Acwa Power wins inaugural solar project in Saudi Arabia

Saudi Arabia's Acwa Power won the kingdom’s first utility-scale solar photovoltaic plant, as the world’s largest oil exporter kick starts its renewables programme to free up more crude for export.

Paddy Padmanathan, chief executive of the Riyadh-headquartered firm said it had won the bid for the 300 Megawatt project at Sakaka, in the northern Al Jouf area at “a new world record tariff” of US Cents 2.3417/kWh (8.781 halalas/kWh).

The kingdom, which meets its power requirements by burning oil and is increasingly pivoting to natural gas has made a recent move towards renewables to meet its rising demand for electricity. The oil producer’s newly-established Renewable Energy Project Development Office (Repdo) said last month it would tender 3.25 Gigawatts of solar power and 800MW of wind capacity this year, as the kingdom works towards meeting an ambitious target of deploying 9.5GW of renewables capacity by 2023.

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The US$302 million Sakaka plant will be developed on the basis of an independent power producer model and is backed by a 25-year power purchase agreement with the Saudi Power Procurement Company.

In January about eight international and local developers submitted bids for Saudi Arabia's inaugural renewables round, with Repdo shortlisting Acwa Power and Japan's Marubeni. In an interview with The National last month Turki Al Shehri, the head of Repdo, said the project would reach financial closure in February and target commissioning by August 2019.

Last year the kingdom tendered a 400MW wind project - its first - at Dumat Al Jandal, for which Repdo pre-qualified companies in 2017.

Acwa Power, which develops conventional and renewables projects across the Middle East is considering listing on the domestic capital markets as well as an international exchange in 2018.

In an interview in December, Mr Padmanathan said Acwa Power has an “adequate enough operating portfolio that can generate that dividend stream” as it prepared to file for listing.

Recent reports have suggested that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund may pick up a 10 per cent stake in the developer ahead of its public listing.

Acwa Power is set to invest around US$4bn, as part of its capex spend, on renewable energy projects in Dubai, Jordan, Egypt and Morocco next year, with 80 per cent of the cost to come from debt and the rest from equity.