Renewable energy expert aggressively expanding capacity as demand grows around the Middle East
Saudi Arabia's ACWA Power plans to raise $8 billion of debt in the first half of this year to finance projects that will help to boost its generating capacity by a third by the end of 2016, its CEO told Reuters.
The plan comes in the face of difficult market conditions for Middle Eastern developers, with regional governments reassessing expenditure at a time of lower oil prices that have also served to squeeze liquidity in the region's banking system.
Yet the need for new projects remains undiminished because of rising demand for power as the region's increasingly wealthy populations continue to expand. Power demand in Morocco, for example, is growing at about 7 percent a year.
Among the projects earmarked for ACWA's proposed new funding is the 1,200 megawatt (MW) Hassyan clean coal power plant in Dubai, which it is building in conjunction with China's Harbin Electric and with Alstom as the lead contractor, CEO Paddy Padmanathan said.
The $8 billion raised will also cover the Ibri/Sohar-3 scheme in Oman, in partnership with Japan's Mitsui & Co, as well as the 100 MW Redstone solar plant in South Africa. Some of the money will also be used to help refinance debt against the Rabigh 1 power plant, run by Rabigh Electricity Co and part-owned by ACWA.
The new projects are expected to raise ACWA's power assets to 28,000 MW by the end of 2016 from almost 21,000 MW now.
While Kuwait is expected to be one of the most active markets this year, ACWA is also watching for new projects being tendered in Jordan, Morocco and the United Arab Emirates.
In Egypt, ACWA expects to sign a power purchase agreement and secure financing for a 2,250 MW power plant in Dairut.
The overseas activity comes at a time when ACWA's domestic market is subdued, though Padmanathan hopes the situation might improve later in the year.
"There is a bit of repositioning of the sector going on right now as the government is reformulating its plans," he said. "I think everybody is aware there is much more focus on the private sector leading the delivery of more IPPs [independent power producers] and IWPPs [integrated water and power plants]."
A new policy on renewable energy could also be announced this year, which would boost demand for new projects.
One Saudi project pending a decision is the Fadhili IPP, for which ACWA was one of a number of local and international bidders.
"They haven't formally announced anything yet, but the market is telling us that it is between us and GDF Suez," Padmanathan said.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.