Acwa Power from Saudi Arabia Eyes Expansion in China during the Energy Transition

28 Oct, 2023

Acwa Power from Saudi Arabia Eyes Expansion in China during the Energy Transition

Acwa Power, a private utility developer based in Saudi Arabia, is set to intensify its efforts to expand its presence in China, the world's leading producer of renewable energy. This strategic move is part of the company's commitment to clean energy projects, with a strong emphasis on green hydrogen and desalination initiatives. The company's Vice Chairman and Managing Director, Raad Al Saady, recently shared these expansion plans.

Acwa Power has been active in China since establishing an office in the Asian nation in 2008. Over the years, they have conducted business, including the acquisition of products and services worth more than $30 million. Mr. Al Saady explained that they are now exploring ways to leverage their extensive experience and successful track record in various parts of the world to benefit the Chinese market.

Last month, Acwa Power signed initial agreements with two Chinese companies to strengthen collaboration in green hydrogen, ammonia production, and renewable energy. The partnerships were established with China Southern Power Grid International Company, a state-owned enterprise, and MingYang Smart Energy Group, a clean energy company.

The International Energy Agency forecasts that China's energy demand will reach its peak around the middle of this decade, driven by the continued growth of clean energy sources. In the first half of 2023, China added 109 gigawatts of renewable power capacity, accounting for a remarkable 71% of the total new capacity installed in 2022, as reported by Fitch Ratings.

Acwa Power's $5 billion green hydrogen project in Saudi Arabia's smart city Neom has served as a catalyst for the company's exploration of similar ventures in other regions. The Neom project is designed to utilize 4 gigawatts of renewable power from sources such as solar, wind, and energy storage to produce 650 tonnes of hydrogen daily through electrolysis. It is expected to come online in 2025 and will yield approximately 1.2 million tonnes of green ammonia annually.

Mr. Al Saady stressed the importance of increasing local content to address supply chain disruptions that have affected various sectors, including renewable energy. He emphasized the need for partners to establish manufacturing units in Saudi Arabia to ensure project quality and sustainability.

Acwa Power, committed to achieving net-zero status as a company by 2050, maintains an optimistic outlook despite recent economic and geopolitical challenges. According to Mr. Al Saady, 2023 has been a promising year, driven by their work and a global readiness for the energy transition. He highlighted the increasing momentum toward renewable energy and emphasized the need for ongoing preparedness to meet the world's evolving energy needs.

The International Energy Agency predicts that, under current policies, renewable energy will make up nearly half of the global electricity mix by 2030. However, stronger measures will be required to meet the goals of the Paris Agreement, including a significant increase in the share of renewable energy in power generation and a surge in the adoption of electric vehicles worldwide.