Al Jouf Cement, Engie ink deal to build solar power plant

Logo of Al Jouf Cement Co.

Al Jouf Cement Co. signed an agreement with the French company Engie to construct and operate a solar power plant for 25 years at the company's site in Turaif city, with a generation capacity of 22 megawatts, according to a Tadawul statement.

The cement producer will purchase the electricity generated from the plant for 25 years starting from the actual commencement of the plant’s operations. The cost will be lower than the company’s current production costs from its heavy fuel oil power plant and lower than the industrial electricity costs if connected to the national grid.

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The solar power plant is expected to contribute approximately 25% of the company’s electricity needs upon completion. Al Jouf Cement will not incur any financing for the project, as it will not bear any capital or operational expenses.

According to the company’s initial estimates, the positive impact of cost reduction will gradually begin to appear from the first year of operation. The financial impact will be determined based on prevailing fuel prices. The positive impact, compared to the current industrial electricity tariff from the Saudi Electricity Co., is expected to be SAR 3.6 million annually.

Al Jouf Cement noted that the contract will have a positive environmental impact by reducing carbon emissions by 1.5 million tons, supporting the government’s efforts to preserve the environment in the energy-intensive cement sector. According to data available to Argaam, Al Jouf Cement received notifications from Saudi Aramco about adjustments to prices of fuel products used in cement production, effective Jan. 1, 2024.

The company stated that this price change would increase production costs by 9% based on the latest audited financial statements.

In addition, the cement maker said it was exploring ways to minimize the financial implications of this adjustment on its profits.