Saudi Arabia’s Public Investment Fund’s (PIF) subsidiary, The Water and Electricity Holding Company (Badeel), and ACWA Power, the country’s energy major, announced an investment of SAR12.2 billion ($3.25 billion) to develop and operate 4.55 GW of solar power projects.

The companies signed power purchase agreements with the Saudi Power Procurement Company to develop and operate three new solar power projects in the country.

The three projects – Ar Rass (2 GW), Saad 2 (1,125 MW), and Al Kahfah (1,425 MW) — are expected to reach financial close by the third quarter of 2023.

The new projects will be jointly owned by Badeel and ACWA Power and are expected to power 750,000 homes.

The projects are a part of the National Renewable Energy Program, initiated by the Ministry of Energy, which mandates PIF to develop 70% of the program’s target capacity.

The ministry aims to increase the share of renewables in the energy mix to around 50% by 2030, with the remainder supplied through high-efficiency gas-fueled power plants.

PIF is developing five projects with a cumulative capacity of 8 GW and over $6 billion of investment from PIF and its partners. PIF’s renewable projects – Sudair, Shuaibah 2, Ar Rass 2, Al Kahfah, and Saad 2 – will support the local private sector through requirements for significant local content contribution and the procurement of equipment, supplies, and services through local supply chains.

Marco Arcelli, Chief Executive Officer of ACWA Power, said, “As a Saudi national champion, we are incredibly proud to lead Saudi Arabia’s ambitious energy diversification plans and contribute towards achieving its Net Zero targets. Today’s signing of three Power Purchase Agreements marks a significant milestone for ACWA Power, representing the largest single transaction for solar projects in our company’s history.”

ACWA Power’s solar portfolio in Saudi Arabia includes 11 projects with over 12 GW of combined capacity after adding the three new projects. The company’s total renewable capacity portfolio now stands at 23.4 GW.

In January this year, Saudi Arabia announced its plans to generate 15.1 TWh of renewable energy annually by 2024, sufficient to meet the power requirements of 692,557 households.