Iconic Saudi 300MW Sakaka PV IPP project launched
King Salman bin Abdulaziz of Saudi Arabia officially commenced the ground-breaking ceremony for the 300 MW Sakaka PV IPP.
Commenting on the occasion, Mohammad Abunayyan, Chairman of ACWA Power, said: “The project is marked as the first project under the progressive initiative to benefit from renewable energy in the Kingdom and is set at a world record-breaking tariff that will transform the photovoltaic solar energy sector across the globe.”
The event took place following an announcement last week of the successful financial closure of the $324 million project by ACWA Power, a leading developer, owner, and operator of power generation and water desalination plants.
The commercial operation date of the plant is expected to be next year. Upon completion, the 300 MW Sakaka PV IPP will supply 45,000 households with power in Al Jouf while offsetting over 430,000 tonnes of carbon dioxide a year. The project will also create new employment opportunities in fields including construction and operations.
ACWA Power is owned by the Public Investment Fund (PIF) of Saudi and is currently with 49 assets in operation, construction or advance development, and employing over 3,500 people across 11 countries.
Renewables continue to gain importance in the GCC
A recent report by S&P Global Ratings says that given the climatic advantages and declining costs to build solar plants, the six-nation Gulf Cooperation Council (GCC) region continues to invest in solar electricity generation.
The need to diversify away from hydrocarbon-based electricity generation and political will have led to most countries in the GCC to set a renewable target mix to be achieved over the next five-to-10 years.
The UAE has launched some major solar projects over the past few years, while in 2018, Saudi awarded its first utility-scale 300-megawatt photovoltaic solar project at a record lowest price of $0.02342 per kilowatt hour.
“With subsidies being phased out in the region and slow but steady regulatory reforms in the power sector, we expect to see many new projects in the region over the next 12-18 months,” said S&P.
“However, this may require limited capex from our rated national utilities given the private sector’s increasing participation in power projects.”
It added that the weakening of sovereign creditworthiness, regulatory changes, cuts in fuel and electricity subsidies, and the rollout of cost-reflective tariffs in countries such as Saudi and Oman have led to negative outlooks on three national utilities.
“Oman Power and Water Procurement Co. (OPWP), Saudi Electricity Company, and Dubai Electricity and Water Authority all have negative outlooks. However, the national utilities have not seen significant weakness in their stand-alone performance over the past few years, and we expect it to remain stable in 2019,” S&P said.