SoftBank Group Corp and Saudi Arabia’s Public Investment Fund are in early talks with banks about potential funding for a multi-billion dollar solar power project planned in the kingdom, say sources familiar with the matter.
The talks follow an agreement, signed and announced in March, between PIF and SoftBank to create the New Solar Energy Plan 2030, the world’s largest project of its type.
Saudi Arabia is embarking on a huge push to transform its economy and reduce its dependence on oil. One of the world’s biggest oil exporters, Saudi Arabia’s rulers view solar power as a way to cut the amount of crude it uses to generate power at home and raise its overseas shipments.
Nobody from SoftBank or PIF immediately responded to a Reuters request for comment.
The pair had started preliminary talks in the past few weeks with Saudi Arabian and some international banks to assess which financing tools would be available for a project of that size, one of the sources said. The other described the discussions as an unofficial sounding-out of banks.
At the time of the announcement in March, SoftBank Chief Executive Masayoshi Son said the project was expected to have the capacity to produce up to 200 gigawatts (GW) by 2030, adding to around 400GW of globally installed solar power capacity.
The initial phase of the project, for 7.2 GW of solar capacity, will cost $5bn, with $1bn coming from SoftBank’s Vision Fund and the rest from project financing, Son said in March. The final investment total for the entire project will eventually total around $200bn, Son said.
Last May, Softbank said it raised over $93bn for the Vision Fund, the world’s largest private equity fund with backers including PIF and Apple Inc.
Bankers say the size and scale of the project mean it might be given priority by the government ahead of other energy infrastructure plans.
Despite its sunny climate, Saudi Arabia produces most of its electricity from oil-fired power plants.