The demand for oil could start to wane in the coming years, and the reserves of the fossil fuel won’t last forever, so one of the largest producers and exporters is joining the global trend of diversifying energy sources. Crown Prince of Saudi Arabia Mohammed bin Salman announced contracts have been signed for seven utility-scale solar power plants.

Local company ACWA Power and its partners agreed to sell electricity produced in a future 600 MW photovoltaic system for only USD 10.4 per MWh.

The planned construction of seven utility-scale solar power plants is part of the Vision 2030 project

The level is the world’s record low so far in deals for the construction of solar power plants, beating the level set in Portugal in August. Of note, the standard for prices set in power purchase agreements differs from market to market, as some items like balancing costs may be excluded. The levelized cost of energy (LCOE) is the most widespread measure.

ACWA Power plans to build the Shuaibah project with Gulf Investment and Al Babtain Contracting, Saudi Minister of Energy Abdulaziz bin Salman bin Abdulaziz al-Saud said.

Saudi Arabia launches production at 300 MW Sakaka solar power plant

The officials revealed the information on the seven deals, with 3.7 GW in combined capacity, as they inaugurated the 300 MW Sakaka solar power plant, the kingdom’s first utility-scale renewable energy project. Saudi Arabia has less than 1 GW in capacity for the production of green electricity.

The latest investment, worth USD 320 million, was agreed in 2018 at what was the world’s record low price at the time. ACWA Power holds a 70% stake in the new photovoltaic system, while the remainder is controlled by Al Gihaz Holding.

Government-backed ACWA Power dominates seven new deals

The seven agreements that have just been signed should add up to 3.67 GW to the country’s power capacity. The contracts were made with five consortia, in which ACWA Power partnered with 12 domestic and international firms. The government-run Public Investment Fund owns half of the utility company.

The Sudair photovoltaic plant is envisaged to have a capacity of 1.5 GW, which would make it one of the largest in the world

The projects were agreed as part of Saudi Arabia’s Vision 2030, an investment plan for diversification away from oil. Energy Minister Abdulaziz bin Salman said the country would soon be rolling out 5 GW or 7 GW in solar energy projects per year and reach a 50% share in the production of electricity from renewables by the end of the decade.

The Sudair photovoltaic plant will be the biggest among the seven projects – 1.5 GW, which would make it one of the largest in the world, too. The site is 130 kilometers north of Riyadh. The start of construction is scheduled for the second half of next year. The power purchase agreement is for 25 years.

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