Saudi Arabia Announces Financial Closure for Two Solar PV Projects

Saudi Arabia’s move to harness solar power and move away from using fossil fuels to generate electricity, has gathered pace with two solar Photo Voltaic (PV) projects achieving financial closure.

Saudi-listed ACWA Power and leader in the energy transition, PIF-owned Water and Electricity Holding Company (Badeel), and Saudi Aramco Power Company (SAPCO), a wholly owned subsidiary of Aramco, announced the successful financial close of Al Shuaibah 1 and Al Shuaibah 2 solar PV projects, which will generate over 2.6GW of clean electricity in the Kingdom.

The financial close for the projects is a key achievement in the National Renewable Energy Program (NREP) which is led and supervised by the Ministry of Energy and is a key achievement towards PIF’s commitment to develop 70% of Saudi Arabia’s Renewable Energy Target Capacity by 2030.

 Saudi Power Procurement Company (SPPC) is the procurer and the off taker for the projects, while the new projects will be jointly owned by Badeel (34.99%), ACWA Power (35.01%), and SAPCO (30%), the official Saudi Press Agency (SPA) reported.

The $1.63 billion senior debt financing for this plant includes a $450 million, Saudi Riyal denominated loan from the National Development Fund on behalf of the National Infrastructure Fund (Under Establishment) as well as $1.18 billion, US-dollar denominated commercial facility from a consortium of local, regional, and international banks (Bank Saudi Fransi, First Abu Dhabi Bank, Mizuho Bank, Riyad Bank, Saudi National Bank, Standard Chartered Bank and Saudi Investment Bank).

Second Investment

Aramco’s investment in Al Shuaibah 1 and Al Shuaibah 2 Solar PV Projects through SAPCO is its second participation in the National Renewable Energy Program; aligning with the company’s objectives of achieving net-zero of operational scope-1 and scope-2 emissions by 2050.

PIF, through Badeel, in partnership with ACWA Power as a lead developer, is executing a total of five NREP projects, with a cumulative capacity of 8GW and over $6 billion of investment from PIF and its partners.

These projects – Sudair, Al Shuaibah 2, Ar Rass 2, Al Kahfah, Saad 2 – are aiming to enable and support the local private sector through requirements for significant local content contribution and the procurement of equipment, supplies, and services through local supply chains.

Situated in Al Shuaibah in the Makkah Province, the Al Shuaibah PV 1 and Al Shuaibah PV 2 will have a capacity of 600 MW and 2,031 MW respectively and are capable of powering approximately 450,000 households. The total investment in the plant amounts to $2.37 billion, and commercial operations will commence in 2025.

Marco Arcelli, CEO of ACWA Power said that securing financing for this groundbreaking project marked a significant step towards achieving Saudi Arabia’s clean energy goals, in alignment with the National Renewable Energy Program, which aims to generate 50% of electricity from renewable sources by 2030.

“We are proud of this milestone and look forward to working closely with our key partners PIF, Aramco, and other contributors to successfully realise a sustainable future,” he added.

Badeel CEO Husam Al-Ghailani said that reaching the financial close for the Al Shuaibah 1 and Al Shuaibah 2 plants is a significant milestone and gave Badeel the drive to continue its efforts to support the growth of renewable energy in the Kingdom.

“This will contribute to unlocking the capabilities of promising non-oil sectors to enhance Saudi Arabia’s efforts in diversifying revenue sources and to enhance its leading role in the renewable energy sector locally and globally,” he added.

Mohammed Al Qahtani, President of Downstream at Aramco, said that their participation in the Al Shuaibah PV 1 and Al Shuaibah PV 2 projects aligns with their efforts to reduce Aramco’s carbon footprint and create a more sustainable future.

“While oil and gas will play a major role to meet the energy demand of today and tomorrow, renewables will increasingly play a part in the energy transition to address the climate change challenges,” he added.

Esmail bin Mohammad Alsallom, CEO of National Infrastructure Fund (NIF), said that NIF was proud to have played a key role in the Al Shuaibah Projects, which extend NIF’s commitment to the Kingdom’s ambitious energy transition agenda.

With the addition of these two projects, ACWA Power’s solar portfolio in Saudi Arabia now exceeds 12GW of combined PV capacity. This includes the recent inclusion of three new projects with PIF subsidiary Badeel: the 2GW Ar Rass 2, 1.125GW Saad 2, and 1.4GW Al Kahfah solar plants. Overall, ACWA Power’s global portfolio of renewable energy capacity stands at 23.4GW.