Financial Closure Announcement by ACWA Power for 1,500 MW Plant

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ACWA Power, a leading developer, investor, and operator of power generation and desalinated water plants, recently announced the financial closure for the 1500 MW Sudair Solar plant, a key project under the Public Investment Fund (PIF) renewable energy program.

The launch of the Sudair Solar project was announced at the inauguration of the Sakaka PV project in April 2021, under the patronage of HRH Prince Mohammed bin Salman bin Abdulaziz, Crown Prince, Deputy Prime Minister, Chairman of the Supreme Committee for Energy Mix Affairs for Electricity Production and Enabling Renewable Energy Sector, and in the presence of HRH Prince Abdulaziz bin Salman bin Abdulaziz Al Saud, Minister of Energy.

A specialized Saudi technical team at the Ministry of Energy selected the Sudair project site and carried out the engineering requirements and preliminary studies of the project to achieve the highest levels of efficient energy production and contribute to shaping the circular carbon economy, which the Kingdom adopted during its presidency of the G20 last year. Sudair solar is a testament to the Kingdom’s continuous efforts to reduce emissions resulting from the energy sector. Additionally, the Ministry of Energy utilizes its Renewable Energy Program and Local Content Development Program to enable the prosperity of this promising sector and its supply chains through various initiatives such as mobilizing private sector investments and encouraging partnerships between the public and private sectors to create a competitive national market for renewable energy.

ACWA Power also announced that SAPCO, a fully owned company of Aramco, has joined the consortium with ACWA Power and Badeel, a company fully owned by PIF. The consortium, led by ACWA Power, embodies the strategic importance of the Sudair Solar PV project, the first project under PIF’s renewable energy program. The program aims to support Saudi Arabia’s ongoing energy transition and diversification and deliver 70% of the country’s renewable energy under the National Renewable Energy Program (NREP).

ACWA Power – in which PIF holds a 50% stake – and Badeel will each own 35% in the special purpose vehicle “Sudair One Renewable Energy Company”, which was incorporated for the project; with SAPCO holding a 30% stake.

The renewables and Utility sector is one of the 13 priority sectors that PIF identified as a key focus area in its Strategy 2021-2025. The strategy focuses on unlocking the private sector’s capabilities and aims to increase local content contribution to 60%, including PIF and its portfolio companies, and expanding opportunities for local companies to partake in the Fund’s projects.

Aramco’s investment in the Sudair Project is its first participation with PIF in its renewable energy program; reflecting the company’s efforts to advance sustainable energy solutions within its operations and Saudi Arabia, where a variety of low-carbon energy solutions are deployed.

With an investment value of SAR 3.4 billion, Sudair Solar PV project, which is located at Sudair Industrial City, is set to become one of the largest single-contracted Solar PV plants in the world and the largest of its kind in Saudi Arabia. A 25-year power purchase agreement for the plant was signed with the Saudi Power Procurement Company, with the tariff being among the lowest for solar PV projects globally. Using bi-facial modules with tracking technology, the plant is set to deliver highly efficient performance and be capable of powering 185,000 homes, while offsetting nearly 2.9 million tons of emissions per year.

The financing for the project is based on the principles of limited recourse project financing, with the senior debt structured as a soft mini-perm facility with a tenor of 28 years and both conventional as well as Islamic tranches. The financing structure also features a set of equity bridge facilities provided by local and international banks supporting the sponsor group’s equity investment in the project.

The financing group includes Mizuho Bank, Ltd., Riyad Bank, Korea Development Bank, Arab Petroleum Investments Corporation (APICORP), Al Rajhi Banking & Investment Corporation, and Standard Chartered Bank as senior lenders and Mandated Lead Arrangers. Bank Al Bilad, Saudi British Bank, and SMBC International Plc provide the equity bridge facilities.

Mohammad Abunayyan, ACWA Power Chairman, said, “Underpinned by our ambition and determination to continue driving the transformation of the Kingdom’s energy sector, I would like to extend my sincere gratitude and pride following the signing of agreements for the first project under the PIF Renewable Energy Program. Today’s milestone marks progress in achieving the goals of Vision 2030 and the requirements of the National Renewable Energy Program launched by the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud; guided by the directives of His Royal Highness the Crown Prince, Mohammed bin Salman bin Abdulaziz; and reinforced by the unparalleled support of His Royal Highness Prince Abdulaziz bin Salman, Minister of Energy, to accomplish this ambitious vision.”

“The Sudair Solar project is also a testament to the leadership and foresight shown by PIF in bringing together various stakeholders to create tangible impact in the renewables sector by integrating robust public-private partnerships (PPP), one of the cornerstone policies of Vision 2030. We are honored to work hand-in-hand with the Kingdom’s greatest national champions, including PIF, Aramco, and leading local and international financial institutions; to bring the largest solar PV plant in Saudi Arabia to fruition,” he further added.

The EPC agreement for the construction of the Sudair Solar PV was signed with Larsen & Toubro in April 2021. The project’s first phase is expected to begin producing electricity during the second half of 2022, contributing towards the Saudi Green Initiative.

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