China’s Silk Road Fund to acquire 24% of Dubai solar project

The agreement was signed during Chinese President Xi Jinping’s visit to the UAE

Saudi Arabia’s ACWA Power has announced that China’s Silk Road Fund will acquire just under a quarter of the 700MW concentrated solar power (CSP) project it is working on in Dubai.

The agreement was signed during Chinese President Xi Jinping’s visit to the UAE, which concluded on Saturday with more than 13 agreements and memoranda of understanding signed.

Read: Chinese President ends UAE visit, raft of deals signed

ACWA, which was awarded the $3.87bn project by Dubai Electricity and Water Authority (DEWA) in September as part of a consortium, did not disclose the value of the investment for the 24.01 per cent equity stake.

“The introduction of a new investor into the DEWA CSP is absolutely in line with ACWA Power’s established strategy of sharing investments with value adding partners who will in turn bolster our projects,” said ACWA CEO Paddy Madmanathan.

“This co-investment also is in keeping with our investment strategy of efficiently deploying our own capital to retain a meaningful level of equity interest in each project that is sufficient to permit us to be the long-term investor with de facto control over the investment and for us to remain focused on reliably delivering electricity and desalinated water at low cost.”

The firm sealed an engineering, procurement and construction deal with Shanghai Electric Generation Group for the project, described as the world’s largest thermo-solar plant, in April and said Industrial and Commercial Bank of China (ICBC) was mandated lead arranger of a financing package expected to include a $1.5bn senior loan.

Read: Shanghai Electric signs Dubai thermo-solar contract ahead of $1.5bn loan

ACWA and Shanghai were awarded the project by DEWA after bidding the lowest levelised cost of electricity of 7.3 US cents per kilowatt hour (kW/h).

The CSP project is the fourth phase of the Mohammed Bin Rashid Solar Park, a wider development that is set to generate 1,000MW of power by 2020 and 5,000MW by 2030.

The Dubai Clean Energy Strategy 2050 aims to increase the share of clean energy in Dubai’s total power output to 7 per cent by 2020, 25 per cent by 2030, and 75 per cent by 2050.

The Silk Road Fund invests in projects deemed supportive of China’s ‘belt and road’ initiative including including infrastructure, energy resources, industrial capacity cooperation and financial cooperation.