Saudi Arabia moves ahead with its largest solar power project

Saudi Arabia's largest renewable energy project, the 2.6 GW Al Shuaibah solar plant, is moving ahead after completing financing led by the National Development Fund on Aug. 20.

The Riyals 8.3 billion ($2.2 billion) financing included Riyals 1.7 billion from the National Infrastructure Fund, its first financing of an Aramco-sponsored project, the National Development Fund said in an Aug. 20 statement. The project is being developed by a joint venture between Saudi Aramco, the Badeel water and electricity company and ACWA Power. It is expected to start commercial operation in 2025, according to the statement. Saudi Arabia's sovereign wealth fund, the Public Investment Fund, owns Badeel and has a 44% stake in ACWA Power.

The country has 13 renewable energy projects under development with a collective capacity of 11.3 GW. Badeel is developing a total of five projects with a total capacity of 8 GW and over $6 billion of investment.

Tender activity

Saudi Arabia has been ramping up tender activity to add more renewable power capacity to its power grid as part of its ambitions to reach net-zero by 2060.

In May, Saudi Arabia's Water and Electricity Holding Co. (Badeel) and ACWA Power signed power purchase agreements with the Saudi Power Procurement Co. for three huge solar projects for a combined 4.55 GW of capacity. The Ar Rass 2, Saad 2 and Al Kahfah projects have projected capacities of 2.0 GW, 1.1 GW and 1.4 GW, respectively, and a combined value of Riyals 12.2 billion.

Financial close for the projects is expected by the third quarter of 2023.

Saudi Arabia is unlikely to achieve its renewable targets for this year, with less than 3 GW of projects operational, S&P Global Commodity Insights said in an August report. The King Salman Renewable Energy Initiative, under Saudi Arabia's Vision 2030, sets renewable targets of 27.3 GW (20 GW of solar PV and 7 GW of wind) by 2023, it noted. The 2020 target was also missed, it said. The next goal is set at 58.7 GW (40 GW of solar PV, 16 GW of wind and 2.7 GW of CSP) by 2030.