Dewa and Masdar reach financial close of $1.4bn sixth phase of world's biggest solar park

The Dubai utility had selected Masdar to build and operate the project in August

Aerial view of Phase 5 of the Mohammed bin Rashid Al Maktoum Solar Park in Dubai. Pawan Singh / The National

The Dubai Electricity and Water Authority and Abu Dhabi's renewable energy company Masdar have reached the financial close of the Dh5.51 billion ($1.4 billion) sixth phase of the Mohammed bin Rashid Al Maktoum Solar Park.

The 1,800-megawatt project, the world's largest single-site solar park using photovoltaic solar panels, is being built on an independent power producer model, Dewa said on Wednesday.

The deal, with lending support from Abu Dhabi Commercial Bank, Commercial Bank of Dubai, First Abu Dhabi Bank, HSBC, Standard Chartered Bank, Abu Dhabi Islamic Bank and Warba Bank, is a “new milestone in promoting the use of clean and renewable energy in the UAE”, the utility said.

Dewa selected Masdar to build and operate the sixth phase of the solar park in August. The two companies have formed a joint venture, Shuaa Energy 4, which is 60 per cent owned by Dewa while Masdar controls the remainder.

The project is aligned with the UAE Net Zero by 2050 strategic initiative, the Dubai Clean Energy Strategy 2050 and the Dubai Net Zero Carbon Emissions Strategy 2050 to provide 100 per cent of the emirate’s total power capacity from clean energy sources by the middle of this century.

“The solar park supports the UAE’s position as a leading global hub for clean energy,” Dewa managing director and chief executive Saeed Al Tayer said.

“This project also supports the goals of the UAE's Year of Sustainability 2024 to protect and preserve the environment for the benefit of future generations.”

Dubai, the commercial and trading centre of the Middle East, has set a target of generating a quarter of its energy requirements from renewable sources by 2030 and 100 per cent by 2050.

With a total investment of Dh50 billion, the solar park will have a capacity of 5,000MW and will reduce carbon emissions by 6.5 million tonnes annually when it is fully completed in 2030.

Masdar submitted the lowest bid of $1.62154 cents per kilowatt hour, the lowest levelised cost of energy (LCOE) for any of Dewa's solar IPP projects so far.

The project will become operational in stages beginning from the fourth quarter of 2024, Dewa said.

This sixth phase will provide clean energy for about 540,000 residences and will lead to an annual reduction in carbon emissions of about 2.36 million tonnes. The project will cover an area of 20 square kilometres.

The total capacity of the solar energy projects commissioned at the mega solar park has reached 2,427MW, the Dubai Media Office said in August.

Dewa is building another project with a total capacity of 433MW. The sixth phase, when completed, will increase the total generation capacity to 4,660MW.

Dubai’s share of clean energy in its energy mix is about 16.3 per cent of its total installed capacity currently.

It is set to reach 24 per cent in 2026 with the completion of the sixth phase and the remaining phases under construction of the solar park.

Financial close builds on the long-standing partnership between Dewa and Masdar and will help in “advancing the UAE’s energy leadership” as the construction of the world’s largest multiphase solar plant progresses, Masdar chief executive Mohamed Al Ramahi said.

“The UAE continues to demonstrate leadership in delivering cutting edge clean energy solutions which have attracted the interest and confidence of the investment community, locally and internationally,” he said.

“Accessing capital is fundamental to accelerating the global energy transition and this expansion of the Mohammed bin Rashid Al Maktoum Solar Park is an important milestone for the UAE in its own clean energy journey.”