Industrial and Commercial Bank of China (ICBC) has been mandated as lead arranger for a US$1.5 billion senior loan to help finance the fourth phase of the Mohamed bin Rashid Solar Park in Dubai.

ICBC will be joined on the syndicate by Bank of China and Agricultural Bank of China. Also providing funding to the project are China Minsheng Bank and the Silk Road Fund.

The project will feature a combination of a tower and parabolic troughs. These will combine to collect heat and store it in molten salt to supply electricity on demand during the day and through the night. Total project cost is estimated at 14.2 billion dirham (US$3.87 billion).

Last September Dubai Electricity and Water Authority (DEWA) awarded the PPP contract to Saudi project developer ACWA Power and Shanghai Electric, a leading power equipment manufacturer. The power will be sold to DEWA under a long-term contract. The project has achieved the world’s lowest Levelised Cost of Electricity (LCOE) of 7.3 cents per kilowatt hour (kW/h).

On April 15 the Engineering, Procurement and Construction (EPC) contract with Shanghai Electric was signed at a ceremony in Shanghai. Attending were representatives from the Chinese government, the embassies of the United Arab Emirates and the Kingdom of Saudi Arabia as well as senior officials from DEWA, ACWA Power, the Silk Road Fund, ICBC, Bank of China, Agricultural Bank of China and China Minsheng Bank.

ICBC, Bank of China, and Agricultural Bank of China will play a major role in the financing of the project, providing about 80% of the senior debt. ACWA Power is investing US$750 million in the project.

“This project presents an opportunity for China, UAE and KSA to cooperate, promote and benefit in energy and infrastructure development based on each parties’ advantage in equipment manufacturing, engineering, construction & infrastructure, financing, project development and project management,” Shanghai Electric chairman Zheng Jianhua said at the ceremony.

According to ACWA, the deal represents a flagship project for ICBC in supporting the three major Chinese power equipment suppliers, namely Shanghai Electric, Dongfang Electric and Harbin Electric, to ‘go abroad’ and break through into the power market.

This is the fourth phase of the Mohammed Bin Rashid Solar Park and will save 2.4 million tons of CO2 and half a million tons of natural gas per year, eliminating the need to use foreign currency to import this gas by substituting it with clean and renewable energy.

The small initial Phase 1 and 2 solar parks have already been commissioned, while Phase 3 (800MW) has been awarded to Abu Dhabi Future Energy. These are conventional solar projects with thousands of solar panels spread out over a wide area.

Phase 4 is much more sophisticated. The concentrated solar power project will use two technologies for the production of clean energy – the 600MW parabolic basin complex and the 100MW solar tower, over a total area of 43 square kilometres. The mirrors in parabolic troughs focus sunlight onto the tower, where molten salt stores the extreme heat to drive a steam turbine. This will be the world’s tallest concentrated solar power tower at 260 metres.

The US$3.87 billion price tag meant that only the biggest companies with strong financial backing were in with a chance in the bidding process. This gave Chinese entities an advantage, since contractors such as Shanghai Electric typically line up backing from the big state-owned banks.

Under the Dubai Clean Energy Strategy 2050 launched by ruler Sheikh Mohammed Bin Rashid Al Maktoum, 75% of Dubai’s total power output will come from clean sources by 2050. Achieving these ambitious targets will require more than 42,000MW of clean and renewable energy generating capacity by 2050.

The Mohammed bin Rashid Al Maktoum Solar Park is the largest single-site solar park in the world, based on the IPP model. It will generate 1,000MW by 2020 and 5,000MW by 2030. The 13MW photovoltaic first phase became operational in 2013. The 200MW photovoltaic second phase of the solar park was launched in March 2017. The 800MW photovoltaic third phase will be operational by 2020, and the first stage of the 700MW concentrated solar power fourth phase will be commissioned in Q4 of 2020. A ceremony on Phase 4 was held on March 20.

Last October DEWA announced that it had raised an initial 2.4 billion dirham for green projects through its Dubai Green Fund, in collaboration with national banks. The fund will eventually be sized at 100 billion dirham. It is likely that Chinese entities will invest in the fund.

Established in 2016, the primary objective of the Fund is to invest in multiple types of projects, including renewable energy and retrofitting existing fossil fuel-based energy systems, energy efficiency and balancing technologies between electricity demand and supply.

Saudi-based ACWA Power has projects across the region and is currently working with another Chinese contractor in Egypt. In January ACWA Power, a developer of power and water desalination projects, awarded an EPC contract to China’s Chint Group for three solar photovoltaic power plants at Benban, Egypt within the Feed-in-Tariff.

The EPC contract moves forward the development of these three projects of a total investment value of US$190 million. These projects contribute to the target of obtaining 20% of energy requirements from renewable sources by 2022, set out by the Government of Egypt and the Ministry of Electricity and Renewable Energy.

This was ACWA Power’s first investment in Egypt. Construction on all three projects, which are located in the Aswan Province at Benban, started in the first quarter. Once the projects start operations in Q4 2018, the new installed capacity will power 80,000 houses and provides a saving of 156,000 tons of CO2 a year.

The Benban photovoltaic facility will play a role in the government’s efforts to meet the country’s increasing energy needs through renewable resources in addition to supporting Egypt Vision 2022 and 2030.