Saudi Firms Sign $3.07bn Power Deal to Expand Rabigh Energy Capacity

Saudi Arabia has taken another step in expanding its power generation capacity, with ACWA Power and Saudi Energy Company signing a long-term agreement for a major energy project on the Kingdom’s western coast.

In filings to Tadawul, the companies confirmed a 31-year power purchase agreement with Saudi Power Procurement Company for the Rabigh 2 Independent Power Producer Expansion project. The deal is valued at SR11.5 billion ($3.07 billion).

The project will involve the development, financing, construction, ownership and operation of a combined-cycle gas turbine power plant with a generation capacity of 2,313.5 megawatts. Both ACWA Power and Saudi Energy Company will each hold a 40 per cent effective stake.

Located in Makkah province, around 130 kilometres north of Jeddah, the Rabigh 2 project is a greenfield development situated بالقرب من an existing independent power plant. It will also include an extension to a 380 kV electrical substation, aimed at strengthening the transmission network in the region.

The agreement comes as Saudi Arabia continues to invest in energy infrastructure under its Saudi Vision 2030 strategy. The Kingdom is seeking to diversify its energy mix, increase efficiency and integrate cleaner technologies into its power sector. Plans include raising the share of renewable energy to 50 per cent by 2030, alongside a long-term target of reaching net-zero emissions by 2060.

The Rabigh 2 plant is expected to be designed with readiness for carbon capture technologies, reflecting a broader push to reduce emissions while maintaining reliable electricity supply.

The companies said details on the financial impact of the project will be disclosed once it reaches financial close.

The announcement follows earlier developments in the sector. In December, ACWA Power completed refinancing for the Rabigh 3 Independent Water Project, a desalination facility with a daily production capacity of 600,000 cubic metres of potable water using reverse osmosis technology.

In a separate agreement, Al Yamama Steel Industries signed a contract with SEPCOIII Electric Power Construction Company to supply wind towers for the Yanbu Wind Farm Project. The deal, signed under the supervision of Saudi Ministry of Energy, includes a localisation rate exceeding 80 per cent.

Officials said the wind project reflects efforts to boost domestic manufacturing and increase local participation in large-scale renewable energy developments. The ministry described the agreement as another step in advancing the Kingdom’s clean energy ambitions while strengthening local industry.