Masdar consortium completes $1.1bn Saudi solar project funding

Financing for 2-gigawatt Al Sadawi power plant was raised through a group of eight regional and international lenders

Masdar's Dhafra solar power plant near Abu Dhabi. The company aims to expand its total capacity to at least 100 gigawatts of renewable energy by 2030. Bloomberg

The $1.1 billion Al Sadawi solar project in Saudi Arabia being developed by a consortium of UAE clean energy company Masdar, China’s GD Power and Korea Electric Power Corporation (Kepco) has reached financial close.

Eight regional and international lenders – Standard Chartered, Korea Eximbank, Abu Dhabi Commercial Bank, BNP Paribas, Abu Dhabi Islamic Bank, Bank of China, HSBC and Societe Generale – participated in the financing, which will cover a substantial part of the total project costs, Masdar said on Tuesday.

The 2-gigawatt solar photovoltaic project is being developed under the kingdom's National Renewable Energy Programme (NREP), led by the Ministry of Energy. It is expected to begin generation at full capacity in early 2027, with commercial operation targeted for the same year.

The announcement marks a "significant step in Saudi Arabia’s clean energy journey, with Al Sadawi set to be one of the largest solar power projects in the world", said Mohamed Al Ramahi, chief executive at Masdar.

“Masdar is committed to supporting Saudi Arabia’s clean energy objectives and this landmark project will add to our growing portfolio in the kingdom."

The consortium was awarded the project in November.

The kingdom is rapidly expanding its renewable power generation capacity to meet the rising demand of electricity in domestic commercial, industrial and residential sectors. Under the NREP, the country aim to boost its solar energy capacity to 40 gigawatts by 2030. Overall, Saudi Arabia aims to achieve an energy mix with 50 per cent renewables by the end of this decade.

Last month, the kingdom also signed agreements worth more than 31 billion Saudi riyals ($8.3 billion) for seven renewable energy projects with an Acwa Power-led consortium to boost its green energy capacity.

The deals cover five solar projects, including a 3-gigawatt Bisha project in Aseer, a 3-gigawatt development in Madinah, the Khulis Project in Makkah with a capacity of 2 gigawatts, and Afif 1 and Afif 2 in Riyadh, each with a 2-gigawatt capacity.

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The independent power-producer project at Al Sadawi, in Eastern Province, will be developed on a build, own and operate basis, with a 25-year power purchase agreement signed with the Saudi Power Procurement Company late last year, Masdar said.

The UAE company, which opened an office in Riyadh in 2022, aims to expand its total capacity to at least 100 gigawatts of renewable energy by the end of the decade, from about 20 gigawatts.

The company allocated more than $1.68 billion in green bond proceeds from 2023 and 2024 issuances to new solar, onshore and offshore wind, and energy storage projects as of the end of December, it said in a report this week.

The funding is being used to develop clean energy across the UAE, Saudi Arabia, the US, Germany and the UK, as well as markets such as Uzbekistan, Azerbaijan and Serbia, Masdar said.