Chairman’s message

Mohammad A. Abunayyan Founder and Chairman of the Board of Directors

In this historic year marking ACWA Power’s twentieth anniversary, we reached many remarkable milestones signifying unparalleled success in terms of both performance and growth.

Dear stakeholders,

Allow me to present ACWA Power’s Integrated Annual Report for the year 2023.

This year marks ACWA Power’s twentieth anniversary, wherein and after the blessing of the Almighty, we achieved many remarkable milestones signifying unparalleled success in terms of both performance and growth.

As a proud Saudi company in our core, we are honoured to be empowered by the Kingdom of Saudi Arabia’s Vision 2030. Envisioned, launched, and being executed under the visionary leadership of King Salman bin Abdulaziz Al-Saud, the custodian of the Two Holy Mosques, and HRH Prince Mohammed bin Salman bin Abdulaziz Al-Saud, the Crown Prince and Prime Minister, Vision 2030 has also set a strategic framework and ambitious targets for decarbonisation and transitioning to a more sustainable energy mix. We are proud to play a leading role as a national champion together with our major shareholder, the Public Investment Fund (PIF), in this very ambitious yet achievable energy transition.

ACWA Power, a journey propelled by ambition…

Two decades ago, we started out as a small team in the Kingdom with nothing but ambition, drive, and a blueprint to seize the opportunities to develop public-private partnership projects in utility-scale electricity generation and water desalination in the Kingdom of Saudi Arabia and with a vision to deliver power and water reliably, responsibly and at the lowest possible cost.

Having successfully executed some iconic projects in our home market in our first years, including rolling out the first Reverse Osmosis (RO) seawater desalination at scale, we have expanded our operations to 11 other countries since 2010. From a start-up, we have now become the largest private producer of desalinated water in the world, a leader in renewable energy, and first mover in at-scale green hydrogen production. We achieved our leadership position while repeatedly setting world records for both the lowest tariffs and the scale of our solar PV, Concentrated Solar Power (CSP), wind and RO seawater desalination projects.

Not surprisingly, there have been considerable challenges along our path, not least the 2007-08 global financial crisis; the Covid pandemic and its aftershocks; global geopolitical tensions, but we have maintained our progress, year-on-year. It is a great testament to the commitment and resilience of the ACWA Power family and our business model, that we have overcome these setbacks and maintained our course.

2023 was a record-breaking year for the company, marked by the execution of 16 offtake agreements mainly in the Kingdom, the United Arab Emirates and the Republic of Uzbekistan, where we also broke ground on our second green hydrogen project. We achieved financial closure of 12 projects with a value of SAR59 billion, the largest in our history, including the Neom Green Hydrogen Project, the world’s largest green hydrogen and ammonia production facility that is under construction.

These achievements, coupled with new projects achieving their commercial operation dates and starting to generate stable returns within our operating portfolio, contributed to our strong financial results in 2023. Consequently, our earnings per share to equity holders of the parent increased year-on-year by 7.6% to SAR 2.27.

Since the IPO, we have distributed SAR1.2 billion cash dividends to our Shareholders (2021 and 2022 payouts) with successively increasing amounts in line with our guidance then.

For 2023, with a very ambitious growth pipeline ahead of us that will see our equity commitments double from the levels we anticipated during the IPO, ACWA Power’s Board of Directors resolved to recommend to the General Assembly a cash and non-cash bonus share distribution in order to optimise our cash utilisation in the eve of this unprecedented growth without impacting the total distribution value to our shareholders.

Project:
Noor Energy 1

Setting us up for our ambitious 2030 growth plan...

Rather than rest on our laurels, as a global leader in the energy transition, this is an ideal time to revisit our strategy with the opportunities presented by the global shift towards cleaner energy sources. In June 2023, we announced our new growth strategy, which is to triple our Assets Under Management to USD 250 billion by 2030, and to become one of the largest and leading players in renewable power and sustainable production of green hydrogen in the world, while maintaining our world leadership in water desalination.

ACWA Power, as a Saudi National Champion, is committed to supporting the realisation and execution of the Kingdom’s decarbonisation and energy transition programme under the leadership of the Ministry of Energy and HRH Prince Abdulaziz bin Salman bin Abdulaziz Al-Saud.

We expect our home market to continue to account for over half of our portfolio by 2030, while at the same time, we will continue to grow our operations internationally including in the People’s Republic of China, where we benefit from more than 15 years of established and long-term relationships with a multitude of financial and commercial entities.

We are in the business of providing essential services to many communities in the Middle East, Africa and Asia and it is gratifying to know that we are contributing to improving the standard of living of over 100 million people.

A very strong people bench...

With our exceptionally competent organisation driven by innovation, entrepreneurship, and a passion to deliver, ACWA Power is blessed with the availability and readiness of a highly talented people bench for a seamless succession across the Company. There is no better demonstration of this than our two inhouse C-level appointments to the positions of the Chief Financial Officer (CFO) and Chief Operations Officer (COO) or, more recently, the filling of the newly created Geo Head positions for our four business clusters from within our ranks.

This year we welcomed our new Vice Chairman and Managing Director, Raad Al-Saady, and our new CEO, Marco Arcelli. Raad is already an accomplished ambassador for ACWA Power, cultivating valuable and enduring relationships with our myriad stakeholders, and continuing his stellar previous experience representing the Kingdom on the world stage. Marco, on the other hand, is a veteran industry leader with three decades of international experience in energy and infrastructure, retail, and digital innovation. As an energy leader, he has held various top leadership roles in the strategic positioning and growth of multinational companies. Marco also mentors organisations that support women in business and nurture young talent.

Together, they have hit the ground running and been very quick to visit our operations internationally, meeting local teams and partners, and have been building on our foundation, to develop an execution plan to realise ACWA Power’s new growth strategy.

I also welcome Abdullah Abduljabbar to the Board. Abdullah brings over 20 years of multidisciplinary experience in the financial sector and so will be a source of sound advice and judgement on investments, strategic planning and corporate finance matters.

Among all this welcoming, Paddy Padmanathan, the former CEO and Vice Chairman of the Board of Directors of ACWA Power, retired from his executive and director positions after a long and dedicated service to the Company wherein his leadership was instrumental to its growth and success. On behalf of the Board, and the entire ACWA Power family that he has played a very critical role to build into what it is today, I once again wish him well and good health in his retirement.

We all recognise the primary importance of people in our plans for growth and are proactively taking the necessary steps to ensure the sustainability of our strengths even as we carry our business beyond the Kingdom’s geographical borders. I am confident that the men and women at ACWA Power will continue to innovate, stay ahead of technological advances, and forge essential partnerships to successfully execute our ambitious growth strategy.

As we continue to grow at an accelerated and sustainable pace, our goal is to continue leading the market by enhancing local content, not only within the Kingdom but across all the regions where we operate.

In the Kingdom, we have consistently surpassed our targets for local content by encouraging our EPC (Engineering, Procurement, Construction) contractors and OEMs (Original Equipment Manufacturers) to establish operations locally, while also supporting the local companies looking to expand their reach globally.

Our ongoing commitment to our flagship project, the Energy and Water Academy (EWA), remains unwavering as we continue to invest in its growth. Since its establishment in 2009 as a non-profit vocational training institute in Rabigh, Saudi Arabia, to support localisation of technical fields, EWA has evolved into a powerhouse that offers technical training across 18 diverse industrial specialties, including safety, renewable energy, and water desalination, to the young men and women of the Kingdom. In the past 15 years, EWA has graduated over 15,000 young Saudis who are now pursuing successful careers, not only within ACWA Power but also in other regional and international companies. Recognised by numerous awards and accredited by reputable organisations, EWA is a testament to our dedication to excellence.

I am delighted to see that EWA is now the archetype of all other educational initiatives we are undertaking in other countries, including the Shirin College in the Republic of Uzbekistan.

Project:
Ibri 2 PV IPP

Gratitude

As we reflect on the past year’s remarkable growth, I extend my sincere gratitude to all our stakeholders who have played a vital role in our success. I am deeply thankful to our esteemed leaders, The Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al-Saud, and HRH Prince Mohammed bin Salman bin Abdulaziz Al-Saud, Crown Prince, and Prime Minister of the Kingdom of Saudi Arabia, for their visionary leadership.

I also express my appreciation to HRH Prince Abdulaziz bin Salman bin Abdulaziz Al-Saud, Minister of Energy, HE Khalid Al-Falih, Minister of Investment, and their respective ministries and associated enterprises, as well as HE Yasir Othman Al-Rumayyan and the PIF, for their unwavering support of our growth journey. We thank the governments of the other countries where we operate, for their trust in us as a reliable and sustainable provider of power, water and green hydrogen and fuels. Special thanks go to all our off-takers, EPC contractors, suppliers, advisers, and financial partners for their crucial support; we remain committed to delivering value for them and their communities.

Finally, on behalf of the Board of Directors I would like to thank every member of the ACWA Power team for their hard work and dedication during the year; it has given us an excellent platform for our future growth and development.