Saudi Electricity Company (SEC), the Gulf's largest utility, has contracted two companies for SR2.5 billion  ($667 million) to build and operate the Green Duba power plant, state news agency SPA said.

Spanish solar firm Inteq Energia and the Saudi Services for Electro Mechanic Works (SSEM) won the bids for the 605 MW plant, which will produce 43 MW of solar energy.

Green Duba, planned to be built near Tabuk on the Red Sea coast, will be Saudi Arabia's first fossil-fuel fired power plant to incorporate solar energy production to boost efficiency - known as an integrated solar combined cycle (ISCC) plant.

ISCC plants reduce emissions of climate-warming carbon by increasing the amount of steam available for driving power generation turbines, without having to burn more gas or oil.

The solar portion of the plant will save the equivalent of 3 to 4 million barrels of fuel over the life of the project and reduce carbon emissions by between 40,000 and 50,000 tonnes per year, said SEC chairman Saleh Bin Hussein Al-Awaji.

Saudi Arabia, already one of the world's largest carbon emitters per capita according to the World Bank, faces surging demand of 6 to 8 per cent per year for energy as its population increases rapidly and the economy grows.  - Reuters