Acwa Power, a leader in power generation and water desalination plants, and AlGihaz Holding Company, a major Saudi contractor and investor, have announced the financial closure of the SR1.2 billion ($320 million) Sakaka PV IPP.

The Sakaka PV IPP is the first ever utility scale renewable energy project to be developed in Saudi Arabia under the landmark National Renewable Energy Program executed by REPDO (Renewable Energy Project Development Office).

A new company “Sakaka Solar Energy Company (SSEC)” has been formed with Acwa Power holding 70 per cent and AlGihaz 30 per cent through its subsidiary AlGihaz Renewable Energy Company to own the Sakaka PV Plant. SSEC has concluded a 25 years Power Purchase Agreement with Saudi Power Procurement Company (SPPC) acting as offtaker.

The transaction is financed through limited recourse ring fenced project financing with the entire debt fully underwritten by Natixis as Initial Mandated Lead Arranger and Bookrunner. In addition, Arab National Bank provided an equity bridge loan for the transaction.

Paddy Padmanathan, president & chief executive officer of Acwa Power, said, "We are excited to commence construction of this first utility scale PV plant in the Kingdom project which will allow us to utilize the considerable expertise and relationships with technology providers and the supply chain we have acquired through the development of 3000MW of renewable energy projects in 5 other countries over the last 7 years to now deliver at our home not only the lowest tariff for PV power but also to start establishing a renewable energy industry in the Kingdom which we believe will become one of the most significant cornerstone to deliver several of the objectives of Vision 2030 of the Kingdom."

Marking the occasion, Osama Bin Abdulwahab Khawandanah CEO, SPPC, added: The Sakaka 300MW Solar PV project is the first step in a long journey the Kingdom has committed to undertaking. We are blessed with abundant sunshine and wind, and it is our mission to utilize these valuable resources to diversify our energy mix, eliminate the use of high-value liquid fuels from our power generation system, and encourage further private sector contributions in the power sector”.

Sami Al Angari, vice-chairman & chief executive officer of AlGihaz said: “We are delighted to be investing with Acwa Power on this important and landmark project in Saudi Arabia and are honoured to provide our support to the consortium for the delivery of the project.

“The Kingdom’s plan to become more diversified in its energy sources and concentrate on renewable energy is an important part of the National Transformation Plan (NTP) and we are keen to play a major role in helping deliver this. AlGihaz is committed to a green future for the Kingdom and for the world and we will aim to participate to any renewable energy project that would help achieve this goal.”

Rajit Nanda, chief investment officer of Acwa Power, said: “Sakaka PV IPP is a landmark project for the Saudi renewable energy sector as it serves as first step towards achieving the visionary goals of the Saudi National Renewable Energy Program that aims to accelerate the shift of the Kingdom towards utilizing renewable energy resources and ensuring energy security at the lowest cost.

“The new world record tariff of US Cents 2.3417/kWh will set the stage for a robust and competitive market for renewable energy in the Kingdom, thus enabling Saudi Arabia to expand its portfolio of clean energy projects to support the sustainable development of country.”

The commercial operation date of the plant is scheduled to be towards the end of calendar year 2019.

Upon completion, the 300 MW Sakaka PV IPP will supply more than 75,000 households with green power while offsetting over 430,000 tonnes of carbon dioxide per year. The project will also create new employment opportunities in fields including construction, operations and maintenance as well as enhancing the local capabilities in terms of local content.

The engineering, procurement and construction (EPC) contract for the project was awarded to a consortium of Mahindra Susten and Chint. The operations and maintenance agreement was signed with DiaaSakaka Operation and Maintenance Company, an affiliate of First National Operations & Maintenance Co. Ltd. (NOMAC).

The plant is located in Al Jouf at a site spanning over 6 sq km. – TradeArabia News Service