Saudi Arabia And Japan Signed A 1.1GW Power Purchase Agreement, Creating The Lowest Wind Power Cost in The World

    On May 21, Saudi Arabia and Japan's Marubeni Corporation signed a PPA power purchase agreement with a total capacity of up to 1.1GW at the Saudi-Japan Vision 2030 Business Forum in Japan, with agreed electricity prices well below $20 /MWh. This is considered to be the lowest cost per kilowatt-hour (LCOE) of wind power in the world.

    The purchase agreement was signed between Marubeni Corporation of Japan and the Saudi Power Procurement Company (SPCC). The Saudi Power Procurement Company said it has entered into a Power Purchase agreement (PPA) for the production of the 600 MW Al-Ghat wind farm at a levelised cost of kilowatt-hour (LCOE) of approximately US $0.0156 / KWH (US $1.56558), equivalent to 5.87094 halala per KWH. Equivalent to RMB 0.1129 RMB /kWh). The company's second project, the 500MW Waad Al-Shamal Wind Farm, has a levelised kWh cost of just US $0.017 / KWH (US $1.70187, equivalent to 6.38201 halala per KWH, equivalent to about RMB 0.1231 /kWh).

    With the Marubeni deal, Saudi Arabia claims to have the lowest wind power costs in the world.

    The two wind projects produce enough electricity to power 257,000 homes a year. The projects are part of the goals of the Saudi National Renewable Energy Plan, which aims to harness renewable energy sources across the kingdom to replace the fossil fuels currently used in the electricity production sector. It is expected that by 2030, renewable energy will account for about 50% of the total energy in Saudi Arabia.

    In December 2023, Saudi Arabia announced that it would add 20GW of renewable energy per year, with a total installed capacity of 130GW by 2030. In the past two years, Saudi Arabia's installed renewable energy capacity has grown rapidly, from 700MW in 2022 to more than 2.2GW now, with more than 8GW and 13GW of renewable energy projects under development.