Saudi Arabia's Acwa Power targets 120 gigawatts of power capacity in next 10 years

The company aims to raise money by the end of the year or early next year through sukuk

Saudi Arabia's Acwa Power is active in 13 countries, with a power capacity of about 43 gigawatts. Ruel Pableo for The National
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Saudi Arabia’s Acwa Power is targeting about 120 gigawatts of power-generating capacity in the next 10 years with a presence in 20 countries, and it plans to raise more money through the issuance of a bond at the end of this year or early next year to fund its growth plans.

The Riyadh-listed company is active in 13 countries with a power generation capacity of about 43 gigawatts, with 37 per cent of the total capacity being renewables. The company aims to take the total renewable capacity to 70 per cent in the next decade, with the rest consisting of the gas portfolio, according to its chief financial officer.

“To grow our portfolio, we are looking at a pipeline of 20 countries in the next 10 years … the new countries will be mainly in Africa and Asia including South-East Asia and Central Asia,” Abdulhameed Al Muhaidib told The National on the sidelines of the Water, Energy, Technology and Environment Exhibition in Dubai on Tuesday.

Acwa Power announced a number of new projects this year as it continues to boost its energy portfolio globally.

Last month, the company signed $12 billion worth of agreements to develop new energy projects in Uzbekistan, including the world’s largest single onshore wind project, with a total capacity of 1.5 gigawatts, in the Karakalpakstan region of the country.

It was also selected as the preferred bidder to develop two solar plants in Indonesia, South-East Asia's largest economy, and is leading a consortium to establish a 1.1-gigawatt wind project worth $1.5bn in Egypt.

Abdulhameed Al Muhaidib,  Acwa Power's chief financial officer at Wetex on Tuesday.  Ruel Pableo for The National

“We tend to spend time exploring the market before we go there ... we are targeting capacity of at least five to six gigawatts to grow in each country … otherwise, it does not make commercial sense for us,” Mr Al Muhaidib said.

Acwa Power, which raised 2.8bn Saudi riyals ($746 million) through the issuance of a sukuk last year, is looking to raise more money this year to fund its pipeline of projects.

“Last year, it was tranche one of the [sukuk] programme and we did not announce when tranche two would be launched. Today, we are foreseeing the second tranche of the same programme ... [5bn riyals sukuk] could be [brought to the market] by the end of this year or beginning of the next year," he said.

It will raise “more or less” the same amount equivalent to the tranche one, he added.

Acwa Power signed a preliminary agreement with France's Natixis Corporate and Investment Banking last year to secure financing of up to $2bn for its renewable projects.

The utility developer reported 743.9m riyals in net profit last year, down 17.5 per cent compared to 2020, mainly owing to its recognition of some share-based payments related to its initial public offering and an impairment loss.

However, Acwa Power's second-quarter net profit attributed to equity holders of the parent jumped 27 per cent to nearly 389.9m riyals amid the launch of new projects. It expects better financial performance this year compared to the previous year as it continues to boost its energy portfolio.

“We always target better [financial performance],” Mr Al Muhaidib said, without divulging details.

Acwa Power is bullish on hydrogen as demand for clean fuel increases globally amid the energy transition. The company is developing a $5bn green hydrogen facility in Saudi Arabia’s Neom city in partnership with US-based Air Products and Neom. It is also 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.

“Green hydrogen is part of our growth story, so we have formally added that together with power and water,” Mr Al Muhaidib said, adding that the company is exploring new hydrogen opportunities in Egypt and Morocco.

Acwa Power, which raised $1.2bn from its listing last year, also aims to become carbon neutral by 2050 and “took out coal completely” from its portfolio this year, Mr Al Muhaidib said.

UAE’s Hassyan power project was converted into a natural gas plant. Another coal-powered project in Vietnam, which was in the advanced stage of development, was discontinued amid concerns about climate change.

Saudi Arabia's sovereign wealth Public Investment Fund is the biggest shareholder in Acwa Power, with a 44 per cent stake. It also has seven other stakeholders, including the Saudi Public Pension Agency.

Updated: September 29, 2022, 9:59 AM