Covington Advises ACWA Power on the $1.5bn Red Sea Gigacity
May 12, 2022
LONDON–Covington advised a sponsor consortium led by ACWA Power in relation to the development and financing of the $1.5 billion Red Sea Gigacity Utilities Infrastructure Project in Saudi Arabia, which consists of eight different infrastructure systems.
The Red Sea Project is the world’s most ambitious regenerative tourism project to date. ACWA Power had been appointed by The Red Sea Development Company (TRSDC), the developer behind the Red Sea Project, to design, build, operate and transfer the Red Sea Project’s utilities infrastructure, which relies entirely on renewable energy for power generation, water production, wastewater treatment, waste management and district cooling. TRSDC (via a wholly owned subsidiary) is the procurer of the utilities from the ACWA Power consortium. All the utilities are being procured from the ACWA Power consortium under a single offtake arrangement - unique for a project of this kind.
The energy system being provided by the ACWA Power consortium has been designed to allow the Red Sea Project to remain completely off-grid and to be powered by renewables using photovoltaic plants and biofuel power generation plants with associated battery energy storage systems (BESS). The BESS systems, which have a total design capacity of c. 1.200 GWh, will be one of the world’s largest BESS systems. The energy systems are currently sized to meet the initial demand of TRSDC, with the ability to expand in line with the development of the Red Sea Project.
The scope of the utilities infrastructure project also includes construction by the ACWA Power consortium of two district cooling systems and at least three seawater reverse osmosis (SWRO) plants with a combined capacity of at least 32,500 cubic meters per day in order to provide clean drinking water to the Red Sea Project. In addition, the ACWA Power consortium will provide a waste management centre and innovative sewage treatment plants that will allow waste from TRSDC’s infrastructure to be managed in a way that enhances the environment, by creating new wetland habitats and supplementing irrigation water for the TRSDC landscape nursery.
Phase 1 of the Red Sea Project is expected to launch at the end of 2022.
The Covington team was led by Agnieszka Klich (Finance) and Robin Mizrahi (Project Documents) and included Ursula Owczarkowski, Laure Berthelot, Richard Oliver, Florence Cock and Jecolia Horn.
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