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Masdar eyes major Saudi expansion

13 September 2023

 

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The Saudi branch of the UAE-based clean energy firm Masdar aims to bid for every single renewable energy project that is tendered in the kingdom, according to its managing director and country manager Abdulaziz al-Mubarak.

The company, along with French utility developer EDF and local consortium partner Nesma, has been shortlisted for contracts to develop two solar photovoltaic (PV) independent power producer (IPP) schemes under the fourth round of the kingdom’s National Renewable Energy Programme (NREP).

This month, alongside EDF, it signed a multi-utility contract for the Amaala tourism development in Saudi Arabia.

The team won the contract after two years of bidding and negotiations.

Unlike most IPP projects that Masdar and its partners have previously implemented, the scope of the Amaala contract covers four technologies: power generation through a solar power farm; a battery energy storage system to enable 24-hour solar power dispatch; renewable energy-powered water desalination through reverse osmosis; and a wastewater treatment plant.

Only one other development, the Red Sea project, has implemented the same model.

“The Amaala multi-utility project allows us to partner with the best technology providers,” Al-Mubarak tells MEED.

In addition to EDF’s expertise, another French firm, Suez, is expected to join the project.

“The requirement of Amaala is unique,” the executive explains, referring to the completely off-grid nature of the utility infrastructure that will support the development. “It is not a straightforward IPP and Masdar as a developer is a strong suit for this project.”

Developing the entire sustainable infrastructure under one contract is expected to lead to greater operational efficiencies throughout the project’s lifecycle.

“Bundling the technologies, which will be completely off-grid, is as close as you can get to an ideal sustainable solution,” adds Al-Mubarak.

The Amaala multi-utility project is expected to reach commercial operation in 2025, and the developer consortium aims to issue a limited notice to proceed as soon as an engineering, procurement and construction (EPC) contractor is finalised.

“We will not wait to reach financial close before mobilising for the project’s construction phase,” the executive says, without elaborating on a potential EPC contractor and battery energy provider.

Bundling the technologies, which will be completely off-grid, is as close as you can get to an ideal sustainable solution
Abdulaziz al-Mubarak, Masdar

C&I opportunities

Masdar expects to quadruple its employee headcount in Saudi Arabia by mid-2024, roughly two years after its local office was inaugurated in Riyadh.

In addition to responding to an accelerated pace of renewable energy tenders, both through the principal buyer, Saudi Power Procurement Company, and other clients such as Neom, Masdar intends to play a major role in Saudi Arabia’s nascent renewable energy commercial and industrial (C&I) sector.

Emerge, a joint venture with EDF, signed a cooperation agreement with Al-Watania Agriculture Company in May this year to develop a 30MW solar PV project in Al-Jouf.

It is one of several captive renewable energy projects that Masdar is actively pursuing in the kingdom.

“We are in negotiations with several large organisations to implement a total capacity of roughly 200MW,” explains Al-Mubarak.

MEED understands these C&I opportunities range from a few megawatts to up to 30MW. A recent regulation has enabled C&I projects in Saudi Arabia, creating multiple opportunities, especially for companies looking to decrease their energy consumption or offset their carbon emissions.

Al-Mubarak adds: “As a leading utility developer in Saudi Arabia, Masdar can offer techno-commercial competitive proposals. We are also very focused on local technology and knowledge transfer and have a robust training programme in place.”

Masdar, in partnership with EDF, has won one contract each in the second and third rounds of NREP. The 400MW Dumat al-Jandal wind project has been completed and work on the 300MW South Jeddah solar IPP is approaching completion. 

Robust market

According to Al-Mubarak, Saudi Arabia will continue to be an exciting market for Masdar in the coming years due to its robust ecosystem, talent, outstanding credit rating and transparent contracting regime.

As such, the possibility of Saudi Arabia continuing its track record of achieving world-record-low tariffs in solar and wind project tenders cannot be ruled out.

“World-record-low levelised electricity costs are a result of the input for each project. The kingdom offers robust contractual agreements, good pre-development work, and a robust local EPC ecosystem that these projects can tap,” explains Al-Mubarak.

With plans to install a total renewable energy capacity of up to 58,700MW by 2030, the kingdom could play a significant role in fulfilling Masdar’s vision to reach 100,000MW of renewable energy installed capacity by the end of the decade.

Al-Mubarak, however, stops short of specifying how much Saudi Arabia is expected to contribute to this overall target.

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Jennifer Aguinaldo

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