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A consortium led by Saudi utilities giant ACWA Power is to invest $8.3bn to build 15 gigawatts of solar and wind farms in the kingdom as it accelerates its push into renewables.
ACWA Power, owned by the country’s sovereign wealth fund, is joined by Aramco Power, part of Saudi Aramco, in the consortium that has signed power purchase agreements with the state-owned electricity buyer to build five solar and two wind projects in four regions across the kingdom.
The deals mark a significant step forward in the country’s ambition to generate half of its electricity from renewable sources by 2030 as part of a plan launched by Crown Prince Mohammed bin Salman to diversify the Saudi economy away from its dependence on oil revenues. The world’s biggest oil exporter also wants to cut its carbon dioxide emissions to net zero by 2060.
The kingdom had about 4.34 gigawatts of solar capacity as of the end of 2024, according to the Energy Institute’s latest Statistical Review of World Energy, but wants to have up to 130GW of solar and wind capacity by the end of the decade.
A rough rule of thumb is that one gigawatt can potentially supply electricity for about 1mn homes. Almost all of Saudi Arabia’s electricity is currently supplied by oil and gas-fired power plants.
The Saudi government described the agreements as “among the world’s largest” at prices that are “the lowest globally”, according to an official statement. It went on to say that they were a result of “the efficiency of the kingdom’s financing and development models and the growing confidence in the kingdom’s investment environment”.
Prince Mohammed’s older half-brother Prince Abdulaziz, who serves as energy minister, attended the signing ceremony for the deals in Riyadh on Sunday. The Water and Electricity Holding Co, controlled by the Public Investment Fund, is part of the consortium.
Solar power is growing rapidly in the Middle East thanks to its abundant sun and the falling cost of solar panels, and as Gulf countries look to free up more oil and gas for export.
The Financial Times reported in January that, from a low base, the Middle East is the fastest growing region outside of China in terms of adding new renewable electricity capacity.
The central Riyadh region will have two solar and two wind projects, while the remaining solar projects will be in the regions of Mecca and Medina, as well as Aseer province. The projects should be up and running by 2028, according to a joint statement from ACWA Power and partners.
ACWA Power is one of the largest renewable energy companies in the Middle East, with operations in 14 countries across the region, Africa and Asia. The company has recently announced its entry in China as it seeks to expand its footprint despite concerns over trade tensions with the US.
“We decided to enter China because it’s the biggest market in the world in renewables, by far. So it makes sense when you want to grow to do it where there is growth,” chief executive Marco Arcelli told the FT this year.