Asset AllocationJuly 22, 2024

Saudia Arabia’s Sovereign Wealth Fund Bolsters Renewable Investments

The $990 billion Public Investment Fund signed four joint venture deals involving solar, wind and green hydrogen projects.

Reported by Michael Katz

As part of Saudi Arabia’s ongoing strategy to transform from the world’s second-largest oil producer—behind only the U.S. —into a dominant player in renewable energy, its $990 billion sovereign wealth fund has recently signed four joint venture deals involving solar, wind and green hydrogen projects.

The investments by Saudi Arabia’s Public Investment Fund aim to build production facilities and supply chains within the country’s renewable energy sector as part of its goal to generate up to 130 gigawatts of renewable energy by the end of the decade under its Vision 2030 economic plan.

One of the joint ventures is with Shanghai-based wind power technology company Envision Energy and Saudi manufacturing firm Vision Industries. The venture will involve manufacturing and assembling wind turbine components with an estimated annual generation capacity of 4 gigawatts.

Envision will own a 50% stake in the joint venture, with PIF subsidiary Renewable Energy Localization Co. owning 40% and Vision Industries holding the remaining 10%.

Another joint venture is with panel maker Jinko Solar Co. Ltd., also based in Shanghai, and Vision Industries. The venture involves manufacturing photovoltaic cells and modules in Saudi Arabia to generate 10 gigawatts of solar power annually. Under the agreement, RELC and Jinko Solar will each hold a 40% stake in the joint venture, with Vision Industries owning the other 20%.

The third joint venture is with Lumetech SA PTE Ltd., a subsidiary of China’s TCL Zhonghuan Renewable Energy, and again with Vision Industries. The deal aims to produce solar photovoltaic ingots and wafers in Saudi Arable with annual production that is expected to generate 20 gigawatts of power. Under the agreement, RELC and Lumetech will each own a 40% stake in the joint venture, with Vision Industries holding 20%.

The PIF also signed a memorandum of understanding with French utilities company Engie SA to jointly develop green hydrogen projects in Saudi Arabia. Under the MoU, PIF and Engie announced they will evaluate the feasibility of co-development opportunities and form a strategy to approach the international market and secure offtake arrangements.

“Our partnership with PIF will contribute to laying robust foundations for the green hydrogen industry, enabling the Kingdom to be one of the top exporters of green hydrogen worldwide,” said Engie’s Frédéric Claux in a statement.

According to sovereign wealth fund data provider Global SWF, the PIF is mandated to develop 70% of Saudi Arabia’s renewable energy program and expects to invest more than $10 billion in green projects from 2022 to 2026. The kingdom also plans to increase solar and wind energy in its local grid to 50% by 2030, Global SWF reported. [Source]