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Shuaibah solar projects reach financial close

11 August 2023

Saudi utility developer Acwa Power has reached financial close for the Shuaibah 1 and 2 solar photovoltaic (PV) projects in the kingdom.

"Financial close was declared yesterday on Al-Shuaibah1 and Al-Shuaibah2 solar photovoltaic (PV) projects, following a successful hedging," a source tells MEED on 11 August.

The two schemes will require an investment of SR8.3bn ($2.2bn), which will be funded by equity and long-term debt, Acwa Power said in a bourse filing on 16 July, when it announced the signing of the financing agreements.

"Negotiated throughout the height of Covid-19, commodity price movements and engineering, procurement and construction (EPC) competition, Al Shuaibah 1 PV, was originally tendered as Al Faisaliah PV under the National Renewable Energy Programme (NREP) and the site was subsequently expanded to include another larger project Al-Shuaibah 2," the source said.

The site comprises the development, design, construction, commissioning, testing, operation and maintenance of each project and each project was closed under a power-purchase agreement as tendered.

"The total financing of SR6.1bn ($1.6bn) represents one of the world's largest renewable energy financings," the source said.  

As earlier reported, a consortium of mostly local banks agreed to provide SR4.4bn of senior debt. The banks are:  

  • Bank Saudi Fransi (local)
  • First Abu Dhabi Bank (UAE)
  • Mizuho Bank (Japan)
  • Riyad Bank (local)
  • Saudi National Bank (local)
  • Standard Chartered Bank (UK)
  • Saudi Investment Bank (local)

The remaining senior debt of SR1.7bn, a Saudi riyal-denominated loan, will come from the National Development Fund (NDF) on behalf of the National Infrastructure Fund (NIF).

The consortium that will develop and operate the projects includes Acwa Power; Electricity Holding Company (Badeel), a wholly owned company by Saudi sovereign wealth vehicle the Public Investment Fund (PIF); and Saudi Aramco.

Acwa Power will hold a 35 per cent equity stake in the projects.

Sumitomo Mitsui Banking Corporation (SMBC) provided financial advisory services to the Energy Ministry/Saudi Power Procurement Company (SPPC) for the projects. UK-based Eversheds Sutherland and the US' White and Case provided legal advisory while Germany's Fichtner provided technical advisory services to the client.

Shuaibah 2

The utility developer and Badeel signed the power-purchase agreements (PPAs) for the 2,060MW Shuaibah 2 solar power project in December last year.

Badeel and Acwa Power will build, own and operate the facility, and the electricity produced will be sold to offtaker SPPC.

The consortium awarded the project’s EPC contract to a consortium led by China Energy Engineering Corporation (CEEC) in October last year.

The team, which includes China Energy Construction International Group and Guangdong Electric Power Design Institute, commenced work on the Shuaibah 2 scheme in November.

The new capacity is being procured under the kingdom’s renewable programme price discovery scheme, which the PIF oversees.

The smaller 600MW Shuaibah 1 solar PV project was tendered and awarded as part of the second round NREP.

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Jennifer Aguinaldo

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