Saudi Arabian oil behemoth Aramco joined one of the largest solar projects planned in the Middle East as it made its first investment under the kingdom’s renewable energy programme.
Aramco joined compatriot utility group ACWA Power in the $900m, 1.5GW Sudair Solar project that forms a key part of an initiative led by Saudi Arabia’s Public Investment Fund (PIF) that aims to deliver the majority of the renewable energy needed to meet national targets.
Saudi energy minister Prince Abdulaziz bin Salman earlier this year said the kingdom – the world’s largest oil exporter – wants to be “another Germany when it comes to renewables” and derive 50% of its electricity from green power sources by 2030.
Aramco will hold 30% of Sudair Solar via its wholly owned subsidiary Sapco, with ACWA holding 35% and the remainder owned by PIF itself.
The Aramco stake, the first investment under PIF by the state-controlled oil giant, was revealed as ACWA Power announced financial close on Sudair Solar, which will sell its output for 25 years under an offtake agreement with the Saudi Power Procurement Company for a price equivalent to around $12.40/MWh – among the lowest-cost PV power achieved globally.
The consortium expects to start commissioning Sudair’s first modules next year.
The green light for the giant project comes soon after Saudi Arabia entered the wind power era when its first commercial wind farm, the 400MW Dumat Al Jandal, began operations.
The kingdom’s previous plans for large-scale wind and solar deployment have made slow progress, but its latest initiatives include massive deployments to supply the Neom mega-city, and big ambitions in both blue and green hydrogen production.
The executive leading the energy plans for Neom told Recharge in an interview earlier this year that he expects future power costs of $10/MWh for solar and $15/MWh for wind in the kingdom.