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Renewable energy giant Acwa Power reached financial close with Dubai state utility Dewa on its solar-powered Hassyan water desalination project in Dubai, according to a statement from Dewa (pdf) yesterday. The news comes weeks after Acwa Power secured SAR 2.77 bn (USD 738.4 mn) from local and international lenders to fund the development and construction of the AED 3.4 bn (USD 925.8 mn) Hassyan project.
The largest of its kind: The plant, which is set to produce 180 mn imperial gallons per day, is the “world’s largest project of its kind using reverse osmosis technology” on what the industry calls an independent water producer (or “IWP”) model, according to the statement. Acwa Power holds a 20.4% stake in the project.
BACKGROUND- Dewa signed a 30-year water purchase agreement with Acwa Power to buy water from phase one of the plant. Dewa will purchase the desalinated water at a price of around USD 0.365 per cbm — the lowest bid the Dubai state facility received.
SOUND SMART- An IWP is just an industry-specific type of public-private partnership that sees a private-sector partner ink a long-term (20-30 year) agreement to design, build, finance, and operate a water plant for a government. The state, in turn, will derisk the project with an offtake agreement (called a “water purchase agreement,” or WPA, as we note above) that generally provides a floor for pricing and clarity to would-be bankers about the project’s financials.
