In Short : A Saudi procurement firm has inked a significant agreement with a clean energy consortium to collaborate on the development of a 1,100MW solar project. This partnership represents a major stride in Saudi Arabia’s renewable energy sector, highlighting the nation’s commitment to transitioning towards cleaner, sustainable energy sources. The joint efforts of the procurement firm and the clean energy consortium are expected to play a pivotal role in advancing solar energy initiatives and promoting environmental sustainability in the region.
In Detail : Aconsortium of three clean energy firms has signed a power purchase agreement (PPA) with a power procurement company in Saudi Arabia to develop the 1,100 megawatt (MW) Al Henakiyah Solar energy project in the Gulf state.
Solar project to power 190,000 homes
The Saudi Power Procurement Company (SPPC) signed the deal with Abu Dhabi Future Energy Company (Masdar), EDF Renewables, and Nesma Company to develop the mega solar project, which is expected to power more than 190,000 homes per year and displace over 1.8 million tons of carbon dioxide annually, Masdar said in a statement Tuesday.
With an estimated capital expenditure of $1 billion, the Al Henakiyah Solar Plant is expected to reach financial closure in early 2024 and connect to the grid in 2025, the Masdar statement added.
The planned solar project, one of the largest such renewable energy ventures in the world, is coming up in Saudi’s Al Madinah province.
According to Masdar, the off-taker SPPC awarded the project to the consortium after the latter submitted the most cost-competitive bid of $16.8 per megawatt hour.
After the country’s 400 MW Dumat al Jandal wind power farm currently under operation and the 300MW South Jeddah Solar Park, the journey ahead is promising, EDF Renewables Chairman and CEO Bruno Bensasson said in the statement.
Renewable energy target
The solar project, which will be developed, built, owned, and operated by the consortium as part of a 25-year agreement with the SPPC, will help to achieve the country’s target of raising the share of the renewables in the energy mix to around 50% by 2030.
Saudi Arabia is targeting 58.7 gigawatts from renewable sources by the end of the decade, according to an S&P Global Ratings report released in February this year.
The Gulf state aims to reach zero-net emissions by 2060 through a circular carbon economy approach.
In-country value
At least 19% of the equipment, materials, and services will be provided by local companies during the construction phase, which will boost the Saudi economy, Masdar said.
The project is expected to provide employment opportunities for Saudi youths. For instance, during the first five years of operation, Saudi nationals will constitute 50% of the project’s workforce, which will be further raised to 75% during the project’s entire operational life.