In a move that enhances the efficiency of the energy sector in the Kingdom of Saudi Arabia, the Saudi Electricity Company (SEC) announced the signing of a pivotal power conversion agreement with the Saudi Power Procurement Company, as the "principal purchaser," for the Rabigh 1 power plant expansion project.
In an official statement published on the Saudi Stock Exchange (Tadawul) website, the company revealed that the agreement aims to purchase power generated from the combined-cycle expansion project, which is technically ready to accommodate the future addition of a carbon capture unit. The strategic project is located in the western region of the Kingdom, with a target production capacity of 1,179 megawatts, representing a significant addition to the national electricity grid.
Project details and financial impact
Saudi Electricity Company clarified that it owns the project entirely, noting that the total cost is approximately SAR 5.33 billion. The scope of work includes the development, financing, construction, ownership, and operation of a combined-cycle gas turbine power plant, which is considered one of the most efficient systems for electricity generation and fuel efficiency.
The agreement is for a period of 25 years, commencing from the date of full commercial operation of the plant. Regarding the financial impact, the company anticipates that the positive effect on its financial statements will begin by the second quarter of 2027, the expected date for the commencement of full commercial operation.
Strategic context and alignment with Vision 2030
This agreement comes within the context of the major transformations taking place in the Saudi energy sector, in line with the Kingdom's Vision 2030, which aims to increase the efficiency of power generation and reduce carbon emissions. The inclusion of carbon capture-readiness technology at the Rabigh 1 power plant is tangible proof of the Kingdom's commitment to the Saudi Green Initiative and achieving net-zero carbon by 2060 through the adoption of circular carbon economy technologies.
The cooperation between Saudi Electricity and the Saudi Power Procurement Company (the main buyer) also reflects the maturity of the new structure of the electricity sector in the Kingdom, where the buyer’s activity is separated from the generation activity to ensure transparency and competitiveness, and to attract major capital investments to develop vital infrastructure, which enhances the reliability and sustainability of the electricity service for future generations.
