The Red Sea Development Company, the developer of what is said to be the world’s most ambitious regenerative tourism project, has secured multinational investment in its first public-private partnership for a utilities package focused exclusively on environmentally responsible renewable energy, water production, wastewater treatment and district cooling. It has now 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 contract marks a significant step forward for project, establishing it as the region’s first tourism destination powered solely by renewable energy. A project of this size has never been achieved on this scale anywhere in the world.
“This contract also signifies a noteworthy step change for us as the consortium brings foreign investment to the project for the first time, demonstrating international support and confidence for the vision that is becoming a reality along the Red Sea coast. At the same time, we are delighted to partner with a consortium leader that has its roots in the Kingdom and shares our ambition to accelerate the energy transition locally,” said John Pagano, CEO of TRSDC.
“The Red Sea Project is a vital undertaking under the Saudi Vision 2030 and aims to be a global showcase of the Kingdom’s ability to develop ambitious mega projects” commented Mohammad Abunayyan, chairman of ACWA Power.
All the utilities will be delivered under a single agreement, unique for a contract of this kind, which includes the provision of renewable power, potable water, wastewater treatment, solid waste management and district cooling for the 16 hotels, international airport and infrastructure that make up phase one of the project.
Energy will be generated via solar panels and wind turbines to meet an initial demand of 210 MW, with the ability to expand in line with the development.
Included in the package is the world’s largest battery storage facility of 1 GWh, which is expected, uniquely for a project of this size, to 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 plants, designed to provide clean drinking water, a waste management centre and an innovative sewage treatment plant 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 the TRSDC landscape nursery.
The ACWA Power consortium is financed by Saudi and international banks, including the UK’s Standard Chartered Bank, and marks a new stage for the development, in terms of securing external investment.
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. Saudi Arabia’s sovereign wealth vehicle the Public Investment Fund (PIF), which owns TRSDC, will provide the guarantee for the 25-year offtake agreement.
The project has already passed 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. Upon completion in 2030, there will be 50 hotels, offering up to 8000 hotel rooms, and around 1300 residential properties across 22 islands and six inland sites.