Saudi Arabian oil giant Aramco has struck a deal to take a key stake in one of the largest solar projects planned in the Middle East .
The move represents the state-controlled player's debut investment under the kingdom’s renewable energy programme.
Saudi energy minister Prince Abdulaziz bin Salman said earlier this year that the kingdom – the world’s largest oil exporter – wants to be “another Germany when it comes to renewables” and derive 50% of its electricity from green power sources by 2030.
Aramco has joined Saudi utility group ACWA Power in the $900 million 1.5 gigawatt Sudair Solar project that forms a key part of an initiative led by Saudi Arabia’s Public Investment Fund (PIF) that aims to deliver the majority of the renewable energy needed to meet national targets.
Aramco will hold 30% of Sudair Solar via its wholly owned subsidiary Sapco, with ACWA holding 35% and the remainder owned by PIF.
Aramco's stake, its first investment under PIF, was revealed as ACWA Power announced financial close on Sudair Solar, which will sell its output for 25 years under an offtake agreement with the Saudi Power Procurement Company for a price equivalent to around $12.40 per megawatt hour – among the lowest-cost photovoltaic power achieved globally.
The consortium expects to start commissioning Sudair’s first modules next year.
The green light for the giant project comes soon after Saudi Arabia entered the wind power era when its first commercial wind farm, the 400MW Dumat Al Jandal, began operations.
The kingdom’s previous plans for large-scale wind and solar deployment have made slow progress, but its latest initiatives include massive deployments to supply the Neom mega-city, and big ambitions in both blue and green hydrogen production.
The executive leading the energy plans for Neom told Recharge in an interview earlier this year that he expects future power costs of $10/MWh for solar and $15/MWh for wind in the kingdom.
* This article first appeared in Upstream’s sister renewable energy publication Recharge on 16 August, 2021
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