Rabigh 2 IPP expansion power purchase agreement (PPA) anchors a $3 billion power project delivering 2,313.5MW through a new combined-cycle gas turbine plant in western Saudi Arabia. The agreement establishes a 31-year framework for developing, financing, constructing, owning, and operating the facility. Moreover, the project sits in Makkah province, about 130km north of Jeddah, adjacent to the existing Rabigh IPP. Consequently, the development strengthens regional generation capacity while supporting industrial and urban demand growth.
Rabigh 2 IPP expansion PPA drives large-scale capacity growth
The Rabigh 2 IPP expansion PPA, valued at $3.07 billion, formalizes long-term electricity supply arrangements with the Saudi Power Procurement Company. Under the structure, developers will deliver a greenfield combined-cycle gas turbine plant with a total capacity of 2,313.5MW. Furthermore, the project includes readiness for future carbon capture unit integration. As a result, it aligns with cleaner generation objectives while maintaining baseload reliability.
In addition, the ownership structure reflects strong private sector participation. Both Acwa Power and Saudi Energy Company hold 40% effective equity stakes in the project. Therefore, the remaining share is expected to involve other investors or stakeholders. Meanwhile, the independent power producer model ensures bankable revenue through the long-term offtake agreement. Consequently, lenders are likely to support financing at financial close.
Notably, the agreement also covers the expansion of a 380kV electrical substation. This component will enhance grid integration and ensure stable transmission of generated power. Hence, the project strengthens both generation and network infrastructure simultaneously.
Construction scope under Rabigh 2 IPP expansion PPA
The Rabigh 2 IPP expansion PPA outlines a comprehensive engineering and construction program for the new facility. Initially, developers will undertake detailed design and procurement of key equipment, including gas turbines and heat recovery systems. Subsequently, contractors will execute civil, mechanical, and electrical works in coordinated phases. This sequencing supports efficient delivery and minimizes interface risks.
Moreover, the combined-cycle configuration improves thermal efficiency by utilizing waste heat for additional power generation. Therefore, the plant will achieve higher output with lower fuel consumption compared to conventional systems. At the same time, carbon capture readiness ensures adaptability to future environmental requirements. Consequently, the facility remains aligned with evolving emissions standards.
In parallel, grid infrastructure upgrades will proceed alongside plant construction. The extension of the 380kV substation will support increased load dispatch and network stability. Furthermore, integration with existing Rabigh facilities requires careful synchronization. Thus, project teams are prioritizing system compatibility and operational continuity.
Importantly, financial impact details will be disclosed after financial close. Developers are currently advancing financing arrangements and final project structuring. Hence, construction timelines will become clearer once these milestones are achieved.
Rabigh 2 IPP expansion PPA supports Vision 2030 targets
The Rabigh 2 IPP expansion PPA directly supports Saudi Arabia’s Vision 2030 energy strategy and infrastructure expansion goals. The Kingdom aims to achieve 50% renewable energy in its power mix by 2030. However, reliable thermal capacity remains essential for grid stability. Therefore, projects like Rabigh 2 complement renewable deployment while ensuring consistent supply.
Additionally, Saudi Arabia targets net-zero emissions by 2060. Consequently, integrating carbon capture readiness into new plants reflects a forward-looking approach. The Rabigh 2 project contributes to this transition by combining efficiency improvements with future decarbonization potential. It also enhances electricity availability for industrial zones along the Red Sea corridor.
Meanwhile, Acwa Power continues to expand its infrastructure portfolio. In December, the company completed refinancing for the Rabigh 3 Independent Water Project, a desalination plant producing 600,000 cubic meters daily. This demonstrates continued investment across both power and water sectors. Therefore, Rabigh remains a strategic hub for integrated utilities development.
In a parallel development, Al Yamama Steel Industries signed an agreement with SEPCOIII Electric Power Construction Company. The deal covers supply of wind towers for the Yanbu Wind Farm Project. Notably, localization exceeds 80%, supporting domestic manufacturing growth. Thus, Saudi Arabia continues advancing both conventional and renewable energy infrastructure simultaneously.
Overall, the Rabigh 2 IPP expansion PPA marks a significant milestone in Saudi Arabia’s power sector development. It combines scale, efficiency, and strategic alignment with national energy objectives. Consequently, the project reinforces long-term supply security and infrastructure resilience.
Meanwhile, a similar large-scale power project is advancing in the Kingdom, with the $3.6 billion expansion of QIPP highlighting continued momentum in Saudi Arabia’s independent power sector. The Qurayyah expansion, like Rabigh 2, focuses on combined-cycle gas turbine technology and carbon capture readiness, underscoring a broader shift toward more efficient and lower-emission thermal power generation in line with Vision 2030.
Project Fact Sheet
Project Name: Rabigh 2 Independent Power Producer Expansion Project
Location: Makkah Province, Saudi Arabia (130km north of Jeddah)
Project Value: SAR 11.5 billion ($3.07 billion)
Project Type: Greenfield Combined-Cycle Gas Turbine (CCGT) Power Plant
Capacity: 2,313.5 MW
Contract Structure:
- 31-year Power Purchase Agreement (PPA)
- Independent Power Producer (IPP) model
Scope of Works:
- Development, financing, construction, ownership, and operation of power plant
- Installation of combined-cycle gas turbine systems
- Carbon capture readiness integration
- Expansion of 380kV electrical substation
Key Features:
- High-efficiency thermal generation
- Grid stability enhancement
- Future decarbonization capability
Timeline:
- PPA Signed: April 16, 2026
- Financial Close: Pending
- Construction Start: Expected post-financial close
- Commissioning: To be announced
Strategic Objectives:
- Increase baseload generation capacity
- Support industrial and urban demand
- Align with Vision 2030 energy targets
- Enable future carbon capture deployment
Project Team
Developers / Sponsors:
- ACWA Power (40% equity stake)
- Saudi Energy Company (40% equity stake)
Offtaker: Saudi Power Procurement Company (SPPC)
EPC Contractors: To be announced
Equipment Suppliers: Turbine and plant technology providers (to be confirmed)
Financial Institutions: Regional and international lenders (to be confirmed at financial close)
Technical Advisors: Engineering and environmental consultants supporting design and compliance
Legal Advisors: Firms advising on PPA structuring and project financing
Operations & Maintenance: Expected under developer-led or specialized O&M structure
Associated Projects / Stakeholders:
- Rabigh 3 Independent Water Project (ACWA Power)
- Yanbu Wind Farm Project (Al Yamama Steel Industries, SEPCOIII)
