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Saudi Arabia opens bidding for its first utility-scale solar power plant

  • The UAE's Abu Dhabi Future Energy and an EDF unit submitted the lowest bids to build the first solar-powered power plant in Saudi Arabia
  • Bids for the project were opened on Tuesday and will be evaluated in a three month process

UAE-based Abu Dhabi Future Energy (Masdar) and EDF Energies Nouvelles, a wholly-owned unit of France-based EDF, have submitted the lowest bid to build the first utility-scale solar plant in Saudi Arabia, results seen by Reuters show.

A Saudi man walks past a field of solar panels at the King Abdulaziz city of Sciences and Technology, Al-Oyeynah Research Station, in Saudi Arabia.
Fahad Shadeed | Reuters
A Saudi man walks past a field of solar panels at the King Abdulaziz city of Sciences and Technology, Al-Oyeynah Research Station, in Saudi Arabia.

The 300-megawatt solar photovoltaic project is in Sakaka, the Al Jouf Province in the north of the kingdom.

The two companies submitted a joint bid for a levelized cost of electricity (LCOE) of 6.69 halalas/per kilowatt-hour (kWh)($0.0178/ kWh ). Saudi-based Acwa Power came second with 8.78 halalas/ kWh.

The bid measure comprises the cost of generating a megawatt-hour of electricity; the upfront capital and development cost; the cost of equity and debt finance and operating and maintenance fees.

"All of the bids opened today (Tuesday) will now undergo stringent technical, financial and legal evaluation," Turki al-Shehri, the head of the Energy Ministry's Renewable Energy Project Development Office told Reuters in a statement.

He did not comment on the bids for the project, which he said would be awarded to the bidder with the lowest cost measure which meets all compliance criteria set out in the request for proposals, including a 30 percent local content requirement.

The bid evaluation will be a three-month process, with a targeted power purchase agreement effective day by Jan. 27, he added.

"The LCOE quoted by the winning bidder will be the most accurate measure of the potential related to this project. The lowest bidder today is not guaranteed to be awarded the project," said Shehri.

In April, Saudi Arabia kicked off the massive renewable program in Riyadh by announcing the beginning of the bidding process for the Sakaka project, which is expected to come online by 2018-2019. The Sakaka project is estimated to cost around $300 million.

The winning bidders will build, own and operate the power plants in partnership with the government.

The government plans to generate 9.5 gigawatts (GW) of electricity from renewable sources a year by 2023 through wind and solar projects, involving up to $50 billion worth of investments.

The 9.5 GW target is expected to be exceeded, Shehri told Reuters in August, to highlight the kingdom's long-term commitment to green energy.