Local firm to co-develop Saudi wind IPPs

22 May 2024

 

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Local firm Ajlan & Bros will co-develop, along with consortium leader Japan's Marubeni Corporation, the Al Ghat and Waad Al Shamal wind independent power projects (IPPs) in Saudi Arabia.

The projects, along with a third one in Yanbu, are procured under the fourth round of Saudi Arabia's National Renewable Energy Programme (NREP).

Saudi Arabia’s principal buyer, Saudi Power Procurement Company (SPPC), signed the power-purchase agreements (PPA) with the consortium for the 600MW Al Ghat and 500MW Waad Al Shamal wind farms on 21 May.

Saudi Energy Minister, Prince Abdulaziz Bin Salman Bin Abdulaziz Al Saud, witnessed the signing ceremony held during the Saudi-Japan Vision 2030 Business Forum in Tokyo.

The Al Ghat wind IPP project achieved a new world-record-low in terms of levelised electricity cost from wind power at $cents 1.56558 a kilowatt-hour (kWh), or about 5.87094 halalas/kWh.

The Waad Al Shamal project has also achieved a second world-record-low for wind power at $cents 1.70187/kWh or  6.38201 halalas/kWh.

MEED understands that the developer consortium has selected a team comprising Chinese engineering, procurement and construction (EPC) firms Power China and Sepco 3 for the two wind IPP projects.

The winning bidder for the third project – the 700MW Yanbu wind IPP –  has yet to be confirmed, a source told MEED.

In addition to the Marubeni consortium, the following developer teams submitted proposals for the contracts to develop the three wind IPP schemes:

  • Acwa Power (Saudi Arabia) / TotalEnergies Renewables (France)
  • EDF Renewables (France) / Masdar (UAE) / Nesma Company (local)
  • Engie (France) / Albawani Company (local) /  Haji Abdullah Alireza & Company (local)
  • Sumitomo (Japan) / Aljomaih Energy & Water Company (local) / Shikoku Electricity Power Company (Japan)

The financial advisory division of Tokyo-based Sumitomo Mitsui Banking Corporation is advising SPPC on procuring the three wind IPPs.

Saudi Arabia has procured only one wind IPP under the NREP so far.

Tendered under round two, the 400MW Dumat Al Jandal wind IPP was connected to the Saudi electricity grid last year.

A team of France’s EDF Renewables and UAE-based Abu Dhabi Future Energy Company (Masdar), which won the $500m contract in 2019, is developing and operating the scheme. 

Saudi Arabia aims to install 58,700MW of renewable energy capacity by 2030 through the NREP. MEED understands the final target has been increased to 130GW, subject to demand growth.

The Energy Ministry, through SPPC, is tasked with procuring 30% of this capacity through public tendering. Saudi sovereign wealth vehicle the Public Investment Fund will procure the rest under the kingdom’s Price Discovery Scheme.

Both initiatives aim to drive renewable sources to account for 50% of electricity production in Saudi Arabia by 2030, displacing liquid fuels, with natural gas accounting for the remaining 50%.


MEED's April 2024 special report on Saudi Arabia includes:

> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector

> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospects

 

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Jennifer Aguinaldo
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