Saudi Arabia has an unlikely solar star
SITTING ATOP a fifth of the world’s oil reserves, Saudi Arabia doesn’t spring to mind when you think about renewables. Muhammad bin Salman, its crown prince and de facto ruler, would like this to change. He wants half of Saudi electricity to come from wind and solar farms by 2030. Two-thirds of that capacity, or around 40 gigawatts (GW) will, if Prince Muhammad gets his wish (as he tends to do), be courtesy of one firm: ACWA Power.
For most of its 19-year existence the utility was a relatively anonymous family-run affair. No longer. Since it went public in Riyadh in 2021 its market value has swelled nearly four-fold. It is now worth $50bn. The Public Investment Fund (PIF), the steward of Saudi sovereign wealth, owns a 44% stake. ACWA has 24GW of green projects at home and abroad either already running or at an advanced stage, up from 0.3GW in 2014. Add its other capacity under construction and the total is 54GW. Its original business of desalinating water went from 1m cubic metres a day in 2006 to 7.6m cubic metres in December. Its newish boss, Marco Arcelli, a seasoned Italian energy executive, expects assets it has a stake in to triple between now and 2030, to $250bn. Its projects will, he hopes, help create a broader domestic green-energy supply chain. “We are a big enabler,” he says.
ACWA has thrived as many other renewables operators around the world have struggled. Whereas those rivals are seeing the cost of projects soar as a result of rising interest rates, ACWA has received non-interest-bearing loans from the PIF, in addition to debt secured against individual projects and loans from banks to tide it over while it raises more equity capital and brings in partners. Access to easy money has allowed ACWA to expand capacity, while lowering costs for customers. This has helped make the levelised cost of Saudi solar energy, which takes into account both construction and operation of a power plant, among the lowest…
2024-01-04 08:20:25
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