Saudis, SoftBank Announce Massive Solar Power Project
Development to start this year with $1 billion investment from Saudi-SoftBank Vision Fund
Saudi Crown Prince Mohammed bin Salman, center, sits with SoftBank chairman and CEO Masayoshi Son, right, and International Monetary Fund managing director Christine Lagarde at the Future Investment Initiative conference in Riyadh in October. PHOTO: FAISAL AL NASSER/REUTERS
By
Margherita Stancati and
Michael Amon
Updated March 28, 2018 8:00 a.m. ET
Saudi Arabia’s sovereign-wealth fund and Japan’s SoftBank Group Corp. 9984 -1.41% plan to undertake the world’s biggest solar-power-generation project, setting another ambitious goal for two of the world’s richest investors.
The development would start this year with a $1 billion investment from the joint Saudi-SoftBank Vision Fund, Masayoshi Son, chief executive of SoftBank, said on Tuesday. He said it is expected to grow into a $200 billion behemoth that provides about 200 gigawatts of power by 2030, more than Saudi Arabia would need to light up the entire country by then.
“It’s by far the biggest solar project ever,” Mr. Son said at an evening news conference in New York, after signing a nonbinding agreement for the project’s development with Saudi Crown Prince Mohammed bin Salman.
The first stage of the project will cost around $5 billion and begin this year, Mr. Son said, with the installation of solar panels that will produce around 7.2 gigawatts of power coming in 2019. Most of the first stage will be financed with debt.
If taken to the heights outlined by Mr. Son, the solar project would be the biggest joint undertaking so far announced by Saudi Arabia’s Public Investment Fund and SoftBank. The two entities unveiled their roughly $100 billion technology fund last year, upending technology investment across the world. Saudi Arabia’s sovereign-wealth fund committed up to $45 billion to the technology fund, which is the largest of its kind. Saudi Arabia has long touted its potential to become a solar powerhouse, with its wealth of sunshine and vast stretches of desert. But its dreams have been deferred by high costs and the logistical problems of building large solar fields in inhospitable regions.
But costs have come down in recent years, driven by Chinese production of panels, making solar the fastest-growing power generator in the world, according to the International Energy Agency. In some cases, solar projects have been competitive on cost with new natural-gas and coal plants, says the IEA, which monitors global energy trends for governments and corporations.
Solar remains a small part of the global energy mix, making up about 1% of the world’s power output in 2016, according to the IEA. But its share is likely to grow, especially if the Saudi plans are fully realized.
Mr. Son said the project would eventually include solar panels in different locations across Saudi Arabia. The Saudis plan to build out battery systems for storing the power and releasing it when needed—an approach that hasn’t been carried out on such a scale before.
The solar panels would be imported from the lowest-cost producers until Saudi Arabia begins producing its own at a competitive rate within two to three years, he said.
Mr. Son didn’t spell out in detail how the Saudis and SoftBank would fund the project, though proceeds from power generation could contribute to future phases of the plan.
“The project will fund its own expansion,” he said. “New investment comes from the profit of the earlier project—we don’t need to secure total $200 billion in one day. It will be step by step.”
Saudi Arabia is searching for new ways to produce electricity other than burning its crude oil—a cheap but inefficient means of providing power. Those barrels of oil also would fetch higher prices on the export market.
“It will not happen overnight,” Mr. Son said. Write to Margherita Stancati at [email protected] and Michael Amon at [email protected]
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