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ACWA Power and EIG sign US$500mn agreement in Riyadh

ACWA Power partnered with the Azerbaijan Ministry of Energy to develop 1.5GW of offshore wind in the country. (Image source: ACWA Power)

ACWA Power signed agreements worth US$746mn on the sidelines of the Future Investment Initiative (FII7) in Riyadh on Thursday

The company entered into a US$500mn Heads of Terms agreement with EIG, an institutional investor in the energy and infrastructure sectors. The two organisations will cooperate in power generation, water desalination, green hydrogen, and green ammonia projects, with a specific focus on investing in projects in Gulf countries and Uzbekistan. 

ACWA Power also signed the funding agreements at an aggregate project financing amount of US$246mn with the European Bank for Reconstruction & Development (EBRD) and the OPEC Fund for International Development (The OPEC Fund) for the development of a 240MW wind power project in Azerbaijan. Both agreements are subject to the completion of the conditions precedent.

The project is the first foreign investment-based independent wind power project in the Republic of Azerbaijan, structured as a public-private partnership (PPP) at a total investment cost of US$347mn. The national electrical power company Azerenerji is the sole offtaker for the project, which, once completed, is expected to power nearly 300,000 households, save 220 million cubic metres of natural gas and reduce carbon emissions by more than 400,000 tonnes annually. 

ACWA Power has previously worked with EBRD and The OPEC Fund on the financing of multiple projects across Central Asia, Middle East and Africa. During the 2022 edition of FII, ACWA Power and EBRD signed an MoU to finance sustainable infrastructure projects in Uzbekistan, Azerbaijan and Egypt.

Apart from this 240MW plant, ACWA Power partnered with the Azerbaijan Ministry of Energy to develop 1.5GW of offshore wind and 1GW of onshore wind, as well as the development of a battery energy storage system (BESS). It is also working with the “State Oil Company of Azerbaijan Republic” (SOCAR) to explore collaboration and exploration in the fields of renewable energy and green hydrogen.

Marco Arcelli, CEO of ACWA Power said, "This is a landmark agreement with EIG, one of the world’s largest infrastructure investment firms. Their commitment to working with ACWA Power is a sign of confidence in the company’s strong position in power, water, and green hydrogen, and we look forward to collaborating in these areas."

Abdulhamid Alkhalifa, OPEC's fund director-general said, "The OPEC Fund is proud to be a key partner in the Khizi-Absheron Wind Power Project, which will mark a shift in Azerbaijan’s energy landscape by promoting foreign investment and private sector financing for a public-private partnership renewable project. Through our support we aim to catalyse clean energy generation and a diversified energy future for Azerbaijan. The agreement is also testament to what international development cooperation can achieve."

Nandita Parshad, managing director, Sustainable Infrastructure Group, EBRD, said, “We are proud to finance this landmark project for the energy transition in Azerbaijan. Last year at this same venue we signed an MOU with our long standing partner, ACWA Power, committing to deliver renewable energy, green hydrogen, and green desalination projects in our regions.  I am so pleased that with this signing we have achieved already nearly 1.5GW of that promise to scale up renewable energy in the EBRD region from megawatts to gigawatts.  We are grateful to ACWA Power and the OPEC Fund for the shared commitment to climate action.”