SoftBank to build world's largest solar project in Saudi Arabia

Saudi Arabia's Public Investment Fund (PIF) and Japan's SoftBank on Tuesday announced plans to build the world’s biggest solar power generation project in the Kingdom.

Crown Prince Mohammed bin Salman and SoftBank CEO Masayoshi Son signed a memorandum of understanding between PIF and the $100-billion SoftBank Vision Fund to kick-start the process in New York on Tuesday.

The solar project will have the capacity to produce up to 200 gigawatts by 2030 and is expected to cost $200 billion, CNBC reported, citing Son. The due diligence on the project is expected to be completed by the end of May.

The 200 gigawatts of capacity will be spread across the Kingdom with the first two solar parks generating 7.2 gigawatts of power. The plants are scheduled to begin construction this year and start generating electricity in 2019, CNBC reported.

The cost of the two parks will be about $5 billion, with $1 billion coming from Softbank's Vision Fund and $4 billion from project financing.

Son said revenues from early-stage solar parks will help finance the construction of future projects.

Each solar park will have a 25-year power purchase agreement and a long-term contract to supply electric power to customers.

“The project is so large, it will support the creation of a domestic solar equipment manufacturing industry in the Kingdom,” Son added.

PIF is the largest investor in Softbank's Vision Fund and has committed $45 billion to it.

The Kingdom is increasingly focusing on renewable energy sources as it looks to diversify its energy mix and economy. Its National Renewable Energy Program (NREP) targets 9.5 gigawatts of renewable energy by 2023 in support of the Vision 2030, with an interim target of 3.45 GW of renewable energy capacity by 2020.