Three local and international banks have signed a project finance agreement with Saudi Arabia’s South Rabigh Renewable Energy Company (SRREC) for the planned Rabigh solar photovoltaic (PV) independent power project (IPP).
They include the Japan Bank for International Cooperation (Jbic), which will provide $78m of the estimated $157m financing required for the project.
Japan’s Mizuho Bank (MHBK) and local Al-Rajhi Banking and Investment Corporation (RBIC) are co-financing the rest, with Al-Rajhi planning to provide funds based on Islamic finance.
It is the first loan by Jbic for an IPP and renewable energy project in Saudi Arabia.
SRREC, which was established by Marubeni Corporation (MTR) together with the local Al-Jomaih Energy and Water Company, will build, own and operate the 300MW Rabigh solar PV plant.
The firm will sell electricity produced by the plant to Saudi Power Procurement Company for over 25 years.
The team offered a levelised cost of electricity (LCOE) of SAR0.06 a kilowatt-hour (kWh) for the scheme.
In partnership with France’s Total, Marubeni is developing an 800MW solar IPP in Qatar.
NREP round two
The 300MW Rabigh solar IPP scheme is one of six projects tendered under the second round of Saudi Arabia’s National Renewable Energy Programme (NREP).
MEED understands the power-purchase agreements for the remaining five projects under NREP’s round two have either been signed or are about to be signed.
These schemes include solar IPPs in:
- Al-Faisaliah (600MW)
- Jeddah (300MW)
- Qurayyat (200MW)
- Medina (50MW)
- Rafha (20MW)
NREP second-round transaction advisers are Japan’s Sumitomo Mitsui Banking Corporation (SMBC) as lead and financial adviser, the UK’s DLA Piper as legal adviser and Germany’s Fichtner as technical adviser.
Saudi Arabia has tendered 3,370MW of renewable energy capacity so far under NREP’s first three rounds.
Of these, two contracts with a combined capacity of 700MW were awarded in 2018 and 2019 under the first round.
Bids are expected in May for 1.2GW of solar schemes under the third round.
Clean energy target
Riyadh’s clean energy target includes generating 27.3GW of renewable energy by 2024 and 58.7GW by 2030.
The Energy Ministry will oversee the development of 30% of this target through competitive tendering while the Public Investment Fund (PIF) is expected to appoint developers through direct negotiations for the remaining 70%.
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