In a significant milestone for sustainable energy, the consortium led by Saudi Arabia’s Acwa Power has successfully achieved financial close for the planned $564m 900MW fifth phase of the Mohammed bin Rashid al-Maktoum solar park in Dubai. The consortium, demonstrating resilience amid challenges, signed all the project finance agreements with nine lenders, solidifying the project’s financial foundation. This solar endeavor initially gained acclaim for securing one of the world’s lowest photovoltaic (PV) solar tariffs during its tender in 2019.

Robust Financing Structure

The financing for the $564m project adheres to the principles of limited recourse project financing, with senior debt contributions from a diverse group of international, regional, and local banks. The deal includes a project recourse mezzanine tranche structured as a 27-year soft mini-perm financing, featuring both conventional and Islamic tranches.

Strategic Equity Arrangement

The financing structure also incorporates equity bridge loans from local banks and Dubai Electricity & Water Authority (Dewa), the state utility and offtaker. Dewa holds a 60% stake in the special purpose vehicle (SPV), Shuaa Energy 3, established for the development and operation of the solar plant. Acwa Power and its partner Gulf Investment Corporation (GIC) from Kuwait collectively hold the remaining 40% stake.

Collaborative Lender Consortium

A diverse consortium of lenders, including Abu Dhabi Islamic Bank, Arab Petroleum Investment Corporation, Industrial and Commercial Bank of China, Emirates NBD Bank, Natixis, Samba, Standard Chartered, and Warba Bank, played pivotal roles in shaping the financial landscape of this ambitious solar project.

Record-Breaking Power Purchase Agreement (PPA)

Dewa, in collaboration with Acwa Power, signed the power purchase agreement (PPA) for the 900MW fifth phase project in April. The PPA established a levelized cost of electricity (LCOE) tariff at $cents1.6953/kWh, securing a position as one of the world’s lowest PV solar tariffs.

Engineering, Procurement, and Construction (EPC) Milestone

In July, Acwa Power took a decisive step forward by appointing China’s Shanghai Electric as the engineering, procurement, and construction (EPC) contractor for the project. This move highlights the commitment to timely and efficient project execution.

Toward a Sustainable Future

The Mohammed bin Rashid al-Maktoum Solar Park is poised to play a pivotal role in Dubai’s Clean Energy Strategy 2050, with plans to reach a total installed capacity of 5,000MW by 2030. With 1,013MW of PV solar capacity already in operation and an additional 1,850MW of PV and concentrated solar power (CSP) capacity under construction, this solar park stands as a beacon of sustainable progress.

Acwa Power’s achievement in securing substantial project financing amid the challenges of the COVID-19 pandemic underscores the resilience, credibility, and commitment of all stakeholders involved. The successful financial close signifies a significant stride toward realizing Dubai’s vision of a sustainable and clean energy future.