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Expectation grows for Yanbu wind IPP award

23 May 2024

Commentary
Jennifer Aguinaldo
Energy & technology editor

Market expectations and speculation have intensified regarding the third wind independent power project (IPP) – the 700MW Yanbu scheme – that the Saudi principal buyer tendered as part of round four of Saudi Arabia's National Renewable Energy Programme (NREP).

This follows the signing of power-purchase agreements (PPAs) on 21 May by the Energy Ministry's Saudi Power Procurement Company and a consortium of Japan's Marubeni Corporation and the local Ajlan & Bros for the contracts to develop two wind IPP schemes that belong to the NREP round four.

The Marubeni-led consortium has agreed to develop and operate the 600MW Al Ghat wind IPP project with a new world-record-low levelised electricity cost (LCOE) from wind power of $cents 1.56558 a kilowatt-hour (kWh), or about 5.87094 halalas/kWh.

The 500MW Waad Al Shamal project has also achieved a second world-record-low tariff for wind power of $cents 1.70187/kWh or  6.38201 halalas/kWh, the ministry has announced.

The tariff achieved for Al Ghat is almost 22% lower compared to the LCOE agreed for Saudi Arabia's first wind IPP, the 400 Dumat Al Jandal scheme, which was awarded in 2019.

MEED understands the final approval process is under way for the Yanbu wind IPP contract award.

Speculation over the winning bidder and the tariff proposed by that team varies.

Some assume that the Yanbu wind IPP's higher capacity and potential lower capacity factor and the world-record-low tariffs achieved for Al Ghat and Waad Al Shamal imply that the LCOE for the Yanbu wind contract will be even lower than either.

The same text that says "world-record-low" tariffs, attributed to Saudi Energy Minister Prince Abdulaziz Bin Salman Bin Abdulaziz Al Saud, may also imply the opposite, though less plausible, outcome: that the winning bidder for the Yanbu wind scheme may have proposed a higher tariff than those achieved for Al Ghat and Waad Al Shamal. 

Industry sources previously told MEED that the favourites to win the three contracts, in addition to Marubeni, were the teams separately led by Riyadh-based Acwa Power and France's Engie.

However, the Marubeni-led team's successful bid for the two contracts means one of the region's two largest utility developers will go home empty-handed, assuming the industry sources are correct.

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Jennifer Aguinaldo

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