A consortium led by Saudi Arabia's Acwa Power International has won a 1.7 billion euro ($2 billion) contract to build two solar power plants totalling 350 megawatts in the southern Moroccan city of Ouarzazate, the Moroccan solar energy agency (Masen) said in a statement.

The two plants are the second phase of the 500 MW Ouarzazate project, which is part of a government plan to produce 2 gigawatts of solar power by 2020, equivalent to about 38 per cent of Morocco's current installed generation capacity.

Acwa Power is already building a 160 MW plant in the first stage of the project in the Ouarzazate area.

Acwa's consortium, which includes Spain's Sener, had priced its offer at Dh1.36 ($0.146) per kilowatt (KW) for the first 200 MW plant with parabolic mirror technology, while it priced the plant with solar power tower technology at Dh1.42 ($0.15) per KW.

Consortiums led by Spain's Abengoa, GDF's International Power and Acwa Power were pre-selected for the 200 MW (Noor II) tender. The three groups were also pre-qualified for the 150 MW (Noor III) tender, along with another consortium led by Electricite de France (EDF).

Sources have told Reuters that consortiums led by Acwa and Spain's Abengoa have bid the lowest to build the two plants. If Masen decides to combine the bids for the two plants, the Acwa bids overall would beat Abengoa's, the sources added.

The plants are scheduled to start generating power in 2017.

To finance the plants, Morocco has secured loans of $519 million from the World Bank, 654 million euros from German state-owned bank KFW and the rest from the African Development Bank (AfDB), the European Commission and European Investment Bank.

Facing an electricity demand that rises by an annual 7 per cent and a gaping trade deficit from heavy reliance on fossil fuel imports, Morocco also hopes renewable energy will enable it to export electricity to energy-hungry trade partner, the European Union.

Coupled with another multi-billion dollar wind energy development scheme, the solar development plan should reduce Morocco's annual imports of fossil fuels by 2.5 million tonnes of oil equivalent and prevent emissions of 9 million tonnes of carbon dioxide.

Masen is expected to announce the two next solar plants, which would be located in Midelt (central) and Tata (south) towns with an estimated 500 MW each.

The choice of the two towns came after international lenders told Reuters they would not finance projects located in the disputed Western Sahara that were initially in the Moroccan solar plan. – Reuters