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Saudi Arabia’s largest solar photovoltaic (PV) project, the 1.5-gigawatt Sudair PV Independent Power Project (IPP), will reach financial close in a week, a senior official from the developer consortium said.
The financial close for the 3.5 billion Saudi Riyal ($930 million) solar project “is just a week away and construction began a couple of weeks ago,” Rajith Nanda, Chief Investment Officer of ACWA Power said at an online event on Wednesday.
India’s Larsen & Toubro was awarded the engineering, procurement and construction contract for the project last month. The first phase is expected to be commissioned in the second half of 2022.
Sudair PV IPP recorded the second lowest cost globally for Solar PV electricity production of $1.239 cents/kwh, according to project information posted on ACWA Power’s website. The project forms part of the 70 percent of the target capacity of 58.7 GW of the Kingdom that has been assigned to PIF.
Minimal pandemic impact
The pandemic has had minimal impact on the Saudi developer’s operations, Nanda said.
“We have 12 assets worth about $12 billion under construction and they have shown limited slippage. In some cases there have been couple of months of slippage and we have got the contractual time relief protection from the offtaker”, he said speaking at a panel discussion at the CEBC Annual Summit 2021 organised by the UAE-based Clean Energy Business Council.
“We have not seen any project cancellations in the last 14-15 months although I do need to recognise that the bid cycle and the time to financial closing has definitely lengthened due to the pandemic”, he said.
On the operational side all plants operated at pre pandemic levels, he said.
Growth prospects
Nanda said he sees really positive signs on the growth front for renewables. The pandemic has encouraged several jurisdictions to look even more closely at green initiatives and the energy transition to a decarbonised asset fleet, he said.
“In the renewables space our project pipeline has never been so strong….We have more than a dozen transactions spanning solar PV, wind and green hydrogen in advanced development”.
Totally 11 GW of renewables are under construction or advanced development, he said.
Hydrogen’s arrival
Nanda pointed out that ACWA power has taken a strategic view on green hydrogen and has several projects at various stages of development including the NEOM green hydrogen project in Saudi Arabia.
“We see hydrogen in the same state where solar energy was five years back. It will for sure experience aggressive and promising cost and delivery outcomes over the next half a decade”, he said.
Explaining the reasons for his optimism, he said, “Due to the rapidly decreasing costs of renewable energy, electrolysers and battery storage, green hydrogen is now starting to become commercially viable. Battery storage is also exponentially improving the dispatchability of solar technology”.
(Reporting by Sowmya Sundar; Editing by Anoop Menon)
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