Saudi Arabia's private utility Acwa Power and Water and Electricity Holding Company has signed a power purchase agreement worth $3.25 billion with the Saudi Power Purchase Company.

In a statement to the Tadawul Exchange, where its shares trade, Acwa said the agreement to develop and operate three major new solar PV IPP projects is part of the country's push to meet its renewable energy goals.

The three projects - Ar Rass 2, Saad 2 and Al Kahfah - will be jointly owned by Acwa and Badeel, a wholly-owned subsidiary of Saudi Arabia's sovereign investment arm, the Public Investment Fund. Acwa Power CEO Marco Arcelli said the signing of the three PPAs marks an important milestone for Acwa Power and represents the largest single deal for a solar project in our company's history. This achievement demonstrates our strong commitment to a sustainable future in Saudi Arabia and beyond.

The new plant aims to produce 4.55 gigawatts of renewable energy, enough to power approximately 750,000 homes. Upon completion, the Ar Rass plant will have a production capacity of 2 GW. Saad 2 will generate 1.125 GW, while Al Kahfah will have a capacity of 1.425 GW when completed.

Financial close for all three projects is expected to be completed by the third quarter of 2023, Acwa said. The solar projects are part of the Saudi National Renewable Energy Program, which is led and overseen by the Ministry of Energy. It requires PIF to develop 70% of the NREP target capacity.

Saudi Arabia, the Arab world's largest economy, is developing several new renewable energy projects as it aims to boost its clean energy capacity and become carbon neutral by 2060. In November, a unit of PIF in Saudi Arabia signed an agreement with Acwa to develop a solar power plant with a total capacity of 2.1 GW in Mecca.

The facility, expected to begin commercial operations in the fourth quarter of 2025, will be the largest of its kind in the Middle East, the companies said at the time. Saudi Arabia is also building the world's largest green hydrogen-based ammonia production plant in Neom - the country's planned futuristic city.

Mohammed Al Balaihed, PIF Director of Energy and Utilities, said that renewable energy is one of PIF's priority sectors, with a focus on unlocking capacity in promising sectors and enabling the private sector to strengthen Saudi Arabia's efforts to diversify its economy.

However, the Abu Dhabi-based International Renewable Energy Agency said in its World Energy Transition Outlook that this figure must rise to around $5 trillion a year by 2030 to meet the 2015 Paris Agreement , to limit the temperature rise to 1.5°C above pre-industrial levels Preview March 2023. It said renewable energy capacity must grow from about 3,000 GW today to more than 10,000 GW by 2030, an average of 1,000 GW per year.

Acwa Power operates in 12 countries across the Middle East, Africa, Central and Southeast Asia, with 68 projects in operation, advanced development or construction - with an investment of $68.27 billion, generating capacity of 44.4 GW of electricity and managing daily 6.2 million cubic meters of desalinated water.

With the addition of the three new projects, Acwa’s solar portfolio in Saudi Arabia has grown to 11, with a total PV capacity of more than 12 GW. Acwa Power's total installed renewable energy capacity in the country has increased to 23.4 GW.Editor/XingWentao