Chairman’s message
The Neom Green Hydrogen Company (NGHC) USD 8.5 billion mega-plant will integrate 4 GW of solar and wind energy to produce up to 600 tonnes per day of carbon-free hydrogen from 2026, to then convert to liquid green-ammonia equivalent to 1.2 million tonnes per year. When complete, the project will mitigate the impact of 5 million tonnes per year of carbon emissions.
A key element in ACWA Power’s energy transition, for the benefit of the planet, is the ingenuity of our 4,000+ strong people”
Mohammad Abunayyan Chairman of the Board of Directors
Dear stakeholders,
I welcome you all and thank you for your interest and investment in ACWA Power.
ACWA Power’s overall strategy is to be at the forefront of the energy transition with the mission to deliver power, desalinated water, and green hydrogen reliably and responsibly for the benefit of all the communities we serve. At the foundation of this strategy, we will always seek to maintain a balanced portfolio, adhere to our winning business model, and ensure robust financial strength, while at the same time we continue to embed best practice across all elements of corporate governance, environmental stewardship, and social responsibility.
In a year surrounded by geopolitical, economic and supply chain challenges, the resilience of our Develop, Invest, Operate and Optimise business model ensured our unwavering focus to deliver value to all our stakeholders, underlined by a strong set of financial results for the year 2022.The robust growth in our financial indicators reflects our philosophy of generating returns while focusing on developing solutions that serve people and the planet.
Our earnings per share to equity holders of the parent was SAR 2.11 in 2022, more than doubling compared to the previous year. On 26 January 2023, the Board of Directors declared a cash dividend of SAR 606.8 million (SAR 0.83 per share) for the year 2022 that is 8% higher than last year.
We are delighted to observe the strong investor confidence — institutional and retail, Saudi and international — that we believe reflects conviction in our strong fundamentals and growth potential as well as the strength of our business model and people.
The energy transition
A key element in ACWA Power’s energy transition, for the benefit of the planet, is the ingenuity of our 4,000+ strong people. This runs right through our business and operations and through the four stages of our business model and not just in the technological arena, where our engineers and EPC partners are applying technology to increase our competitive advantage in power generation, water desalination and green hydrogen production.
Our ingenuity applies equally to the way we conceive and structure our project partnerships. Our inhouse commercial, finance and legal teams demonstrate time and again their inventive thinking in constructing enduring relationships with our new partners that enable us to execute long-term, large-scale projects.
We now have 68 projects in 12 countries with 42 in operation, 13 under construction and 13 in advanced development. Total investment cost of our portfolio has reached SAR 270 billion, with 39% of our power generation capacity in renewable technologies. This is a testament to our dedication to lead the energy transition as well as the confidence of both the Saudi Arabian and foreign governments and offtakers in our agility, expertise, and capability to help them transform their energy mix for the economic development of their countries in a sustainable and responsible way for the benefit of many generations to come.
As we look to the future, we will continue to rely on the ingenuity of our people, strong relationships with our business partners across our stakeholder domain, and the technical and institutional knowledge we have developed over nearly 20 years of operations to grow our business, while creating a greener future for all.
A responsible enabler for the Kingdom’s Vision 2030
As the Kingdom of Saudi Arabia continues to accelerate its ambitious plans for diversifying its energy mix to include renewable energy under the guidance of our visionary leadership and the Ministry of Energy (MOE), ACWA Power remains committed to play its role as key enabler in delivering on these plans as a national champion in the energy space. Aspiring to achieve net zero by 2050, ten years ahead of the Kingdom’s target date, we believe we will continue to lead the energy transition at home. The 5.6 GW of solar PV projects of ACWA Power currently in operation, under construction or in advanced development in the Kingdom, both under the strategic framework agreement with the Public Investment Fund (PIF) and the competitive MOE bidding programmes, are a testament to our commitment in this mission.
Additionally, the USD 8.5 billion, 4 GW world’s largest at-scale green hydrogen production facility is well into construction in NEOM, following the successful financial close of USD 6.3 billion of non-recourse project finance debt, giving us the confidence to move forward with our ambition to develop other at-scale green hydrogen projects in the Kingdom and beyond.
In another equally iconic project and having achieved its financial close earlier in 2022, we are on track to develop the Red Sea multi-utilities project. The first of its kind in the region, the project relies entirely on renewable energy for power generation, water production, wastewater treatment and district cooling to the very exacting zero carbon emission, zero waste and zero plastic standards.
Another milestone was our coordinated action with our offtaker, towards the Kingdom’s ambition to reduce dependency on liquid fuels as an energy source, to decommission and convert the Shuaibah 3 Independent Water and Power Project (IWPP) from an energy-intensive power generation and thermal desalination facility to a greenfield seawater reverse osmosis (SWRO) desalination plant. Representing ACWA Power’s first conversion action, the project will be partially powered by photovoltaic solar energy and offset 22 million barrels of heavy fuel oil and save 9.5 million tonnes of CO2 per year.
To unlock value and sustain the Kingdom’s ambitious growth plan, we remain committed to developing local capabilities in technology, supply chain, and talent and ensure they are realised to their fullest potential.
Beyond the Kingdom
As we expand globally, our mission to provide reliable, responsible, and affordable power and water requires the support of strategic anchor investors to partner with us on our journey to ensure fast and reliable development of energy infrastructure of nations that ultimately benefits the communities and enables robust socio-economic progress.
To this end, we are committed to partnering with nations in their energy mix diversification endeavours and during the year we continued to sign agreements that will provide an ample growth pipeline for us in the near- to mid-term future.
In December 2022, we signed a series of memorandum of understanding (MOU) agreements with nine renowned Chinese entities to collaborate on clean and renewable energy projects.
ACWA Power’s solid and growing relationship with major Chinese entities has contributed to our leading position in driving the global energy transition and reflects the valuable ties between Saudi Arabia and China. To date, Chinese organisations have a hand in 47 projects within ACWA Power’s portfolio, spread across 12 countries.
Leveraging our first mover advantage in the green hydrogen space, we are already working with governments to develop similar at-scale green hydrogen projects. We have signed MOU agreements representing billions of dollars with the governments of countriesincluding Uzbekistan and Egypt for exploring opportunities to develop new green hydrogen projects in addition to starting long-term contract discussions with hydrogen offtakers in Austria, Korea, and Indonesia.
Uzbekistan today is at the forefront of energy transition in central Asia and we are proud to play a vital role in supporting the nation’s decarbonisation efforts, stemming from the strong international cooperation between Saudi Arabia and Uzbekistan under their visionary leadership. Following the signing of agreements with the government of the Republic of Uzbekistan in August 2022 for the joint development of gas-to-power, renewable energy and green hydrogen projects including the largest single-site onshore wind plant in Central Asia, I am glad to report that in March 2023, we signed three power purchase agreements (PPA) with the National Electric Grid of Uzbekistan for the development of three solar PV projects facilities at a total combined capacity of 1.4 GW and a battery energy storage system (BESS) with a combined total capacity of 1.5 GWh of additional battery storage capacity.
In Azerbaijan, ACWA Power’s new MOU with the Azerbaijan Ministry of Energy entails the development of a battery energy storage system, together with implementation agreements for onshore and offshore wind. Our partnership with the Azerbaijan government also involves water desalination in support of the Republic’s sustainability targets as well as collaboration and exploration in the field of green hydrogen.
Serving local communities
Power and water are fundamental to life, and we believe strongly that our resources should be applied to providing affordable energy and water to peoplein a responsible manner. ACWA Power is engaged in an important, in fact vital, service and we are contributing to the standard of living of over 100 million people.
Our projects become part of the essential infrastructure within the communities we serve and so have a long term and humanitarian impact. More reason for us to make sure that they are truly sustainable — that is why we are moving fast with the energy transition from carbon-based energy to renewables.
We have always considered ourselves to be an integral member of the communities in which we operate. We prioritise community engagement and address the most pressing issues our communities face with relevant CSR programmes. We are fully committed towards community development, social responsibility, and sustainable livelihoods. Our CSR programme supports a wide range of educational, health, agricultural, infrastructure, environmental and social initiatives.
Of particular note, the Higher Institute for Water and Power Technologies (HIWPT) has made remarkable progress by offering high-level training initiatives and a proper training ground for the Saudi youth in line with the government of Saudi Arabia’s ambitions. During 2022, HIWPT started the first training programme for women, in the field of reverse osmosis (RO) desalination, with 15 trainees. In March 2023, we welcomed another 60 female trainees as HIWPT launched the Renewable Energy and Occupational Safety Programme, the first of its kind in the Kingdom, focused on training women in technical disciplines related to renewable energy and water desalination.
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Health and safety
Health and safety is of primary importance and we place the greatest emphasis on the safety of our people and plants towards creating a zero-harm culture.
To review and improve our safety procedures across the whole business in 2022 we set up an Executive Safety Committee, comprising C-suite executives as well as a Head of Safety and commissioned an independent third party. We are also investing more in training our staff to be more conscientious about their safety and that of their colleagues in the workplace, always.
Governance
We started 2022 with a new Board of Directors, following their election at the Extraordinary General Assembly (EGA) held on 5 January 2022. Subsequently on the EGA held on 12 February 2023, when it was approved to increase the Board size from 11 to 12 members, Raad E Al-Saady was elected as the new Vice-Chairman of the Board and Managing Director of the Company. On behalf of the Board of Directors, I would like to welcome Raad, a strategic management veteran, who brings with him broad commercial experience as a board member of several prominent Saudi companies. As ACWA Power keeps growing as a key partner to the public authorities and governments in bringing power and water to millions of people around the world, I have no doubt that Raad will significantly contribute to our mission.
On 20 March 2023, ACWA Power announced that Paddy Padmanathan has retired and stepped down from his executive role of President and CEO of ACWA Power.
To the person I consider a partner and a co-founder of ACWA Power, on behalf of all our stakeholders, I would like to take this opportunity to express our immense gratitude for being an inspiration to all of us for his unwavering commitment, dedication, and leadership.
His outstanding legacy will no doubt endure for many years to come, and we wish him a happy and healthy retirement. He will, however, remain as a member of the Board as a Non-Executive Director.
Concurrently, I am also delighted to welcome Marco Arcelli as our new CEO, succeeding Paddy. Marco is an energy leader with over 20 years of experience and as we continue to evolve and grow, I am confident that Marco will carry on the legacy of his predecessor and steer ACWA Power towards greater heights of success.
On behalf of my fellow Board members, I would like to thank the 4,000+ deeply dedicated and hardworking women and men of the ACWA Power family whose belief in our mission continues to drive this company beyond all expectations.
I would also like to express our gratitude to the government of the Kingdom of Saudi Arabia, the 11 host governments in the countries we operate in, all our partners and shareholders, customers, suppliers, and the operational and financial partners for their unwavering support and trust.
Outlook
Looking ahead, we at ACWA Power are committed to maintaining our leading position at the forefront of the energy transition by consistently delivering competitive tariffs in all the markets we serve in addition to working with governments as the lead anchor developer for the development of new projects. As a proud national champion, we are passionately committed to deliver on Saudi Arabia’s Vision 2030, driving towards a cleaner future at home and contributing to the efforts of other nations to improve their energy mix in favour of cleaner renewable-energy-sourced power and water. And we are dedicated to working with governments to advance the welfare and futures of all our stakeholders including our own team, our contractors, the households we provide with water and power, and all the communities we serve.