Acwa Power reaches financial close for Dubai 900MW solar project

6 Sep 2020
Acwa Power reaches financial close for Dubai 900MW solar project

The consortium led by Saudi Arabia's Acwa Power has signed all of the project finance agreements for the 900MW fifth phase of the Mohammed bin Rashid al-Maktoum solar park in Dubai. Financing agreements have been signed with nine lenders for the $564m project, which achieved one of the lowest PV solar tariffs in the world when tendered in 2019

A consortium led by Saudi Arabia’s Acwa Power has reached financial close for the planned $564m 900MW fifth phase of the Mohammed bin rashid al-Maktoum solar park in Dubai.

The financing for the $564m project will be based on the principles of limited recourse project financing with senior debt provided by a group of international, regional and local banks. The deal includes a project recourse mezzanine tranche, which will be structured as a 27-year soft mini-perm financing with conventional and Islamic tranches.

The financing structure also contains a set of equity bridge loans provided by local banks and by state utilility and offtaker Dubai Electricity & Water Authority (Dewa). Dewa also has a 60 per cent stake in the special purpose vehicle (SPV) set up to develop and operate the solar plant, Shuaa Energy 3, with the remaining 40 per cent split between Acwa Power and its partner Gulf Investment Corporation (GIC) from Kuwait.

The financing group for the transaction includes:

  • Abu Dhabi Islamic Bank
  • Arab Petroleum Investment Corporation (Saudi Arabia)
  • Industrial and Commercial Bank of China
  • Emirates NBD Bank (local)
  • Natixis (France)
  • Samba (Saudi Arabia)
  • Standard Chartered (UK)
  • Warba Bank (Kuwait)

The local Commercial Bank International provided the project recourse mezzanine tranche, with equity bridge facilities provided by Commercial Bank of Dubai, Emirates NBD Bank and Mashreq Bank.

Dewa signed the power purchase agreement (PPA) with Saudi Arabia’s Acwa Power for the 900MW fifth phase project in April. The PPA was signed for a levelised cost of electricity (LCOE) tariff of $cents1.6953/kWh, one of the lowest PV solar tariffs in the world.

In July, Acwa Power appointed China’s Shanghai Electric as the engineering, procurement and construction (EPC) contractor for the project.

“Securing this amount of long tenor project financing for Shuaa Energy 3 PSC even as COVID 19 pandemic continues to cause social and economic disruption to the entire world illustrates the combined capabilities and trusted partnership between Acwa Power and Dewa. We are delighted to have achieved this significant milestone, which reflects confidence of the financial community in this partnership, and the role and iconic status of the fifth phase of Mohammed bin Rashid Al Maktoum Solar Park in delivering Dubai’s Clean Energy Strategy 2050,” Acwa Power’s CEO Paddy Padmanathan was quoted in a press statement to accompany the financial close announcement.

Acwa Power’s Chief Investment Officer (CIO) Rajit Nanda said that the ability to raise finance from nine lenders during the Covid-19 pandemic was the “… ultimate testament to Dewa’s credibility as a counterparty and the success of their IPP programme as well as Acwa Power’s focus and proven ability to deliver power and desalinated water reliably and responsibly at low cost.”

The MBR solar park is planned to have a total installed capacity of 5,000MW by 2030. The park currently has 1,013MW of PV solar capacity under operation, with 1,850MW of PV and concentrated solar power (CSP) capacity currently under construction.

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