Red Sea awards ACWA Power-led consortium an infrastructure contract for project utilities

The Red Sea Development Co. awarded its highest-value contract to date to a consortium led by ACWA Power to design, build, operate and transfer The Red Sea Project’s utilities infrastructure.

The company said in a statement that all facilities will be delivered under a single agreement, which is unique to a contract of this kind. The agreement will include the provision of renewable energy, drinking water, wastewater treatment, cooling systems for 16 hotels, in addition to the international airport, and infrastructure included in the first stage of the Red Sea project.

Power will be generated through solar panels and wind turbines to meet the initial demand of 210 MW, which is expected to increase as the project progresses.

The agreement is expected to generate up to 650,000 MWh of 100% renewable energy to supply the destination and other utility systems, whilst emitting zero CO2. The resulting saving in CO2 emissions to the atmosphere is equivalent to nearly half a million tons each year, the statement added.

Included in the package is the world’s largest battery storage facility of 1000MWh, which will allow the destination to remain completely off-grid and powered by renewables day and night.

The agreement also covers the construction of three seawater reverse osmosis (SWRO) plants, designed to provide clean drinking water, a solid waste management center and an innovative sewage treatment plant (STP) that is expected to allow waste to be managed in a way that enhances the environment, by creating new wetland habitats and supplementing irrigation water for landscaping at the destination.

“The ACWA Power consortium is financed by Saudi and international banks, including the UK’s Standard Chartered Bank and China’s Silk Road Fund, and marks a new stage for the development, in terms of securing external investment,” the Saudi-listed firm said.

The contract was procured as an independent public-private partnership (PPP), intended to cover the design, construction and operation of the systems providing utilities, accompanied by the associated networks and infrastructure.

The Red Sea Project is not investing any of its own capital and is instead committing to purchase its utilities from the consortium for the next 25 years, the company noted.

“With the largest battery storage facility in the world in place, we can guarantee that the development is 100% powered by renewable energy 24 hours a day, 365 days a year, an accomplishment which has never been achieved on a project of this scale before. This approach requires entirely new utilities infrastructure, and so a PPP contract makes sense as it ensures high quality, affordable utilities for us and a sound return on the investment for our backers,” chief executive officer John Pagano said.

He emphasized that The Red Sea Project has already surpassed significant milestones and work remains on track to welcome the first guests by the end of 2022, when the international airport and the first four hotels will open. The remaining 12 hotels scheduled for completion in stage 1 will open in 2023, delivering a total of 3,000 rooms across five islands and two inland resorts.

Upon completion in 2030, there will be 50 hotels, offering up to 8,000 hotel rooms, and around 1,300 residential properties across 22 islands and six inland sites, the CEO added.