Saudi Arabia signs $200bn SoftBank deal to build the world’s biggest solar project

Saudi Arabia is joining forces with Japanese investment giant SoftBank to create the world’s largest solar power generation project in the kingdom, aiming to spend $200bn by 2030.

SoftBank founder Masayoshi Son, and Saudi Crown Prince Mohammed Bin Salman signed a preliminary agreement for a series of solar parks throughout the kingdom promising to scale up its access to renewables.

Saudi Arabia’s powerful successor as the world’s largest crude exporter is seeking to diversify the economy and decrease a dependence on oil. While the kingdom has for years sought to get a foothold in clean energy, it’s was only in 2017 that ministers moved forward with the first projects, collecting bids for a 300-megawatt plant in October.

At 200 gigawatts, the Softbank project planned for the Saudi desert would be about 100 times larger than the next biggest proposed development and a third more than what the global photovoltaic industry supplied worldwide last year, according to data compiled by Bloomberg New Energy Finance.

“It’s a huge step in human history,” Prince Mohammed said. “It’s bold, risky and we hope we succeed doing that.”

If built, the development would almost triple Saudi Arabia’s electricity generation capacity, which stood at 77 gigawatts in 2016, according to BNEF data. About two thirds of that is generated by natural gas, with the rest coming from oil. Only small-scale solar projects working there now.

Son said he envisions the project, which runs the gamut from power generation to panel and equipment manufacturing, will create as many as 100,000 jobs and shave $40 billion off power costs. The development will reach its maximum capacity by 2030 and may cost close to $1 billion a gigawatt, he said.

“The kingdom has great sunshine, great size of available land and great engineers, great labor, but most importantly, the best and greatest vision,” Son told reporters at a briefing.

The agreement deepens SoftBank’s ties with the Saudi Arabia, and advances the crown prince’s ambition to diversify its economy.

SoftBank was said to be planning to invest as much as $25 billion in Saudi Arabia over the next three to four years. That’s a boost for Prince Mohammed, who’s been at the forefront of the Vision 2030 campaign to diversify the kingdom’s economy away from oil by that year. SoftBank is said to have aimed to deploy as much as $15 billion in a new city called Neom, which the crown prince plans to build on the Red Sea coast.

Saudi Arabia also plans to build at least 16 nuclear reactors over the next 25 years at a cost of more than $80 billion. Electricity demand in the country has risen by as much as 9% a year since 2000, according to BNEF.