Saudi Arabia and SoftBank have signed a memorandum of understanding for the construction of a solar power plant worth $200 billion, larger than any other existing facility, reports Bloomberg.
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The agreement is the latest in a series of announcements by Saudi Arabia to increase investments in renewable energy. Although the kingdom has been seeking a foothold in clean energy for years, it was only last year that ministers launched the first projects by soliciting bids for the construction of facilities with a total capacity of 300 megawatts.
New Jobs and Significant Savings
SoftBank founder Masayoshi Son and Saudi Crown Prince Mohammed Bin Salman say they aim to diversify the economy and reduce Saudi Arabia’s dependence on oil.
If the project is realized, Saudi Arabia’s electricity production capacity will nearly triple; in 2016, it stood at 77 GW, of which about two-thirds was generated from natural gas and the rest from oil. Currently, only a small number of solar power plants are operational.
According to the presented vision, the project is expected to reach full capacity by 2030, creating around 100,000 new jobs and saving the state about $40 billion annually.
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SoftBank plans to invest about $25 billion in Saudi Arabia over the next three to four years, which is an incentive for Prince Mohammed, who has been at the forefront of the Vision 2030 campaign to move the kingdom away from oil. The bank states that the goal is to invest about $15 billion in the new city of Neom, which the Crown Prince plans to build on the Red Sea coast. The Japanese company Vision Fund also plans to invest about $20 billion in the state-owned company Saudi Electricity Co.
The planned solar farm is expected to have a capacity of 200 GW and be about 100 times larger than the second-largest planned facility.
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The project involves the Saudi Public Investment Fund, which has assets of over $224 billion, and the kingdom also plans to sell about 5 percent of its stake in the oil giant Oil Co. to secure additional funds.
Saudi Arabia also plans to build at least 16 nuclear reactors over the next 25 years at a cost of about $80 billion. Since 2000, electricity consumption in the country has increased by more than 9 percent.
Memorandums of understanding do not necessarily result in the realization of the project.
