Saudi Arabia's $3 Billion Rabigh 2 Gas Plant Deal Signed by ACWA and Saudi Energy Co.
In a major development for Saudi Arabia's energy sector, utility giant ACWA Power and Saudi Energy Co. have signed a significant power purchase agreement valued at SR11.5 billion, equivalent to approximately $3.07 billion. This agreement, formalized with the Saudi Power Procurement Co., covers the Rabigh 2 Independent Power Producer Expansion project and spans an impressive 31-year term.
Project Details and Strategic Location
The agreement encompasses the comprehensive development, financing, construction, ownership, and operation of a large-scale combined-cycle gas turbine power plant. This facility is designed to have a substantial generation capacity of 2,313.5 megawatts, positioning it as a critical infrastructure asset.
Rabigh 2 is a greenfield project strategically located in Makkah province on Saudi Arabia's western coast. It is situated approximately 130 kilometers north of Jeddah and is adjacent to the existing Rabigh Independent Power Producer facility, enhancing regional energy infrastructure.
Ownership Structure and Financial Aspects
Both ACWA Power and Saudi Energy Co. hold equal effective shareholdings in the project, each with a 40 percent stake. The remaining ownership details were not disclosed in the initial announcements. According to separate Tadawul filings by the companies, the financial impact from the project's operations will be announced once it reaches financial close, a standard milestone in such large-scale developments.
The agreement also includes provisions for the development, financing, and construction of an extension to a 380 kilovolt electrical substation, further integrating the plant into the national grid.
Alignment with Saudi Vision 2030
This development is closely aligned with Saudi Arabia's Vision 2030 economic diversification and sustainability goals. The project supports the Kingdom's objectives to expand power generation capacity while incorporating cleaner technologies. Notably, the plant is designed with readiness for carbon capture units, reflecting a commitment to reducing environmental impact.
Saudi Arabia aims to increase the share of renewables to 50 percent in its power mix by 2030 and achieve net zero emissions by 2060. The Rabigh 2 project represents a transitional step in this energy transformation, utilizing efficient gas technology while preparing for future carbon management.
Recent Context and Parallel Developments
In December, ACWA Power completed the refinancing of the Rabigh 3 Independent Water Project, located in the western region of the Kingdom. Rabigh 3 Co. is a desalination plant owned by ACWA with a capacity of 600,000 cubic meters per day of potable water output using reverse osmosis technology, demonstrating the company's diversified infrastructure portfolio.
In a parallel development supporting Saudi Arabia's renewable energy ambitions, Al Yamama Steel Industries Co. signed an agreement with SEPCOIII Electric Power Construction Co. to supply wind towers for the Yanbu Wind Farm Project. This deal, signed under the auspices of the Ministry of Energy, includes a localization rate exceeding 80 percent, reflecting efforts to strengthen domestic manufacturing and increase local content in large-scale clean energy projects.
The Ministry of Energy highlighted this development in a social media post, noting it marks another step forward in the Kingdom's drive to localize its renewable energy sector under Vision 2030. These initiatives collectively underscore Saudi Arabia's comprehensive approach to energy security, economic diversification, and environmental sustainability.
