Saudi Arabia in talks with Chinese firms over 2,000 MW solar plant in Turkey; Chinese contractors emerge as front-runners for Tasheli and Sivas projects

REPORT: Olcay AYDİLEK

(ANKARA) - Saudi Arabia has reached the final stage in selecting the main contractor for a 2,000-megawatt solar power plant to be built in Karaman Taşeli and Sivas, Turkey. The Kingdom has compiled a shortlist of companies that meet both financial and technical requirements. Chinese firms, which are reported to have a competitive edge in both technical and financial aspects, are widely expected to serve as the main contractor for this multi-billion-dollar project. Construction of the investment is expected to begin in the second quarter of the new year.

An intergovernmental agreement between the Republic of Turkey and Saudi Arabia regarding solar power plant investments in Turkey was recently ratified by the Grand National Assembly of Turkey.

Under the agreement, Saudi Arabia will develop solar and wind energy projects in Turkey with a total installed capacity of 5,000 megawatts.

In the first phase, designated as Phase-1, solar power plants with a total capacity of 2,000 megawatts—comprising 1,000 megawatts each in Sivas and Karaman Taşeli—will be established.

For this investment, Saudi companies will be granted a corporate tax incentive for the duration of the investment agreement, without the need to obtain an investment incentive certificate.

The Turkish side will grant the company or companies designated by Saudi Arabia the right to import, export, or re-export equipment, materials, machinery, tools, spare parts, and consumables to be used in connection with the implementation of each project into, from, or out of the territory of the Republic of Turkey.

The project company will be exempt from all taxes, duties, financial obligations, fees, funds, and levies applied to imports, including customs duties, value-added tax, and special consumption tax.

ELECTRICITY TO BE PURCHASED IN EUROS

The electricity generated by the plants will be purchased by the state-owned Electricity Production Inc. (EUAŞ) for a period of 30 years.

The purchase tariff for the Sivas Solar Power Plant will be 47.5 euros/MWh, excluding VAT, for the period from the commercial operation start date until the end of the fifth year of the project's commercial operation start date. From the end of the fifth year of the project's commercial operation start date and thereafter, the tariff will be 23.415 euros/MWh, excluding VAT.

For the Taşeli Solar Power Plant, the payment will be 47.5 euros/MWh, excluding VAT, for the period from the commercial operation start date until the end of the fifth year of the project's commercial operation start date. From the end of the fifth year of the project's commercial operation start date and thereafter, the payment will be 19.950 euros/MWh, excluding VAT.

CHINESE FIRMS EMERGE AS LEAD CONTRACTORS

Saudi Arabia has largely completed its work on selecting the main contractor for a 2,000-megawatt solar power plant. The country has compiled a shortlist of companies that meet both financial and technical requirements.

Sources close to the project told ANKA News Agency that Chinese firms, which stand out in technical and financial aspects compared to their competitors, are expected to serve as the main contractor for the multi-billion-dollar project. "At this stage, it is widely assumed that Chinese companies will be the main contractor. Of course, we have been informed that it is not yet finalized. An announcement on this matter is also expected to be made shortly," the sources said.

The sources noted that subcontractors would be determined later, adding, "At this stage, Turkish companies will also participate in the project."

Construction of the investment is expected to begin in the second quarter of the new year. Following the solar power plant investment with a euro-denominated power purchase agreement with Saudi Arabia, a 3,000-megawatt wind power plant investment is also planned.