ACWA Power Signs Deal with Chinese Firm for Central Asia Wind Project

Saudi-listed ACWA Power, the world’s largest private water desalination company, announced on July 17, 2024, the completion of a Sale and Purchase Agreement to sell 35% of its shareholding in ACWA Power Bash Wind Project Holding Company Limited and ACWA Power Uzbekistan Wind Project Holding Company Limited to China Southern Power Grid International (HK) Co. Ltd (CSGIHK), the global investment and development arm of China Southern Power Grid (CSG). The transaction, finalized after the successful completion of conditions precedent, marks the first co-investment between ACWA Power and China Southern Power Grid for a large-scale renewable energy project in Central Asia. A closing ceremony was held in Tashkent, Uzbekistan, attended by Minister of Energy of Uzbekistan Jurabek Mirzamakhmudov, Deputy Minister of Energy Umid Mamadaminov, Deputy Saudi Ambassador to Uzbekistan Hamud Turki Almutairi, Deputy Director of the Energy Market Development and Regulatory Agency Abdullajon Otaboev, ACWA Power CEO Marco Arcelli, and Vice President of CSG Tang Yifeng.

Context and Background

This milestone follows framework agreements signed in December 2022 between ACWA Power and Chinese companies, which laid the groundwork for financing, investment, and construction of ACWA Power’s global clean and renewable energy projects in Saudi Arabia and Belt and Road Initiative countries. The agreements reflect Saudi Arabia’s strategic push to expand its renewable energy footprint internationally, aligning with the Kingdom’s Vision 2030 objectives to diversify energy sources and promote sustainable development. ACWA Power, a key player in Saudi Arabia’s energy transition, has been instrumental in advancing clean energy projects worldwide, and this collaboration with China Southern Power Grid underscores the growing partnership between Saudi and Chinese entities in the renewable sector.

Key Details

The ACWA Power Bash Wind Project Holding Company Limited and ACWA Power Uzbekistan Wind Project Holding Company Limited hold 100% stakes in ACWA Power Bash Wind LLC (“Bash”) and ACWA Power Dzhankeldy LLC (“Dzhankeldy”), respectively, representing a combined 1GW of capacity with an investment cost of over USD 1.3 billion. These projects are set to become some of Central Asia’s largest renewable energy facilities upon completion. Uzbekistan is ACWA Power’s second-largest market by investment cost, highlighting the company’s long-standing commitment to the country. ACWA Power CEO Marco Arcelli expressed enthusiasm about the collaboration, stating, “Through strategic collaboration with China Southern Power Grid International, we are proud to announce a significant milestone in our journey towards sustainable energy solutions. The agreement in relation to our Bash and Dzhankeldy wind projects in Uzbekistan not only enhances ACWA Power’s global presence but also strengthens ties between two industry leaders from different regions. This historic partnership underlines our commitment to driving innovation and progress in the renewable energy sector.”

Implications and Impact

This transaction represents a significant step in strengthening economic ties between Saudi Arabia and China, two major players in the global energy landscape. By partnering with China Southern Power Grid, ACWA Power is not only expanding its international portfolio but also contributing to the development of renewable energy infrastructure in Central Asia. The Bash and Dzhankeldy wind projects will enhance regional energy security, reduce carbon emissions, and support Uzbekistan’s transition to sustainable energy. Furthermore, this collaboration exemplifies the potential of cross-border partnerships in achieving global climate goals and fosters greater cooperation under the Belt and Road Initiative.

Vision 2030 Alignment

This agreement aligns closely with Saudi Arabia’s Vision 2030, which aims to diversify the Kingdom’s economy, reduce dependence on oil, and position Saudi Arabia as a global leader in renewable energy. ACWA Power’s expansion into Central Asia not only showcases Saudi expertise in clean energy but also reinforces the Kingdom’s commitment to international cooperation and sustainable development. As Saudi Arabia continues to drive innovation and investment in renewable energy, partnerships like this will play a crucial role in shaping a more sustainable and prosperous future for the region and beyond.

20 Questions

Q1. What did ACWA Power announce on July 17, 2024?

A1. ACWA Power announced the completion of a Sale and Purchase Agreement to sell 35% of its shareholding in two wind project holding companies to China Southern Power Grid International.

Q2. Who is the buyer in this transaction?

A2. The buyer is China Southern Power Grid International (HK) Co. Ltd (CSGIHK), the global investment and development arm of China Southern Power Grid.

Q3. Where was the closing ceremony held?

A3. The closing ceremony was held in Tashkent, Uzbekistan, marking the completion of the transaction.

Q4. Which Saudi and Chinese officials attended the ceremony?

A4. Attendees included Uzbekistan’s Minister of Energy Jurabek Mirzamakhmudov, Deputy Saudi Ambassador Hamud Turki Almutairi, ACWA Power CEO Marco Arcelli, and CSG Vice President Tang Yifeng.

Q5. What is the significance of this transaction?

A5. It is the first co-investment between ACWA Power and China Southern Power Grid for a large-scale renewable energy project in Central Asia, strengthening Saudi-Chinese ties.

Q6. What framework agreements preceded this deal?

A6. Framework agreements signed in December 2022 between ACWA Power and Chinese companies laid the ground for financing, investment, and construction of renewable energy projects.

Q7. Which projects are involved in this agreement?

A7. The projects are the Bash and Dzhankeldy wind projects in Uzbekistan, held by the two holding companies.

Q8. What is the combined capacity of these projects?

A8. The projects have a combined capacity of 1GW, with an investment cost of over USD 1.3 billion.

Q9. What did ACWA Power CEO Marco Arcelli say about the deal?

A9. He emphasized that the collaboration enhances ACWA Power’s global presence and strengthens ties between industry leaders, underlining commitment to renewable energy innovation.

Q10. How does this deal impact ACWA Power’s global presence?

A10. It expands ACWA Power’s international portfolio and reinforces its position as a leader in renewable energy, particularly in Central Asia.

Q11. What is Uzbekistan’s significance to ACWA Power?

A11. Uzbekistan is ACWA Power’s second-largest market by investment cost, reflecting the company’s long-standing commitment to the country’s energy sector.

Q12. What are the expected outcomes of the Bash and Dzhankeldy projects?

A12. They are set to become some of Central Asia’s largest renewable energy projects, enhancing energy security and supporting sustainable development.

Q13. How does this collaboration benefit Saudi Arabia?

A13. It showcases Saudi expertise in renewable energy, strengthens international partnerships, and supports Vision 2030 goals of economic diversification.

Q14. What role does the Belt and Road Initiative play in this deal?

A14. The initiative provides a framework for cooperation, facilitating investment and construction of renewable energy projects in participating countries.

Q15. What is ACWA Power’s core business?

A15. ACWA Power is the world’s largest private water desalination company and a major developer of renewable energy projects globally.

Q16. How does this deal contribute to Saudi-China relations?

A16. It deepens economic ties and demonstrates successful cross-border collaboration in the energy sector, fostering mutual growth and innovation.

Q17. What are the environmental benefits of these wind projects?

A17. They will reduce carbon emissions and support the transition to clean energy in Central Asia, contributing to global climate goals.

Q18. What is the total investment cost for the projects?

A18. The investment cost for the combined 1GW capacity is over USD 1.3 billion.

Q19. How does this deal align with Vision 2030?

A19. It supports economic diversification, promotes renewable energy, and enhances Saudi Arabia’s role as a global energy leader.

Q20. What future opportunities does this partnership create?

A20. It opens avenues for further co-investments in renewable energy, strengthening Saudi-Chinese cooperation and advancing sustainable development worldwide.

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