Saudi Arabia's drive for renewable energy has been significantly bolstered by a monumental agreement signed this week. ACWA Power, a prominent energy developer, joined forces with Badeel, a subsidiary of the Public Investment Fund (PIF), and SAPCO, the energy arm of Saudi Aramco, to sign Power Purchase Agreements (PPAs) with the Saudi Power Procurement Company (SPPC). This collaboration marks a significant stride in the kingdom's ambitious goal of diversifying its energy mix and reducing reliance on fossil fuels.

The signed PPAs pave the way for the development and operation of three colossal solar photovoltaic (PV) projects across the nation. The focal points of this initiative are the Haden and Al-Muwaih projects, situated in the Makkah province. Each boasting an impressive capacity of 2, 000 megawatts (MW), these giants will significantly contribute to the national grid upon completion. The third project, Al-Khushaybi, will be located in the Qassim province and contribute an additional 1, 500 MW, bringing the total capacity of the trio to a staggering 5, 500 MW.

This large-scale project not only strengthens Saudi Arabia's renewable energy portfolio but also sets new benchmarks for cost-effectiveness. The Haden and Al-Muwaih projects boast some of the most competitive Levelized Cost of Electricity (LCOE) rates ever recorded in the region, at 1. 58762 cents/kWh and 1. 60852 cents/kWh respectively. While the Al-Khushaybi project has a slightly higher LCOE of 1. 67289 cents/kWh, it remains highly competitive within the global solar energy market.

The agreement signifies a crucial step towards achieving the objectives outlined in Saudi Arabia's Vision 2030, a strategic roadmap for economic transformation. This ambitious plan prioritizes the development of a diversified and sustainable energy sector, with renewable energy playing a pivotal role. The collaboration between ACWA Power, Badeel, and SAPCO demonstrates the kingdom's commitment to achieving these goals and positioning itself as a leader in the global renewable energy race.

Financial details regarding the project are yet to be finalized, with financial close anticipated by the fourth quarter of 2024. However, industry experts believe the total investment could reach the billions, solidifying this endeavor as one of the most significant renewable energy projects currently underway anywhere in the world.