Chinese Renewable Energy Companies and Saudi Sovereign State Join Forces

The burgeoning trade corridor between Asia and the Middle East has taken a step up a notch with two agreements signed by key institutions in China and Saudi Arabia.

Shanghai-based renewable energy group Envision Energy announced a strategic joint venture (JV) with the Public Investment Fund of the Kingdom of Saudi Arabia (PIF) and Vision Industries (VI), while another Shanghai-based solar module manufacturer, JinkoSolar, announced a shareholders’ agreement with Renewable Energy Localization Company (RELC), a wholly owned subsidiary of PIF and VI.

Jinko, RELC and VI have agreed to establish a joint venture in Saudi Arabia in which Jinko Middle East, RELC and VI will hold 40%, 40% and 20% equity stakes, respectively. The JV, the partners say, will build and operate a high-efficiency solar cell and solar module manufacturing facility in Saudi Arabia.

The production facility is expected to have a total investment of around US$1 billion and will be financed through a combination of internal funds and external financing. Once completed, it is expected to have an annual production capacity of 10 gigawatts.

Meanwhile, the joint venture between Envision Energy, PIF and VI will aim to accelerate the growth of wind power across the Middle East and help accelerate the region’s transition to cleaner, more sustainable energy sources. It will focus on the production and assembly of wind turbines and components, including blades, nacelles and hubs.

Under their agreement, Envision Energy holds a majority stake in the joint venture, while PIF and VI hold the remaining stake. The collaboration will support Saudi Arabia’s goal of localizing 75% of its renewable energy components by 2030, in line with the Saudi Arabian Ministry of Energy’s National Renewable Energy Program.

As part of its efforts to transition away from fossil fuels, Saudi Arabia is building some of the world’s largest renewable energy plants.

PIF, a sovereign wealth fund with assets of about $925 billion, is committed to the kingdom’s energy transition by investing in renewable energy initiatives, including wind, solar, hydrogen and energy storage.

Saudi Arabia, according to Worldometer, has about 16.2% of the world’s oil reserves. Excluding net exports, at current levels of consumption, there is enough oil for about 221 years of exploitation.