connected to the grid to reach 12.7 gigawatts by the end of this year and rise to more than 20 gigawatts by the end of 2026.

The solar deals signed on Sunday include a three-gigawatt Bisha project in Aseer, a three-gigawatt development in Madinah, the Khulis Project in Makkah with a capacity of two gigawatts, and Afif 1 and Afif 2 in Riyadh, each with a two-gigawatt capacity.

The wind energy projects include two in Riyadh: the Starah development with a capacity of two gigawatts and the one-gigawatt Shaqra project, SPA reported.

Backed by the PIF, Acwa Power is one of the largest renewable energy developers in the Middle East. It currently has operations in 14 countries across the Middle East, Africa, and Central and South-East Asia.

It is an investor in and operator of 101 power generation and water desalination projects in operation, construction and advanced development with an overall portfolio size of about $107.5 billion as of February this year.

The company has grown quickly over the years, capitalising on the rising demand of green energy in the Middle East and the 14 countries it operates in.

Renewable energy generation in the Middle East is forecast to grow by about 14 per cent per year from now until 2027, with its share of the overall energy mix rising from 5 per cent to 7 per cent, according to the International Energy Agency.

Beyond the region, Acwa Power is eyeing markets including China to further strengthen its global footprint. The company plans to grow its business in China despite concerns of a trade war with the US, chief executive Marco Arcelli said in March.

The company has already entered China’s renewable energy market with agreements for projects that will generate one gigawatt of electricity. By 2030, it aims to invest up to $30 billion in China – the world’s largest renewable energy market – in line with its plans to triple its overall assets under management to about $250 billion.

“We take a long-term view, and we see China as a very strong economy,” Mr Arcelli told The National.

“China has a programme of installing 250-300 gigawatts of renewables per year, and the commitment there is very strong. The scale is such that even if, in theory, it slows down by 10 per cent, it is still a gigantic market.”