A consortium of Saudi Arabia’s Acwa Power and Spain’s TSK closed financing for the 200MW second phase of the Mohammed bin Rashid al-Maktoum Solar Park on 19 July.

MEED reported in January that Abu Dhabi’s First Gulf Bank, Saudi Arabia’s National Commercial Bank and Samba Financial Group would provide the $280m syndicated loan.

The financing is thought to cover more than 80 per cent of the costs of the independent power project (IPP), which are reported to be about AED1.2bn ($327m), alongside an equity portion.

Dubai Electricity & Water Authority (Dewa) will own 51 per cent of equity, with developers Acwa and TSK holding the remaining 49 per cent.

They have formed a project company named Shuaa Energy 1.

The loan is expected to have a 25-year tenor, with a grace period for construction. The photovoltaic (PV) solar plant, which occupies 4.5 square kilometres, is due to become operational in April 2017.

MEED previously reported that the average margins on the facility were expected to be about 170 basis points. The excellent rates on the financing package allowed the Acwa/TSK consortium to submit a historically low bid for the project at 5.85 cents a kilowatt hour (kWh).

The deal, one of the first renewables projects in the region to be financed by commercial banks, shows that renewables are becoming an increasing bankable sector.

The Acwa/TSK consortium awarded US firm First Solar a contract to provide 2.36 million solar panels for the project in June. It is thought to be worth $200m.

A contract for the next, 800MW phase of the solar park could be awarded as early as 2016.

“Dewa will continue to execute these ground-breaking projects in renewable energy and contribute to the growing energy needs of Dubai,” said Saeed Mohammed al-Tayer, managing director and CEO of Dewa in a press release. “A large number of international organisations was interested in this project. The wide participation in the bid reflects the trust and interest of international investors to invest in in this vital field, which is supported by the government of Dubai,”

Dubai aims to use solar energy for 7 per cent of the total energy production by 2020 and 15 per cent by 2030. The AED12bn-plus Mohammed bin Rashid al-Maktoum Solar Park will have a total capacity of 3,000MW.