Saudi developer Acwa Power’s acquisition of a 50MW photovoltaic (PV) solar project in Jordan is seen in the industry as a strategic decision to strengthen their position in the Jordanian market.

The low tariff of 4.34 JDcents a kilowatt hour (kWh), or 6.13 cents a kWh, means this is unlikely to be a profit-making project.

Greece’s Sunrise Solar Energy, the original developer, reportedly misjudged the tariff during bidding. It was 5.9 per cent below the second-lowest bid in Jordan, but 4.8 per cent above Acwa Power’s record-breaking tariff of 5.85 cents a kWh for the second phase of Dubai’s Mohammed Bin Rashid al-Maktoum solar park.

The Saudi firm has a strong track record of developing schemes with wafer-thin margins thanks to strong support from regional and Saudi banks. But the cost of borrowing in the GCC has risen since early 2015, when Acwa Power was negotiating its financing package for the Dubai project, with margins of 170 basis points.

Interest rates in Jordan will be significantly higher, as commercial banks still view the country as a difficult market despite continuing support from development banks.

Acwa Power recently signed an agreement to develop a 485MW conventional independent power project (IPP) in Jordan, its first scheme in the neighbouring country. Three out of four second-round feed-in tariff projects in Jordan are now being developed by Saudi companies.

All this suggests the Levant country is a promising market for Saudi developers. While not as large as Egypt’s electricity sector, Jordan’s industry needs 5,500MW of additional generation capacity by 2020, according to MEED. 

It looks like Acwa Power will be competing hard for a bigger role in the Jordanian private power market.