Venture may cost $200 billion, add 100,000 jobs in the kingdom
Plan envisions 200GW of solar capacity in Saudi Arabia by 2030 Saudi Arabia and SoftBank Group Corp.
signed a memorandum of understanding to build a $200 billion solar
power development that’s exponentially larger than any other project.
SoftBank
founder Masayoshi Son, known for backing ambitious endeavors with
flair, unveiled the project Tuesday in New York at a ceremony with Saudi
Crown Prince Mohammed Bin Salman. The powerful heir to the throne of
the world’s largest crude exporter is seeking to diversify the economy
and wean off a dependence on oil.
Masayoshi Son and Mohammed bin Salman.
Photographer: Jeenah Moon/Bloomberg
The
deal is the latest in a number of eye-popping announcements from Saudi
Arabia promising to scale up its access to renewables. While the kingdom
has for years sought to get a foothold in clean energy, it’s was only
in 2017 that ministers moved forward with the first projects, collecting
bids for a 300-megawatt plant in October.
At 200 gigawatts, the Softbank project planned for the Saudi
desert would be about 100 times larger than the next biggest proposed
development and more than double what the global photovoltaic industry
supplied last year, according to data compiled by Bloomberg New Energy
Finance.
“It’s a huge step in human history,” Prince Mohammed said. “It’s bold, risky and we hope we succeed doing that.”
Over The Top
SoftBank-Saudi solar vision dwarfs other planned PV projects
If built, the development would almost triple Saudi
Arabia’s electricity generation capacity, which stood at 77 gigawatts in
2016, according to BNEF data. About two thirds of that is generated by
natural gas, with the rest coming from oil. Only small-scale solar
projects working there now.
Son said he envisions the project,
which runs the gamut from power generation to panel and equipment
manufacturing, will create as many as 100,000 jobs and shave $40 billion
off power costs. The development will reach its maximum capacity by
2030 and may cost close to $1 billion a gigawatt, he said.
“The
kingdom has great sunshine, great size of available land and great
engineers, great labor, but most importantly, the best and greatest
vision,” Son told reporters at a briefing.
Deepening Ties
The agreement deepens SoftBank’s ties with the Saudi Arabia, and advances the crown prince’s ambition to diversify its economy.
“SoftBank
seeks investment and Saudi needs energy, so it may make sense to sort
the financing out in a large block and then separately hammer out the
phases and the technical details,” said Jenny Chase, head of solar
analysis at BNEF. “It is worth noting that many of these memorandums of
understanding do not result in anything happening. ” SoftBank was said
to be planning to invest as much as $25 billion in Saudi Arabia over
the next three to four years. That’s a boost for Prince Mohammed, who’s
been at the forefront of the Vision 2030 campaign to diversify the
kingdom’s economy away from oil by that year. SoftBank is said to have
aimed to deploy as much as $15 billion in a new city called Neom, which the crown prince plans to build on the Red Sea coast.
The Japanese company’s Vision Fund is also said to plan investments of as much as $10 billion in state-controlled Saudi Electricity Co. as part of efforts to diversify the utility into renewables and solar energy.
Vision, Investments
Son, who is known as a savvy investor with a flair for the spotlight,
has been promoting clean energy since the 2011 Fukushima nuclear
disaster and recently completed a 50-megawatt wind power farm in
Mongolia. He has also pushed a plan dubbed “Asia Super Grid,” a plan to
connect Asian nations by grids and undersea cables to distribute clean
energy.
The kingdom’s deal-making has quickened as it pursues
Prince Mohammed’s diversification goals. Saudi Arabia’s sovereign wealth
fund, the Public Investment Fund, which has more than $224 billion in
assets, spent about $54 billion on investments last year. The sale of
about a 5 percent stake in oil giant Saudi Arabian Oil Co. is expected
to provide more funds.
Saudi Arabia also plans
to build at least 16 nuclear reactors over the next 25 years at a cost
of more than $80 billion. Electricity demand in the country has risen by
as much as 9 percent a year since 2000, according to BNEF. — With assistance by Chisaki Watanabe, and Stephen Stapczynski
Masayoshi Son and Mohammed bin Salman.Photographer: Jeenah Moon/Bloomberg
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