Saudi Aramco is investing, alongside the country's sovereign wealth fund and Riyadh-based ACWA Power, in the oil exporter's largest solar project with a capacity of 1.5 GW as the world's biggest energy company makes a push into renewables.
The Saudi Aramco Power Co., a unit of the parent company, has joined ACWA Power and the Water & Electricity Holding Co., or Badeel, owned by the Public Investment Fund, by acquiring a 30% stake in the special purpose vehicle Sudair One Renewable Energy Co., ACWA Power said in an Aug. 15 statement. ACWA Power and PIF will each hold a 35% stake. ACWA Power is 50% owned by PIF.
The $907 million Sudair solar PV plant is the first project under PIF's renewable energy program that aims to support Saudi Arabia's energy transition and contribute 70% of the country's renewable energy under the National Renewable Energy Program, ACWA added. This is Aramco's first investment in the program.
"While hydrocarbons will continue to be a vital part of the energy mix for decades to come, renewables like solar have an important role to play in helping achieve the world's climate goals," Mohammed Al Qahtani, senior vice president of downstream at Aramco, said in the statement. "Sudair will support Saudi Arabia's ambition to generate part of the nation's power needs from renewable energy by 2030, and is one of several low-carbon energy options being deployed by Aramco."
Aramco is evaluating potential projects with partners to make investments in renewables. the company said in its second quarter earnings report on Aug. 9. The partnership is with ACWA Power and PIF, Aramco CEO Amin Nasser said during a call with analysts on Aug. 9.
A 25-year power purchase agreement for the Sudair plant was signed with the Saudi Power Procurement Co., with the tariff being among the lowest for solar PV projects globally, ACWA said. The project will be able to power 185,000 homes, while offsetting nearly 2.9 million mt/year of emissions.
The first phase of the project is expected to begin producing power during the second half of 2022, ACWA added.
"The landmark renewable energy project is a significant step and key part of PIF's commitment to develop 70% of Saudi Arabia's renewable energy capacity outlined in the Saudi Vision 2030," Yazeed Alhumied, deputy governor and head of MENA investments at PIF, said in the statement.
First wind farm
Saudi Arabia's first wind farm, with a capacity of 400 MW, started power generation, operator UAE-based clean energy firm Masdar said Aug. 7, as the world's biggest oil exporter seeks to boost its renewable projects as part of plans to diversify its energy mix and free up crude used in the electricity sector for export.
Dumat al-Jandal, which is being developed by Masdar and France's EDF Renewables, will powerup to 70,000 Saudi households when its complete, Masdar said Aug. 7.
In April, Saudi energy minister Prince Abdulaziz bin Salman inaugurated the Sakaka IPP PV project, the first renewables project in the kingdom that was developed by ACWA Power, with an output capacity of 300 MW as power purchase agreements were signed for seven solar projects.
The total capacity of all the projects, in addition to the two projects of Sakaka and Dumat al-Jandal, is 3.67 GW. They will power more than 600,000 households and reduce greenhouse gas emissions by more than 7 million mt, according to the energy ministry. All projects tendered are backed by 25-year power purchase agreements with the Saudi Power Procurement Co. as offtaker.