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Al-Jouf Cement and Engie to build captive solar plant

20 November 2024

Saudi-listed Al-Jouf Cement Company has signed an agreement with French utility developer and investor Engie to construct and operate a solar power plant for 25 years at the company's site Turaif.

The solar plant will have a generation capacity of 22MW.

Al-Jouf will purchase the electricity generated from the plant for 25 years starting from the actual commencement of the plant’s operations.

In a bourse filing on 19 November, Al-Jouf said the project cost will be lower than the company’s current production costs from its heavy fuel oil power plant and lower than the industrial electricity costs if connected to the national grid.

It added: "The solar power plant is expected to contribute approximately 25% of the company’s electricity needs upon completion. Al-Jouf Cement Company will not incur any financing for the project, as it will not bear any capital or operational expenses."

According to the company’s initial estimates, the positive impact of cost reduction will gradually begin to appear from the first year of operation. The financial impact will be determined based on prevailing fuel prices at that time.

The positive impact, compared to the current industrial electricity tariff from the Saudi Electricity Company, is expected to be SR3.6m annually.

The contract will also have a positive environmental impact by reducing carbon emissions by 1,481,100 tonnes, supporting the Saudi government’s efforts to decarbonise the energy-intensive cement sector and the company's strategy to enhance the consumption of renewable energy.

It is the second major commercial and industrial renewable energy project for Engie in Saudi Arabia, following the signing of a similar contract with agricultural group Nadec in 2019.

Photo credit: Pixabay (for illustrative purposes only)

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Jennifer Aguinaldo

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