Saudi Energy and ACWA Power Sign 3 Billion Dollar Agreement for Major Mecca Power Plant Expansion

Saudi Energy Company and ACWA Power have signed a landmark 3 billion dollar power purchase agreement with the Saudi Power Procurement Company to develop the Rabigh 2 Independent Power Plant expansion project in the Mecca province. The deal worth SAR 11.5 billion was officially signed on April 16 2026 and represents one of the largest energy infrastructure investments in the region.

The ambitious project will develop finance build own and operate a 2313MW combined cycle gas turbine power plant located in the Rabigh area of Makkah province. The facility is designed with future readiness to accommodate carbon capture units reflecting Saudi Arabia’s commitment to reducing emissions as part of its energy transition strategy.

The contract spans 31 years from the expected commercial operation date and includes the development financing and construction of an extension to a 380kV electrical substation. Both Saudi Energy Company and ACWA Power will hold equal 40 percent shareholdings in the project making it a balanced joint venture between the two energy giants.

Omar Al Hassan Country General Manager for ACWA Power in Saudi Arabia described the agreement as an important milestone that reinforces the company’s commitment to supporting the expansion of the Kingdom’s electricity infrastructure. The project is expected to significantly increase generation capacity improve supply reliability and support Saudi Arabia’s broader energy transition goals.

The Rabigh 2 expansion is part of Saudi Arabia’s broader strategy to modernize its power generation capabilities while preparing for a more sustainable energy future. The Kingdom aims to diversify its energy mix with approximately 50 percent coming from renewable sources by 2030 while the remaining capacity will be supplied by high efficiency gas fired power facilities like the Rabigh 2 project.

This major investment comes as part of Saudi Arabia’s Vision 2030 initiative which seeks to transform the Kingdom’s economy and reduce its dependence on oil revenues. The project is expected to create significant employment opportunities during construction and operation phases while contributing to the overall economic development of the Makkah region.

The Saudi Power Procurement Company will serve as the principal buyer and off taker for the electricity generated by the facility. This arrangement provides long term revenue certainty for the project developers while ensuring reliable power supply for the Kingdom’s growing electricity demand.

The Public Investment Fund which owns 74.31 percent of Saudi Energy and 44 percent of ACWA Power continues to play a pivotal role in the Kingdom’s energy sector transformation. This ownership structure demonstrates the strategic importance of the project within Saudi Arabia’s national energy planning framework.

Construction of the Rabigh 2 facility is expected to utilize advanced combined cycle gas turbine technology which offers higher efficiency rates compared to conventional power generation methods. The plant’s design incorporates modern environmental standards and operational flexibility to support the Kingdom’s evolving energy needs.