The world’s cheapest solar power project being built in Dubai is one step closer to commercial operation, the Dubai Electricity and Water Authority has reported.
The 200 MW second phase of the Mohammad Bin Rashid Al Maktoum Solar Park being implemented by Saudi Arabia-based ACWA Power has achieved financial closure. The project was awarded to ACWA Power earlier this year at a record-low tariff of US¢5.98/kWh. The 200 MW capacity would add to the 13 MW phase I project that is already operational. Phase II is expected to achieve commercial operation in 2017.
The project will have a higher debt component compared to most other solar power projects, with about 86% of the funding for the project coming through debt financing, while the rest will be through equity investments.
In March, ACWA Power announced that it secured a debt financing loan worth $344 million for the project. The 27-year loan will be provided by Abu Dhabi’s First Gulf Bank and 2 Saudi banks — the National Commercial Bank and the Samba Financial Group. Paddy Padmanathan, Chief Executive Officer, ACWA Power had announced at Abu Dhabi Sustainability Week 2015 that the company would secure debt financing at a low interest rate of just 4%.
DEWA plans to invest billions of dollars into the expansion of the Mohammed bin Rashid Al Maktoum solar park. The authority has upgraded plans for the installed capacity of the solar park. From an initial target of 1 GW by 2019, DEWA now plans to have 3 GW installed capacity at the park by 2030.
The solar power park is central to DEWA’s target to source 7% of Dubai’s total power output from renewable energy sources by 2020 and 15% by 2030.