Saudi Electricity Company inks USD 3 bn financing agreement with GCC banks to expand local grid: Four GCC banks have signed an agreement to extend USD 3 bn to the Saudi Electricity Company (SEC) through an unsecured loan to finance KSA’s 2030 electricity grid expansion plans, the Saudi Press Agency (SPA) reported yesterday. Earlier this month, the International Energy Agency said countries the world over need to commit USD 600 bn in annual investments by 2030 to double or upscale the world’s current electricity grid capacity to pave the road to net zero.

Who’s in? A consortium of Dubai Islamic Bank, the Kuwait Finance House, the UAE’s Mashreq Bank, and the Saudi National Bank will provide the loan, which will have a five-year tenor, SPA notes. SEC — in which the kingdom’s sovereign wealth fund the Public Investment Fund (PIF) has acquired a 25% stake — will not be putting up any guarantees or collateral for the unsecured loan. The news agency does not mention how much each lender has earmarked for the loan.

Where is the money going? SEC will channel the funds toward expanding and upscaling grid infrastructure to ready the country for the influx of renewable energy coming its way under national targets of producing 80 GW of clean energy by 2030, for which PIF-backed Acwa Power will develop 70% of the targeted capacity. SEC’s development strategy falls in line with KSA’s national strategy of investing as much as SAR 500 bn (USD 133.2 bn) by 2030 to expand and improve its grid capacity. A portion of the loan will be earmarked to boost SEC’s regulatory asset base.

SEC is looking to get into the solar power sector: SEC’s CEO Khaled Al Kanun says the company plans to expand its portfolio to get into the solar energy market, with a focus on PV panel manufacturing, and would work on developing the kingdom’s EV infrastructure.

REMEMBER- SEC has been making moves in the EV market: The company acquired earlier this month a 25% stake in the Electric Vehicle Infrastructure Company to expand fast-charging infrastructure across the kingdom. SEC snapped up the shares for SAR 254 mn (c. USD 67.7 mn).

IN OTHER SEC NEWS- SEC plans to double its investments to meet KSA’s electricity demands, Zawya quotes Senior VP Finance and CFO Abdulaziz Al Muhaiza as saying. The company’s capital investments have exceeded SAR 30 bn (USD 8 bn) since 2020, Al Muhaiza said, noting SEC channeled between SAR 28- 35 bn (USD 7.5 bn) over the past three years on modernizing its electricity and distribution network. SEC would mainly rely on freecash flow — instead of debt instruments — to finance its planned projects for 2024, but has not completely ruled out raising funds through green loan and sukuk issuances. SEC’s freecash flow ranges between SAR 10 bn and SAR 20 bn (USD 2.7-5.3 bn.)