Abu Dhabi clean energy company Masdar, EDF Renewables and Saudi Arabia’s Nesma Company have signed a power purchase agreement with Saudi Power Procurement Company to develop a $1 billion solar project in Al Madinah province in the kingdom.
The consortium won the 1,100-megawatt Al Henakiyah solar power project after submitting the lowest bid of $16.84 per megawatt hour. The project will be developed, built, owned and operated by the consortium as part of a 25-year agreement with SPPC, the entities said in a joint statement on Tuesday.
Once operational, it is expected to power more than 190,000 homes per year and displace more than 1.8 million tonnes of carbon dioxide annually. It is expected to reach financial close early next year and connect to the grid in 2025, the statement said.
“The kingdom is a key strategic market for Masdar, and we are committed to supporting the Ministry of Energy and the SPPC achieve the targets set out under Vision 2030 and the Saudi Green Initiative, as the country accelerates its green transition toward net-zero emissions by 2060,” said Mohamed Al Ramahi, Masdar’s chief executive.
Established in 2006, Masdar is working towards a renewable energy portfolio capacity of at least 100 gigawatts by 2030 and an annual green hydrogen production capacity of up to 1 million tonnes by the same year. Currently, it is active in more than 40 countries.
Saudi Arabia, the world's biggest crude exporter and the Arab world's biggest economy, has set ambitious targets to fight climate change and cut carbon emissions to overhaul its economy and reduce its reliance on oil.
It has set a target of achieving net-zero carbon emissions by 2060.
At least 19 per cent of the equipment, materials and services will be provided by Saudi companies during the construction phase of Al Henakiyah solar plant.
During the first 10 years of operations, Saudi citizens will make up 50 per cent of the project's workforce and this proportion will jump to 75 per cent during the project's entire operational life.
It will also help to achieve the target of increasing the share of the renewables in the country’s energy mix to about 50 per cent by 2030.
“As an industry, we are on an ambitious journey together, and one that will ultimately establish Saudi Arabia as a true global leader in renewable energy generation. This project represents a significant milestone on our way to achieving this,” said Faisal Alturki, president of Nesma Group.
Established in 1979, Nesma Company is a privately owned Saudi conglomerate active in the UAE, Egypt and Turkey.
EDF Renewables is an international energy company that develops renewable power generation plants. At the end of last year, the company operated a net installed wind and solar capacity of 11.4 gigawatts worldwide.