The decision by ACWA Power to invest in renewable energy projects in Africa and Southeast Asia has been made easy by the surge in renewables worldwide and the sector’s robust demand outlook.
“We don’t need to push for anything, everyone wants renewables these days,” Paddy Padmanathan, President and CEO of ACWA Power, said.
The Saudi Arabia-headquartered company, which develops and operates power generation and water desalination plants, is looking to capitalize on the rising demand for renewable energy worldwide. To support the growth, ACWA Power is currently focusing on Africa and Southeast Asia for overseas investments.
The company already has photovoltaic (PV) plant in Vietnam that is in advanced stages of construction, and should be connected in June this year.
“We have got a business unit that’s already established in Indonesia and are looking to work on several investment opportunities there for renewable energy,” Padmanathan continued.
In Africa, ACWA Power does business in Morocco, Egypt and South Africa. The firm now intends to expand to Botswana, Senegal, Mauritania and Ethiopia.
Regional presence
Besides eyeing growth in overseas markets, the power developer is also expanding in the Middle East and North Africa (MENA) market. In March this year, a consortium led by ACWA Power, and comprising Saudi Brothers Commercial Co (SBCC), signed senior financing and hedging agreements for the Rabigh 3 Independent Water Project (IWP) in Saudi Arabia. Worth an estimated SAR 2.6 million ($700 million), the project is one of the world’s largest seawater reverse-osmosis (SWRO) projects.
“We expect to financially close the Rabigh 3 IWP in April. Financing was done by both international as well as regional banks. We have already given the Limited Notice to Proceed (LNTP) for construction to commence,” Padmanathan said.
Read: ACWA Power signs final financial deals for SAR 2 bln Saudi desalination project
With regards to power projects in Oman, he added: “We are in a good position in Oman for a 500MW power plant project. There are more projects coming up in the Sultanate.”
Last year, ACWA Power disclosed its plans to invest at least $10 billion in renewable energy projects in Egypt. Currently the company has three PV plants set to come online soon in Egypt.
In November 2018, a consortium headed by ACWA Power signed a power purchase agreement (PPA) with the Egyptian Electricity Transmission Company (EETC) for a 2,300 megawatts (MW) gas-fired combined cycle plant, to meet Egypt’s increasing demand for electricity.
“We expect the Luxor project to go into construction in April next year. We are working on the engineering, procurement and construction (EPC) contract right now and will be going for financing in Q3 2019,” Padmanathan said.
He mentioned that the firm has also submitted the lowest tender for the 200MW solar PV project in Kom Ombo in Aswan, Upper Egypt.
“It’s currently under evaluation, so we are hopeful that within the next month, they should make up their minds.”
Read: ACWA Power to invest $10 bln in Egypt’s renewables
Future outlook
Padmanathan points out that ACWA Power has been developing typically $7 billion to $8 billion worth of new renewable projects every year. “I expect this pipeline to rapidly increase in 2019,” he said.
He also believes that there is a considerable scope for growth of renewable energy in the Middle East and North Africa.
Meanwhile in an interview with Reuters in February this year, Yasir Al-Rumayyan, managing director of Saudi’s Public Investment Fund (PIF) revealed plans to increase stake in ACWA Power to 40 percent from 25 percent.
With Saudi Arabia wanting to diversify and increase economic efficiency, the ACWA Power chief highlighted the direct impact on the company. “As part of the strategy, Saudi Arabia will look to manufacture components locally and industrialize the Kingdom, which in turn, will create jobs. This will have an absolute positive and direct impact on us,” he said.
“I expect another new 3,000-4,000 MW projects to roll out during the course of 2019,” Padmanathan stated.
Write to Paromita Dey at paromita.d@argaamplus.com
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