Delivering Long-Term Value

DELIVERING LONG-TERM VALUE ACWA Power Annual Report 2018 King Salman Prince Mohammed bin Salman bin Abdulaziz Al-Saud bin Abdulaziz Al-Saud The Custodian of the Crown Prince, Vice President Two Holy Mosques of the Council of Ministers and Minister of Defense ACWA Power 1 Annual Report 2018 ACWA POWER IS A LEADING DEVELOPER, OWNER AND OPERATOR OF POWER GENERATION AND WATER DESALINATION PLANTS. WE PROVIDE POWER AND WATER FOR COMMUNITIES ACROSS THE MIDDLE EAST AND NORTH AFRICA, SOUTHERN AFRICA, EUROPE AND SOUTHEAST ASIA, WITH A FOCUS ON DELIVERING SUSTAINABLE, LONG-TERM VALUE TO OUR STAKEHOLDERS. SINCE THE COMPANY’S FOUNDING IN 2004, OUR PORTFOLIO HAS GROWN TO INCLUDE 50 ASSETS IN 11 COUNTRIES. OUR MISSION: Reliably delivering electricity and desalinated water at low cost. OUR VISION: To ensure the ingenuity and entrepreneurship of the private sector and make available electricity and desalinated water in a reliable manner to support social development and economic growth of nations. OUR VALUES: SAFETY PEOPLE PERFORMANCE We put safety first! We are We treat our employees and We are committed to committed to protecting the partners with respect and excellence in our business well-being of our employees, professionalism, fostering and operations. We set and partners, plants and the a working environment achieve ambitious goals by communities in which we where people can contribute, constantly raising the bar of operate. We find sustainable innovate and excel. We work our performance. We hold solutions for our business together in collaborative and ourselves accountable for to protect the environment inclusive teams, showing taking ownership to achieve for generations to come. support for each other to superior results. We are achieve client, personal and bold, passionately taking Company goals. We embrace on challenges with speed integrity and transparency and agility, quickly adapting by practicing the highest to our environment in the professional and ethical relentless pursuit of growth standards towards our and great results. clients, communities and one another. WHO WE ARE 2 ACWA Power Annual Report 2018 CONTENTS STRATEGIC REPORT At a Glance 4 What We Do 6 Where We Operate 8 Chairman’s Statement 10 Leadership Statement 12 Market Overview 14 Business Model 16 Strategy 17 Our Assets 18 Strategy in Action 20 Operational Review 26 DIRECTORS’ REPORT Chairman’s Introduction to Governance 28 Board of Directors 30 Directors’ Report 32 References 40 Glossary IBC ACWA Power 3 Annual Report 2018 AT A GLANCE ACWA POWER USES FINANCIAL AND OPERATIONAL KEY PERFORMANCE INDICATORS (KPIs) TO TRACK PROGRESS AGAINST DELIVERY OF OUR STRATEGY. 2018 KPIs ILLUSTRATE A YEAR OF OPERATIONAL GROWTH AND CONTINUING FINANCIAL STRENGTH FOR THE GROUP. FINANCIAL HIGHLIGHTS Operating Income (Before impairment Total Assets (‘000 SAR) and other expenses) (‘000 SAR) 1,980,385 36,248,902 2018 2018 1,980,385 36,248,902 2017 2017 1,432,620 32,661,185 2016 2016 1,173,082 25,054,079 Cash Flows from Projects (‘000 SAR) 1,369,471 2018 1,369,471 2017 1,882,830 2016 1,059,202 HIGHLIGHTS 4 ACWA Power Annual Report 2018 STRATEGIC REPORT DIRECTORS’ REPORT OPERATIONAL HIGHLIGHTS* Total Number of Assets Renewable Energy Portfolio by Project Cost 50 22.9% 2018 2018 50 22.9% 2017 2017 46 22.7% 2016 2016 31 15% 2018 GROSS CAPACITY Power 29.3 GW Water 3 3.9M m /day * Figures include advanced development assets. ACWA Power 5 Annual Report 2018 WHAT WE DO THROUGH RESPONSIBLE OPERATION AND OWNERSHIP, WE DELIVER RELIABLE, SAFE, 50 Assets EFFICIENT AND COMPETITIVELY Across three continents PRICED POWER AND DESALINATED WATER TO 164.2 Bn SAR GROWING ECONOMIES. Combined gross investment value Technology-neutral and fuel-agnostic, we serve client nations and communities according to their needs – through natural gas, oil-fired, coal, wind, PV and concentrated solar power electricity generation – while working to minimise our impact on the environment. We continue to grow our renewable assets in a lower- oil-price environment, as offtakers look to increase energy security through diversification, shareholders expect healthy returns and the global energy community seeks to reduce emissions. 102,587GWh Power delivered in 2018 READ MORE OPERATIONAL REVIEW PAGE 26 POWER 6 ACWA Power Annual Report 2018 STRATEGIC REPORT DIRECTORS’ REPORT WATER We provide a crucial supply of desalinated water in our home market of Saudi Arabia and other growing economies where water is scarce, removing salt from seawater to produce drinking water, primarily through a process of reverse-osmosis. The innovative technology we deploy is driving the future of desalination, moving it toward more efficient, sustainable production – particularly as we continue to leverage renewable power in our desalination plants. 742,287,103 m3 Water delivered in 2018 READ MORE OPERATIONAL REVIEW PAGE 26 ACWA Power 7 Annual Report 2018 WHERE WE OPERATE OUR GLOBAL MARKET PRESENCE We operate in our home market of Saudi Arabia and across diverse geographies in the Middle East, North Africa, Southern Africa, Turkey and Bulgaria, and Southeast Asia. We develop, own and operate projects where electricity demand is increasing, potable water is sorely needed and utility scale renewable projects are being integrated into the grid. 50 11 Assets Countries 3,500+ Employees PROJECT TYPE Conventional Renewable Our offices HOME MARKET SAUDI ARABIA • Saudi Arabia is home to ACWA Power’s Marafiq IWPP, which remains the world’s largest power generation and water desalination combined plant in the world • In 2018, construction began on Sakaka PV IPP, the first utility-scale solar plant in ACWA Power’s home market • 2,220 MW of generation capacity was Saudi Arabia added in 2018 for a total of 12,205 MW of operational capacity 8 ACWA Power Annual Report 2018 STRATEGIC REPORT DIRECTORS’ REPORT INTERNATIONAL JORDAN UNITED ARAB EMIRATES • ACWA Power operates both conventional • ACWA Power won one bid in the UAE in 2018 for and renewable energy plants in Jordan 205,000 m3/day of desalinated water (UAQ IWP) Jordan • In 2018, ACWA Power’s operational capacity • Construction also began for 950 MW NOOR Energy UAE in the country increased by 485 MW 1 IPP, which represents one of ACWA Power’s largest financial investments in a project OMAN • In 2018, ACWA Power generated BAHRAIN Oman 4,206,307 MWh and 32,839,858 m3 • Now in Advanced Development, ACWA Power’s first of water in Oman asset in Bahrain, Al Dur Phase II IWPP, will have capacity • 445 MW of generation capacity was of 227,000 m3/day of water and 1,500 MW of power added in Oman in 2018 EGYPT MOROCCO • ACWA Power was the lowest bidder • In 2018, 100 percent of the power for a 200 MW project in Egypt in 2018 generated by ACWA Power in Morocco • The expected total power capacity came from renewable sources, in the pipeline in Egypt is 2,620 MW including wind and CSP projects Morocco • ACWA Power’s NOORo II IPP CSP site came online in 2018 as part of the Egypt largest CSP operation in the world TURKEY BULGARIA • As the market changed in 2018, • ACWA Power’s power production in ACWA Power reduced its stake in Bulgaria is entirely solar PV operations Bulgaria Turkey’s operations • 80,775 MWh of electricity was generated • In 2018, 3,570,585 MWh of electricity in 2018 was generated in Turkey Turkey SOUTH AFRICA • ACWA Power’s current operation in the country, Bokpoort CSP IPP, is among the most efficient CSP plants in the world • Two other projects were under Advanced Development in South Africa in 2018, South Africa totaling 406 MW of power capacity VIETNAM • ACWA Power’s capacity in Vietnam is expected to reach 1,241 MW with the coal-fired 1,200 MW Nam Dinh project in Advanced Development, and Vin Hao – a potential 41 MW PV Vietnam acquisition opportunity ACWA Power 9 Annual Report 2018 CHAIRMAN’S STATEMENT offer opportunities to create far-reaching GENERATING LONG-TERM and long-term value for our stakeholders. In 2018, we signed a Head of Terms with VALUE AND IMPACT FOR Saudi Aramco for the circa 43 billion SAR Jazan Economic City IGCC Gasification/Power plant. In addition, we began construction on Sakaka AND ACROSS GENERATIONS PV IPP, the first utility-scale renewable energy project under The Renewable Energy ACWA Power experienced a record year for operational growth Programme of Saudi Arabia. Scheduled to come online in 2019, this landmark solar PV in 2018, bringing nine plants online and more than doubling project will provide reliable renewable power our operating hours. These successes are attributed to the at low cost and will contribute to a more diverse and economical national energy mix. Group’s forward-looking business strategy, which aims to With customer demand for desalinated water create long-term value for our shareholders and communities on the rise, particularly in Saudi Arabia and the in our home market and abroad. United Arab Emirates, we are leveraging our innovations in reverse-osmosis technology to establish sector leadership and increase the prospects of making affordable potable Since ACWA Power’s founding 14 years water available to an increasingly thirsty ago in our home market of Saudi Arabia, world. Our greatest water investment to date we have continuously delivered on our in the Kingdom, Rabigh 3 IWP, was won in mission to reliably provide electricity and 2018. This project will provide 600,000 m3 desalinated water at low cost. As a leading of desalinated water daily, servicing the water global provider of power and water, with demand for Mekkah and Jeddah year-round. 32 operational projects in 2018, which mostly have a lifespan of 25 to 35 years, In addition to winning these two preeminent we recognise that our actions create projects in Saudi Arabia, two of our power impact for and across generations.

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