Riyadh steps up the Vision 2030 tempo

22 March 2023

 

Riyadh has begun pushing ahead with many of its Vision 2030 initiatives at a faster pace and in a much more tangible manner in the past six months, with the go-ahead given for several infrastructure packages on the kingdom’s flagship Neom project.

More than $13bn-worth of work has been awarded on Neom-linked projects since the start of 2022, including initial piling and tunnel blasting and drilling work for the Line development. More than $7bn has also been awarded in just the past five months, including $4.5bn across community housing schemes.

There has been equally robust activity on the other four official Public Investment Fund (PIF) gigaprojects. Projects worth another $1.8bn have been awarded since 2021 on the Diriyah Gate project, alongside $1.5bn-worth on the Roshn housing programme and $1.1bn each on the Red Sea Project and Qiddiya entertainment city.

Investment uptick

The shift in project tempo has also been matched by a step-up in other Vision 2030 initiatives, including the Shareek investment programme, which is aimed at supporting large Saudi companies in boosting the economic contribution of the kingdom’s private sector.

On 1 March, Saudi Arabia announced $51bn-worth of investments across eight Saudi companies as part of the programme. By 2030, Riyadh wants to increase the private sector GDP contribution to 65 per cent, while increasing the country’s non-oil exports from 16 to 50 per cent.

For external investors too, Saudi Arabia’s Vision 2030 plans are the top opportunity in the region, according to a recent poll by Egyptian financial services firm EFG Hermes. The survey showed that 34 per cent of respondents viewed Vision 2030 as the most important source of current investment opportunities.

There are meanwhile 23 companies waiting to list on the Saudi stock exchange. Those companies “are essentially on the runway waiting for the appropriate time, and obviously market conditions”, according to Mohammed ElKuwaiz, the chairman of the Capital Market Authority.

Last year was a record-breaking year for Saudi Arabia’s capital markets, with companies raising about $10.7bn (SR40bn) from initial public offerings (IPOs). The country also led regional IPO activity, with 34 out of the 48 GCC IPOs debuting on either the Tadawul or the Nomu.

Looking ahead, the Saudi market regulator is reviewing a further 77 IPO applications. It is also formulating a framework for dual listings, following the example of Americana, the first company to be dually listed in the kingdom and the UAE.

More broadly, the business confidence in the non-oil private sector continues to swell. In February, Saudi Arabia’s non-oil business activity reached its highest level in eight years due to a surge in demand, according to the Riyad Bank–S&P Saudi Arabia Purchasing Managers’ Index.

The index – in which a figure above 50 indicates expansion – increased from 58.2 to 59.8 in the fastest rate of increase since March 2015. The new orders component of the index rose to a record high of 68.7, with over 42 per cent of surveyed companies reporting a rise in new orders. The overall higher output also saw further employment and purchasing expansion.

Despite tighter monetary conditions, Naif al-Ghaith, Riyad Bank’s chief economist, noted the robust demand and supply balance spurred by the ongoing projects in the kingdom, which has caused “sharper uplifts in output and new orders for firms, as well as rising demand for labour”.

He added that while “prices have responded to the surge in demand, with the increase in input costs evident especially in the services and construction sectors”, business confidence remains high amid expectations for strong ongoing activity over the next 12 months.

Growth forecast

Despite the positive economic signs, the IMF reduced its 2023 GDP projection for Saudi Arabia to 2.6 per cent in January. This is in response to Opec+ agreements to restrict oil production 1.3 percentage points below the projection of 3.9 per cent growth in its October outlook.

Though non-oil growth remains strong, the reduction in oil output will unavoidably impact Saudi Arabia’s topline GDP. At the same time, the toll on oil revenue should be relatively contained and not unduly affect the kingdom’s capital spending, which is at this point being backed by a diverse pool of both sovereign and private assets.

According to a late February forecast by Riyad Capital, Saudi Arabia’s economy could grow by 3 per cent in 2023, driven principally by a pick-up in the non-oil sector, which it predicts will see a growth rate of 5 per cent this year.

In 2022, Saudi Arabia witnessed its strongest growth in the third quarter, when the GDP rate hit 8.8 per cent, according to the IMF, boosted by a 6.2 per cent growth rate for non-oil activity.

Riyad Capital also expects the weaker oil prices during the first half of 2023 to recover in the second half of the year, with Brent crude expected to end 2023 at a level above $100 a barrel.


MEED's April 2023 special report on Saudi Arabia includes:

> CONSTRUCTION: Saudi construction project ramp-up accelerates

> UPSTREAM: Aramco slated to escalate upstream spending

> DOWNSTREAM: Petchems ambitions define Saudi downstream

> POWER: Saudi Arabia reinvigorates power sector

> WATER: Saudi water begins next growth phase

> BANKING: Saudi banks bid to keep ahead of the pack

https://image.digitalinsightresearch.in/uploads/NewsArticle/10658249/main.gif
John Bambridge
Related Articles
  • Abu Dhabi to quit gas-fired generation by 2050

    23 February 2024

    Abu Dhabi-based state utility Emirates Water & Electricity Company (Ewec) expects to progressively reduce gas-fired generation with the aim of eliminating its use in 2050.

    However, the company added that it continues to see a crucial role in the short- and medium-term for gas generation.

    The summary of Ewec’s latest Statement of Future Capacity Requirements (SFCR) covering the years 2024 to 2037 was issued earlier this week.

    The annual SFCR provides recommendations for future power generation and water desalination capacities in Abu Dhabi based on a modelling approach that considers Ewec’s sustainability targets as well as various macroeconomic inputs.

    “Gas will increasingly be used as a transition fuel that will enable the integration of large amounts of renewable energy into the system,” the annual SFCR said.

    The base case forecast indicates that an approximately equal share of new combined cycle gas turbine (CCGT) and open cycle gas turbine (OCGT), totalling a recommended  5.1GW,  delivers the least cost to the Abu Dhabi electricity system, it added.

    The Abu Dhabi government has set a target to achieve 60 per cent clean energy, from renewables and nuclear, by 2035.

    It also expects demand for both power and water to increase by an average of 5 per cent annually until the end of the forecast period, due to underlying economic growth and electrification of other sectors such as transportation and industry to support decarbonisation.

    The latest SFCR’s recommendations include:

    • Development of 1.5GW of solar capacity by 2027 following the completion of the Al Ajban solar independent power project (IPP) in 2026
    • Development of 400MW of battery energy storage with a one-hour depth of storage for the provision of grid stability by 2026
    • 5.1GW of thermal capacity is required to support the integration of renewable energy projects into the system. This will comprise 2.6GW of low-cost OCGT to be available by 2027 and 2.5GW of CCGT to be available by 2028.
    • Procurement of at least 380,000 cubic metres a day or 62MIGD of reverse osmosis capacity by 2029

    The recommendations and demand growth forecast are understood to have considered the capacities that are currently under construction.

    “The planning recommendation to proceed with the immediate development in 2023 of each of these battery, solar PV and gas generation projects reflects the varying times to implement and achieve commercial operation for these different technologies,” the SFCR stated.

     

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11544303/main.jpg
  • Mergers soar in global mining sector

    23 February 2024

     

    This month's Agenda also includesSaudi Arabia transforms mining sector


    There was a surge in mergers and acquisition (M&A) activity in the global mining sector in 2023, extending a period of consolidation in the industry that began in the previous decade.

    The total value of M&A deals in the industry increased by 75% compared to the previous year, to reach $121bn, according to a report by GlobalData. The number of M&A transactions grew 5% year-on-year to 1,526, while the number of mega deals – which are defined as deals with a transaction value of $1bn or more – stood at 16.

    The Asia-Pacific region, excluding China, recorded the highest M&A deal value, surpassing North America as the leading region. Despite this, North America maintained its leadership position in terms of deal volume.

    GlobalData attributes the increase in M&A activity to companies seeking to position themselves favourably amid disruptive threats in the industry.

    Major deals

    The year’s biggest mining M&A deal was recorded in December, when Japanese steelmaker Nippon Steel announced its $14.98bn takeover of Pittsburgh-based United States Steel.

    In November, Swiss commodities giant Glencore announced it will acquire a majority 77% stake in Elk Valley Resources, the steelmaking coal business of Canadian miner Teck Resources. The transaction is valued at $6.93bn, making it the second-biggest deal of 2023.

    Nippon Steel Corporation will acquire a 20% stake in Elk Valley Resources, while South Korea’s Posco will take 3%.

    Within months of being established, Saudi Arabia’s Manara Minerals entered into a transaction in July with Brazilian mining major Vale to become a 10% shareholder in its $26bn subsidiary, Vale Base Metals. 

    Manara Minerals teamed up with investment firm Engine No 1, which took a 3% stake in Vale Base Metals. The $3.4bn transaction was the third-biggest M&A deal in 2023.

    Manara Minerals was formed in January 2023, when Saudi Arabian Mining Company (Maaden) signed a joint-venture agreement with the kingdom’s Public Investment Fund (PIF) to establish a firm that would invest in mining assets globally. Maaden owns a 51% stake and the PIF holds the other 49% in the company.

    Manara Minerals aims to invest in iron ore, copper, nickel and lithium projects as a non-operating partner, taking minority equity positions.

    In another key deal, Australia’s MMG entered into a share purchase agreement to acquire the parent company of Botswana’s Khoemacau copper mine, with a deal value of $1.8bn.

    Prominent themes

    Among all mining commodities, gold continued to account for the largest share of M&A activity in 2023, in line with the trend observed in 2022, according to the GlobalData report. Last year, there were 375 gold asset-related deals, with a combined value of $49bn.

    The report identified energy transition as the most prominent theme driving M&A deal value in 2023. 

    The industry is facing headwinds from stricter regulatory, social and environmental requirements when it comes to obtaining licences to develop and operate mining operations. In response, the sector is embracing the shift to a green economy and net-zero emissions. 

    Most mining companies recognise the need to develop more environmentally friendly mineral exploration technologies to improve relations with local communities and advance mine development.

    The estimated $17bn-worth of energy transition-themed M&A transactions last year demonstrates this commitment to a cleaner, greener future by mining companies globally.

    The positive momentum of M&A activity is expected to continue into 2024. This year will likely once again see mergers of equals; major mining producers acquiring small producers to strengthen their near-term production profiles; and the strategic acquisition of high-quality, long-life development projects to bolster producers’ development pipelines.

    It is also expected that mining companies will continue to prioritise projects that can increase their exposure to critical minerals, including copper, nickel, cobalt and lithium deposits – all of which are an integral part of the global electrification transition that is under way.

    Saudi Arabia transforms mining sector

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11502734/main.gif
    Indrajit Sen
  • Saudi Arabia transforms mining sector

    23 February 2024

     

    This month's Agenda also includes: Mergers soar in global mining sector


    Saudi Arabia’s metals and mining industry is playing a pivotal role in the country’s non-oil growth trajectory. 

    Commercial exploitation of the kingdom’s massive mineral resource base, most of which lies untapped, is a key component of Riyadh’s Vision 2030 socioeconomic transformation strategy.

    The kingdom took the first step towards realising the commercial potential of its mineral resources when it enacted a new mining investment law in 2021. Since the law came into effect, the Ministry of Industry & Mineral Resources (MIMR) has awarded more than 2,000 mining permits to local and foreign firms under its accelerated exploration initiative.

    Addressing the Future Minerals Forum (FMF) in Riyadh in early January, Bandar Alkhorayef, the kingdom’s industry and mineral resources minister, said Saudi Arabia’s natural resources are worth $2.5tn – an increase of more than 90% compared with the 2016 estimated level of mineral reserves.

    This near-doubling of its deposits of natural resources – which excludes fossil fuels and includes phosphate, gold and rare earths – is set to act as a stimulus to the kingdom’s nascent mining industry.

    Mineral exploration drive

    The MIMR is leading efforts to boost investments in the Saudi metals and mining sector, and Riyadh is providing impetus to the mineral exploration incentive programme with a cash injection of $182m.

    “This programme will de-risk investments in our exploration, to enable new commodities, greenfield projects and junior miners,” Alkhorayef told the FMF.

    To tap into overseas mining experience, the ministry signed four memorandums of understanding at the FMF.

    Deals involving cooperation in the field of mineral wealth were signed with Egypt’s Petroleum & Mineral Resources Ministry, Morocco’s Energy Transition & Sustainable Development Ministry and Congo’s Mines of the Democratic Republic Ministry. A separate agreement inked with Russia involves geology. 

    Alkhorayef also announced the MIMR’s fifth and sixth mining concession licensing rounds at the conference in Riyadh. The rounds will offer local and international miners access to 33 exploration sites this year.

    The ministry launched its last concession licensing round in August 2023, offering eight mining sites in the kingdom. Six of the sites are located in the Eastern Province – in Ghounan, Al Misnah, Al Samman, Ras Al Qaryah and the eastern and western zones of Salwa – and are understood to contain limestone ore, sand and other minerals.

    The other two sites are in Riyadh Province, in Al Armah and Hofayrat Nesaah. These sites are estimated to hold gravel and sand deposits, among other minerals.

    Prior to the August licensing round, the ministry announced in April that it had shortlisted 13 local and international companies for the exploration phase at the Muhaddad and Al Ridaniyah mining sites.

    The Muhaddad exploration site, located in Bisha within the Asir geological terrane, covers 139 square kilometres and includes copper, zinc and lead ore deposits. The Al Ridaniyah exploration site is in the Riyadh region within the Al Dawadmi geological terrane. It covers more than 75 sq km and includes deposits of zinc and silver ore.

    In January, the MIMR announced preferred bidders for another licensing round that it launched last April.

    A consortium of local firm Ajlan & Bros Mining Company and Hong Kong-based Norin Mining Company is the preferred bidder for the Bir Umq exploration site. The site is located in the city of Mahd Ad Dhahab, in western Saudi Arabia. Covering about 187 sq km, the site contains deposits of copper and zinc.

    As part of the licence awarded for this site, the winning consortium will invest over $29m in exploration activities. The consortium has also committed $4m for local community initiatives, including training and development programmes.

    A consortium of UK-headquartered Royal Road and local entity MSB Holding Company has been picked as the preferred bidder for the Jabal Sahabiyah exploration site. 

    The site is located in the Tathleeth region, in the south of the kingdom, and covers an area of 283 sq km. Jabal Sahabiyah holds mineral deposits of zinc, lead and copper. The selected consortium will invest more than $5m in exploration work and another $120,000 in community development.

    A consortium of Saudi Arabia-based Sumou Holding and Canada’s Kuya Silver has been selected for the Umm Hadid site and will invest more than $22m in exploration activities and about $800,000 in community development. Umm Hadid is located in the Afif region in central Saudi Arabia. Covering an area of 246 sq km, the site contains mineral deposits of silver, lead, copper and zinc.

    The near-doubling of its deposits of natural resources is set to act as a stimulus to the nascent mining industry

    Maaden steps up

    Saudi Arabian Mining Company (Maaden) is at the forefront of Riyadh’s campaign to develop and expand the kingdom’s metals and mining sector. By 2040, the company, which is majority owned by the Public Investment Fund (PIF), aims to build its upstream mining capabilities, gain exposure to future minerals and form partnerships with global mining companies.

    Last January, Maaden signed a joint-venture agreement with the PIF to establish a new company to invest in mining assets globally. Maaden owns a 51% stake and the PIF holds the other 49% in the company, known as Manara Minerals, which will have a capital allocation of $50m.

    Manara Minerals aims to invest in iron ore, copper, nickel and lithium projects as a non-operating partner, taking minority equity positions. The firm’s first overseas investment was a deal in July to become a 10% shareholder in Brazilian mining major Vale’s $26bn subsidiary, Vale Base Metals.

    In terms of metals production, Maaden announced in mid-January that its subsidiary Maaden Gold & Base Metals Company (MGBM) had started commercial production of gold from the first phase of the Mansourah-Massarah gold project.

    MGBM operates six gold mines, with the Mansourah-Massarah mine being one of its concession areas. In June 2021, the Maaden subsidiary awarded an estimated $880m contract for the first phase of the Mansourah-Massarah gold mine to a consortium of India’s Larsen & Toubro and Finland-based Metso Outotec. The award of that engineering, procurement and construction (EPC) contract represents the biggest investment in gold mining in Saudi Arabia to date.

    In August last year, MGBM also awarded an EPC contract for the second phase of the Mansourah-Massarah gold mine project, worth $28m, to a consortium of Riyadh-based Darkstone and Australia-headquartered ATC Williams. The contract involves installing tailings storage facilities and wastewater management systems.

    Maaden exploration push

    On the mineral exploration front, Maaden signed an agreement with US-based Ivanhoe Electric in July 2023 to undertake exploration for high-demand minerals in the Arabian Shield zone in Saudi Arabia. As part of the $130m deal, the partners are to survey an area of 48,500 sq km in the Arabian Shield, starting in September.

    About the size of Switzerland, the Arabian Shield region is understood to be rich in reserves of minerals such as copper, nickel, gold, silver and possibly lithium.

    Maaden has had success in its exploration drive. In late December, it announced the discovery of significant gold resource potential extending along a 100km strike from its Mansourah-Massarah gold mine. This is the first find from the company’s exploration programme, which was launched in 2022 with the aim of building Maaden’s production pipeline.

    Exploration around Mansourah-Massarah has focused on identifying potential deposits of a similar scale and with similar geology. Encouraging drill results from several sites on Uruq South, along a 100km stretch south of Mansourah-Massarah, uncovered similar geological characteristics and chemistry to the gold deposit. These results include high-grade drill intercepts found 400 metres away from and under Mansourah-Massarah, with several high-grade intercepts.

    In addition, Maaden has continued the expansion of its exploration footprint at the Jabal Ghadarah and Bir Tawilah prospects located 25km north of Mansourah-Massarah, where the company is converting an inferred resource of 1.5 million ounces to indicated and measured status.

    In combination, these positive drilling results have identified a 125km strike with significant potential to become a major gold belt in Saudi Arabia. The near-mine drilling results around Mansourah-Massarah indicate that the resource is open both at depth and along the strike, offering significant potential to expand resources at the mine and possibly to extend the mine life with underground development.

    Mansourah-Massarah had stated gold resources of almost 7 million ounces as of the end of 2023, and a nameplate production capacity of 250,000 ounces a year.

    Positive drilling results have identified a 125km strike with the potential to become a major gold belt in Saudi Arabia  

    Maaden technology investments

    To extend the role of technology in Saudi Arabia’s mining sector, Maaden signed a master agreement with Germany’s Thyssenkrupp Uhde at the FMF. The deal covers the development of engineering and licensing of a calcination plant for phosphogypsum processing.

    The purpose of the proposed plant, which is to be located at Maaden’s Ras Al Khair site, is to recycle phosphogypsum and enable the capture of carbon dioxide (CO2) emissions. The joint research and development will be carried out together with Thyssenkrupp Polysius and Metso Outotec.

    Also at the FMF, Maaden and US firm GlassPoint announced plans to develop a solar steam technology. The first stage of project development will have the capacity to supply 9 tonnes of steam an hour to begin the decarbonisation of Maaden’s aluminium supply chain, in what is expected to be the world’s largest industrial solar thermal project.

    The technology will combine the direct generation of heat and storage to provide a continuous base load of steam to Maaden’s alumina refinery at Ras Al Khair. The initial capacity will be about 1% of the larger project, which is slated to save more than 12 million British thermal units of energy annually and reduce CO2 emissions by 600,000 tonnes a year.

    Maaden and digital reality firm Hexagon also partnered at the FMF to launch a "digital mine".

    “Hexagon’s life-of-mine technology solutions are being successfully deployed at the Mansourah-Massarah mine, combining sensor, software and autonomous technologies to enhance efficiency, productivity, quality and safety across the mine’s operations,” the companies said.

    Mergers soar in global mining sector


    MEED's October 2023 special report on Saudi Arabia includes: 

    > COMMENT: Riyadh reshapes its global role
    > POLITICS: Saudi Arabia looks both east and west
    > SPORTSaudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    BANKSSaudi banks track more modest growth path
    > UPSTREAMAramco focuses on upstream capacity building

    > DOWNSTREAMSaudi chemical and downstream projects in motion
    > POWERRiyadh rides power projects surge
    > WATERSaudi water projects momentum holds steady
    > GIGAPROJECTSGigaproject activity enters full swing
    > TRANSPORTInfrastructure projects support Riyadh’s logistics ambitions
    > JEDDAH TOWERJeddah developer restarts world’s tallest tower

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11456699/main.jpg
    Indrajit Sen
  • Data centre activity soars in Saudi Arabia

    23 February 2024

    Saudi Arabia is experiencing a major uptick in the construction of data centre assets across the country.

    Despite the preference for data centres to be inconspicuous due to security concerns, it is not uncommon to see certain construction sites or completed facilities marked clearly as such when one navigates the capital city, Riyadh.

    Data sovereignty regulations as well as the widespread use of electronic commerce and social media particularly by young Saudis are driving the data centre construction boom, notes a Riyadh-based expert.

    Government agencies, banks, and family-owned conglomerates, in addition to local and international data centre developers and operators, have either started constructing or are planning to start the construction of data centre facilities across Saudi Arabia. 

    The value of known data centre projects pipeline in the kingdom falls under $1bn, according to regional projects tracking service MEED Projects. While this value corresponds to just one utility-scale renewable energy plant or a minor upgrade of an oil production facility in Saudi Arabia, future plans point to a major expansion of such facilities, which underpin the kingdom's digital hub and artificial intelligence (AI) strategies.

    For instance, the government announced in 2021 a plan to build a network of large-scale data centres that will require investments of up to $18bn by 2030.  At the time, the kingdom's Communications & Information Technology Ministry (MCIT) tapped local firms Gulf Data Hub, Al-Moammar Information Systems and Saudi FAS Holding as its initial partners for the scheme. 

    The following year, Saudi-headquartered Quantum Switch Tamasuk (QST)  unveiled plans to design and operate data centre projects with a cumulative total capacity of 300MW for the MCIT  by 2026. The project will comprise six locations across Riyadh, Dammam, Jeddah and Neom, with a reported budget of at least $2bn.

    Foreign investments have started pouring in to accommodate the rising capacity demand as well as the kingdom's ambition to become a digital hub.

    Dubai developer Damac Properties-owned Edgnex is constructing a data centre, which will have a minimum capacity of 20MW, at Industrial City 2. 

    In October last year, South Korea’s second-largest telecoms company, KT, in collaboration with Hyundai Engineering & Construction (Hyundai E&C) and the local telecoms group STC, signed a memorandum of understanding (MoU) to construct internet data centres (IDC) and smart cities in the kingdom. 

    Similarly, the UAE-based cloud and data service provider Khazna Data Centres also plans to build data centres in Saudi Arabia as it executes its overseas expansion plans. 

    In May last year, sovereign vehicle, the Public Investment Fund (PIF), teamed up with US-based infrastructure investor and asset manager DigitalBridge to develop data centres and related digital infrastructure in Saudi Arabia and across the GCC states.

    Telecoms service provider Zain is also expected to build a new data centre with some support from the kingdom's SR5tn ($1.35tn) Shareek private sector investment programme.

    Crucially, US-headquartered IT and cloud services giants Microsoft and Oracle pledged at the annual Riyadh tech conference, Leap, last year, to invest a total of $9bn in the kingdom. This will go into the construction of multiple data centres to form a so-called cloud region catering to Saudi Arabia and the wider Middle East region.

    Similarly, Chinese tech firm Huawei has pledged to invest $400m to build cloud services in the kingdom.

    "The demand is there that's why we are focusing on these projects," said the Riyadh-based construction expert, who also acknowledges that the depreciation rate for data centres is higher compared to real estate assets due to the high obsolescence of technology and the need to replace data centre components frequently.

    Digital hub

    A growth in the number of subsea cable landing sites in the kingdom is occurring in parallel with the substantial growth in data centre facilities and capacity.

    A 45,000-kilometre subsea cable network connecting Africa, Asia and Europe, 2Africa, reached two of its four landing sites in Saudi Arabia in May 2023. The landing sites are in Jeddah and Yanbu.  The cable is expected to reach the third landing site in Duba late last year and the fourth site in Al-Khobar in 2024.

    Once completed, 2Africa will connect Saudi Arabia to 33 countries, bringing the kingdom closer to its goal of becoming a digital hub.

    The stakes are high for the kingdom, which has simultaneously launched plans to industrialise its economy, decarbonise its industries, increase localisation and reach net-zero carbon emissions by 2060.

    While constructing energy-intensive data centres – which globally account for 1% of energy-related greenhouse gas emissions –  may seem counter-intuitive to these objectives, the rapid advancements in cooling and other data centre components, as well as the potential deployment of clean energy to power them, are expected to ease these assets' environmental impact.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11543521/main.jpg
    Jennifer Aguinaldo
  • US firm wins Al Kahfah solar tracker package

    23 February 2024

    Riyadh-headquartered Acwa Power and India's Larsen & Toubro (L&T) have selected the US-headquartered Nextracker to provide solar trackers for the Al Kahfah solar photovoltaic (PV) power plant in Saudi Arabia.

    The project is one of three utility-scale solar projects being jointly developed by Acwa Power and its partner, Water & Electricity Holding Company (Badeel). as part of the kingdom's National Renewable Energy Programme (NREP).

    The US solar tracking manufacturer will supply its all-terrain NX Horizon-XTR product for the project located in the kingdom's Central Province.  

    The area the solar plant will occupy underpinned the choice to deploy Nextracker's smart solar tracker systems for the Al Kahfah project.

    The location is dominated by a hilly, hard-soil land surface that would otherwise typically require a combination of explosives and grading machines to flatten.

    Nextracker’s all-terrain solar tracker system can conform to the natural terrain to reduce the need for costly land grading while significantly reducing environmental impact, Acwa Power and L&T said.

    The project is understood to be the largest deployment of Nextracker's NX Horizon-XTR solar tracking technology in a single order.

    Nextracker founder and chief executive Dan Shugar said the project bolsters the Saudi government's leadership in energy transition and the dominance of solar technology in driving the transition to renewables in the region.

    L&T is understood to be the project's engineering, procurement and construction contractor.

    PIF solar projects

    Acwa Power and Badeel signed the power-purchase agreements with Saudi Power Procurement Company to develop and operate the three projects in May last year.

    In addition to the Al Kahfah solar project, the developer team will also develop the 2,000MW Al Rass and 1,125MMW Saad 2 solar PV projects.

    The projects are estimated to cost a combined SR12.8bn ($3.4bn).

    The projects are expected to reach financial close after they have satisfied the conditions precedent for senior loans drawdown, as a recent Acwa Power bourse filing has indicated.

    The banks that agreed to provide senior debt financing of SR8.6bn ($2.3bn) for the three projects include:

    • Banque Saudi Fransi (local)
    • HSBC (UK)
    • Mizuho Bank (Japan)
    • Riyad Bank (local)
    • Saudi Awwal Bank (local)
    • Saudi National Bank (local)
    • Standard Chartered Bank (UK)

    The financing duration is 27.75 years. The project debt financing amount is non-recourse to Acwa Power, which owns a 50.1% equity in the three projects.

    Its partner, the Public Investment Fund (PIF) subsidiary Badeel, owns the remaining 49.9% equity in the projects.

    The three projects take the number of solar PV contracts awarded by the PIF under the kingdom’s NREP to five.

    It awarded contracts for the development of the 1,500MW Sudair solar PV in 2021 and the 2,060MW Shuaibah 2 solar PV in 2022.

    Badeel is a wholly owned subsidiary of the PIF, which is mandated to develop 70% of the NREP’s target capacity through the kingdom's Price Discovery Scheme.

    The PIF also owns a 44% stake in Acwa Power.

    Neither SPPC nor Acwa Power has disclosed the levelised electricity cost for the latest three schemes.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11540147/main.jpg
    Jennifer Aguinaldo