Arise Of Green-Certified Utility Project In Saudi Arabia

The future of infrastructure financing is green, or there’s no future at all.

"The construction and operation of the ISTPs will aid in optimising the use of water resources in Saudi Arabia by providing treated and renewable water to be used for agricultural purposes, therefore reducing the consumption of freshwater," said Mara Ortiz de Mendivil, primary analyst, S&P Global Ratings, in a second-party opinion note certifying the projects as green.

Once it is finished, Madinah 3 will serve up to 1.5 million people who live in or will move to areas near Madinah.

It will have an initial treatment capacity of 200,000 m3 per day, which can be expanded to 375,000 m3 per day.

As the report mentioned, Buraidah 2 will serve up to 600,000 people and have a capacity of 150,000 m3 per day. Tabuk 2, serving up to 350,000 people, will facilitate 90,000 m3 per day.

The treated water will replace freshwater resources for farming, saving this scarce resource and contributing directly to the nation’s water security. Daily water savings are expected to amount to 190,000 m3 per day at Madinah 3, 142,500 at Buraidah 2, and 85,500 at Tabuk 2, according to the report.

Madinah 3 will have an initial treatment capacity of 200,000 m3 per day, which can be expanded to 375,000 m3 per day.

Buraidah 2 will serve up to 600,000 people and have a capacity of 150,000 m3 per day.

Tabuk 2, serving up to 350,000 people, will facilitate 90,000 m3 per day.

"We have a zero-sludge-dispatch policy, meaning that all the sludge that we produce in these wastewater treatment plants is either used by farmers to replace other fertilisers or sent to cement factories for the production of cement," said Julio De La Rosa, the Middle East business development director of Acciona Agua, while speaking at an International Desalination Association’s forum held two months ago.

Also, the photovoltaic solar panels that were installed at each plant will make clean energy that will cover some of their daily energy needs.

The green-certified project drew the attention of the bigwigs of the finance world, such as Abu Dhabi Islamic Bank, Mitsubishi UFJ Financial Group, Alimna Bank, Riyad Bank, and Siemens Bank, which parked their investments at first blush.

Green loans for a greener planet

According to the World Bank, a "green loan" is a form of financing that enables borrowers to use the proceeds to exclusively fund projects that make a substantial contribution to an environmental objective.

It is similar to a bond. The only distinction is that a loan is usually smaller than a bond and is carried out in private operations.Also, green loans and green bonds follow different but consistent principles: The Green Loan Principles and the Green Bond Principles of the International Capital Market Association are further elaborated in the report.

Saudi Arabia, in particular, has been facing severe challenges due to the unsustainable use of water resources, and it has limited reserves of nonrenewable groundwater, which are depleting rapidly.

The lack of water has also been made worse by the fact that agriculture uses a lot of water.

"The National Water Strategy reshaped the private sector, which has started to think about how to be efficient and contribute to the water strategy, gain benefits as per their sustainability roadmap, and accommodate the environment, social issues, and governance in their strategies," said Mohammed Al Halawani, CEO of Tawzea.

"Over 210,000 sq. m. of trees will be introduced as part of the project with the support of the Saudi Green Initiative, which is equivalent to approximately sequestering 136 tonnes of carbon dioxide per year," Al Halawani added.

According to the report, another example of sustainability at its core is the Shuaibah 3 Water Desalination Co., a special-purpose vehicle created to finance and develop the Shuaibah 3 Independent Water Project.

The project aims to replace a thermal desalination plant, the Shuaibah 3 IWPP, powered by fossil fuels. The use of reverse osmosis technology makes the proposed plant more energy efficient than the previous thermal desalination plant that will come offline.

The conventional thermal desalination process, multi-stage flash distillation, and multiple-effect distillation produced nearly 20 kg of carbon dioxide equivalent per m3. However, the carbon footprint for the RO process could be anywhere from 0.4 to 6.7 kg of carbon dioxide equivalent per m3, stated the report.

According to ACWA Power, this technology shift could accrue savings of about 45 million tonnes of carbon dioxide annually.

Even though this may not mean that green financing has finally beaten oil lenders, the well-traveled bazaars of fossil fuel financing have become eerily cold after the global pushback on loss and damage at the UN Climate Change Conference in Egypt last year.

Saudi Arabia, for its part, lives by the age-old adage: "You never miss the water till the well runs dry." While going to press, Saudi power juggernaut ACWA Power announced that it added 2.4 million m3 per day of water desalination capacity across four reverse osmosis megaprojects in 2022, the largest in a calendar year in the company’s history.

According to the report, this achievement brings the company’s total water capacity under management to 6.4 million m3 across 16 projects in four countries, producing water at less than $0.50 per m3, which is up to three-quarters lower than the tariff of $2 per m3 just a few years ago.