Hello everyone, and welcome to the ACWA Power financial results conference call for the 12-month period ended December 31st, 2025. My name is Carla, and I will be your moderator today. If you wish to ask a question during the webinar, you can use the raise hand button if you have joined us here on Zoom. Alternatively, you can submit your written questions by using the Q&A box. If you have joined us on the phone lines, please press star followed by one on your telephone keypad. Please note that today's call is an investor call, and the team will not be taking any questions from the media. Media attendees are welcome to stay and listen. I will now hand you over to Ozgur Serin, Head of Investor Relations, to begin. Please go ahead when you're ready, Ozgur.
Thank you very much, Carla, and good morning, afternoon, or evening wherever you are joining from. It's a pleasure to be with you once again. Welcome to ACWA's fiscal year 2025 earnings call. We are reporting today under some kind of distress in the region. You are all aware of that. As a matter of fact, I am joining the call from Dubai because I could not travel to Riyadh as usually I do. My name is Ozgur Serin. I am the Head of Corporate Strategy and Investor Relations. Together with me today in Riyadh are Dr. Samir Serhan, our CEO, Marco Arcelli, now our former CEO, and Abdulhameed Al Muhaidib, our CFO. We will be your hosts today. Before we jump into the results, I'd like to use the opportunity to begin with the recent leadership change.
ACWA board of directors, as you are all fully aware, has appointed a new CEO, and this is effective 1st of March, and it was heavily covered in the media. Marco Arcelli's contract is expiring in April 2027, and as a sign of company's strong governance and succession planning processes, this transition has been decided between Marco and the board to implement the planned succession process. In the meantime, Marco will continue to serve in an advisory capacity to ensure continuity and a smooth transition. Again, in the meantime, the company's long-term direction remains unchanged. If we may move to the next slide, please. I just would like to give you a brief introduction and biography of Dr. Samir, and I'm going to read this with your permission.
Before his appointment as CEO, Dr. Serhan was ACWA's President of Saudi Arabia and Middle East, where he was responsible for seven key markets, including Saudi Arabia, UAE, Kuwait, Bahrain, Oman, Jordan, and Iraq. Previously, Dr. Serhan was Chief Operating Officer of the U.S.-based company Air Products, where he had global responsibility for the company's operational business and project execution with P&L accountability for the Americas, Asia, Europe, Africa, the Middle East, and India. He also led functions including technology, global engineering, manufacturing, and equipment at Air Products. Earlier in his career, Dr. Serhan was President, Hydrogen for Praxair. For 14 years prior, he worked for the Linde Group in leadership positions in the U.S. and Germany, culminating in his role as Managing Director of Linde Engineering. Dr. Serhan holds a PhD in Engineering Mechanics from Virginia Polytechnic Institute and State University, which is a.k.a. Virginia Tech.
Active in research, he has presented and published more than 40 papers at conferences and in scientific journals around the world. Before we jump into the results, I'd like to use the opportunity to begin. Let me hand over to Marco now, because before going into the call, we also wanted to give an opportunity to Marco and Dr. Samir to say a few words to us. Marco?
Thank you, Ozgur, thank you to everyone joining us today. Before we turn to the numbers, I want to reflect briefly. When I came to Saudi Arabia, I arrived in the middle of something extraordinary. A country rewriting its own story at a speed and scale that few places on Earth have ever attempted. That energy is infectious. It gets into you. The ambition of this nation, the clarity of its vision, the sheer determination of the people around you, it changes how you think about what's possible. To have led ACWA through this period, that has been a privilege indeed. What stays with me the most are the people. The late-night problem-solving calls, the long-term relationships built on trust, the young engineers discovering their purpose in this industry. That human energy is what defines ACWA today, that's the ACWA I will carry with me.
We went through a startup phase, a scale-up phase, and now we enter a new phase of maturity. A leader's job is to know when the next chapter needs a different hand on the wheel, and Dr. Samir Serhan is that person. I've worked alongside him since he joined us in mid-2025, and I've watched him earn the trust and respect of everything he's engaged with inside the company and outside. He understands this business at a molecular level. Three decades of building, operating, scaling energy and water infrastructure across the world. The foundation we've set is strong. The team we have here is extraordinary. The person stepping in is ready. That matters more than anything I could say about myself, ACWA, and what we have done. Samir, it's yours.
Thank you, Marco. The results we will go through today are a direct reflection of the company you have helped shape and the platform you have built. I'm thrilled to be here at ACWA. ACWA sits at the intersection of everything that matters in a global infrastructure: energy security, water scarcity, decarbonization at pace. I spent 30 years in the industry. I have developed and built world-scale plants. I have restructured complex organizations. I have navigated downturns and expansion cycles. I want to emphasize that growth alone is not an objective. As I step in, we will sharpen our focus on strict selectability on our market pursuits, operational transformation, solid project execution, and ensuring every annual growth contributes directly to our bottom-line profitability. Solid project execution means safety first, front-end alignment, proactive risk management, transparent project controls, rigorous change control, and operational readiness focus. This is ACWA next chapter.
Given the ongoing geopolitical situation and the ongoing threats in the Middle East, our first priority is the safety and well-being of our people across all locations. ACWA has taken several precautions to protect our people and our assets to ensure the well-being of our employees and business continuity. We're working closely with our partners in every country, including government authorities, off-takers, and security officials. We're implementing necessary steps to ensure the safety of our people, our networks, and our water and energy assets. Our global safety and security teams are monitoring the situation closely. We have even initiated a round- the- clock command center to do so. With that, I would like to go back to Ozgur to go through the details behind the results. Thank you.
Thank you, Dr. Samir, and thank you, Marco, very much. Here we go with the results. Before I hand over the word to Marco, let me do my usual reminders that there is a disclaimer with respect to the material and remarks we will use during this call, particularly on the forward-looking statements and all material, including our comprehensive investor report as well as the usual management discussion and analysis report are on our and Tadawul's websites, and as well as the financial statements and this call material. Without further ado, let's go into the results call. Marco, it's over to you.
Thank you, Ozgur. Let me start by telling you the overarching theme of this 2025. It has been a year of acceleration, scale, and maturation like never before in our history. I think that today, ACWA is doing something that no one else in the world is doing. We achieved very strong financial results, with an operating income that increased about 20%. We closed more than SAR 69 billion, almost SAR 70 billion of project financing, and we reinforced the balance sheet with SAR 7.1 billion rights issue that, if you remember, was 96% subscribed with the rump being 6x oversubscribed and a significant inflow from foreign investors. By the way, we also closed the first private debt placement on a refinancing in Saudi Arabia with private insurance companies from the U.S.
We're really expanding the pool of capital that is available to ACWA to fuel this massive growth. This growth in 2025 was equivalent to about the sum of 2023 and 2024 together. That altogether is equivalent to the previous 18 years in the history of the company. You see really this acceleration. We have proven what we had told you three years ago that we were going to grow massively, to reach this SAR 250 billion of assets under management by 2030. This year alone, we added 25 GW of capacity in power generation and 2.1 million m³ of water desalination per day. That includes the acquisition of the ENGIE assets.
There is a great complement in Kuwait where we won also the tender for Az-Zour North 2 and 3 that was signed early this year. We reinforced our position in Bahrain. Key milestone achieved included also reaching strategic priorities. In water desalination, where we're the number one player in the world, we control a quarter of the global capacity. We want to expand beyond the region that, as you know, is the core of the industry worldwide. We signed the first agreements in Azerbaijan and Senegal outside of GCC. We brought the first green hydrogen or green ammonia plant into operation in Uzbekistan. We did that in less than two and a half years from concept to commercial operation. We became the largest investor in electricity in Africa. We confirmed to be the number one in Central Asia as well.
We added 13 GW and more of capacity and 1.7 million m³/ day of desalination to operations. That is 3x-4x what we used to do up until 2021, 2022. We tripled the speed of execution. We, as I mentioned, brought into operation the first ammonia plant. We are well on track of delivering also the big NEOM G reen Hydrogen plant that is now 90% complete. We started commissioning. We achieved 28 between ICOD/ PCOD predominantly on time, increasing our execution, clarity and track record. In operation, we have very good operational availability in renewables, in water.
We are at world benchmark level there in the top quartile. We made promising progress with the CSP and the CCGT that as you know from previous calls and previous announcements, we had some shortfalls that we had to recover in Noor Energy 1, in Morocco, in Oman and in Uzbekistan. Overall, over the last three years, we reduced forced outages by 50%. We reduced LTIR by 50% in the last three years. Although we had tragic fatalities this year, I am confident that the company is much stronger and better positioned now to address also this in the future. We also improved reliability. The number of trips in our projects decreased by 35% in power, by almost 20% in water.
Not only less outages, but less trips that make it more reliable in the market for the grids. That is increasingly something that is very important for all the grid operators and transmission system operators to be reliable on our plants. Succession is the last point. I'm very glad that we were able to secure this succession so smoothly with Dr. Samir. You will see with the number of appointments that we will make from internal pipeline. If we move to the next slide, that reflects in the scale, reach and delivery, where you can see that we're well on track to deliver the 2030 targets of Strategy 2.0. I think that the only one where it's still kind of moving and we continue to monitor closely the market is green hydrogen, where, as you know, regulatory uncertainty drives what the off-takers will want to commit to.
What I want to reinforce and reassure is that we will not do new green hydrogen projects unless they are fully contracted, and we are working eagerly to achieve that. We now more or less doubled the size of the company since three years ago, and we are now well on track to double again to the SAR 250 billion milestone by 2030. As Dr. Samir mentioned, we are going to increasingly do so, focusing on the profitability because we have the ability to be selective in this growth. With the equity commitment reaching now $2.5 billion roughly on average every year compared to $1.1 billion at the time of the IPO, I think that we have delivered on our commitment to really being able to scale up to this level. Moving on to the next slide.
You can see also the operational improvement that underlines and underpins the ability to deliver strong recurrent financial. Power availability in renewables is higher than what we achieved before. The same for water desalination. As I mentioned on the overall power with the shortcomings that we had in bringing online the Sirdarya project in Uzbekistan and the outage that we had on two plants in Oman. We are shortly below what we achieved in 2024, but the team are already working hard on achieving these numbers and improving them for the next year. Overall, as I mentioned, it is a 50% improvement despite this setback, both in outages and the LTIR. I think that it is a company that you should be proud of and that I am sure that under the leadership of Dr. Samir, we will be able to ensure better continuity and better track record also in the future.
With this, I would like to pass to our CFO, Abdulhameed, to comment the financial performance.
Thank you. Thank you, Marco. Salaam alaikum everyone. Good afternoon. Wishing you all a blessed remaining of the month. I will take you quickly through the financials, and then we will pick up a few questions from the audience to go through. Alhamdulillah as mentioned by both Dr. Samir and Marco, excellent operating year when it comes to operating income. We have delivered a 20% growth compared to last year. When it comes to the overall net income, it was around 5.4% higher than last year, and we will go through the details on the logics and the reasons behind that. Along with a very strong operating income of POCF, which is around SAR 3.2 billion. It is 13.5% increase from last year. This year, this POCF has been delivered without any capital recycling or capital gain cash coming in.
That's definitely a very strong and solid POCF that we have delivered. Alhamdulillah, we have maintained our net debt to POCF on check. We have delivered now almost five years of less than 6.5x of net debt to POCF, despite the fact that we were giving signals that it could go above that. Thanks to our capital raise of SAR 7.1 billion, we've been able to boost and strengthen our balance sheet, and we were able to pay off some of the existing debt from our existing cash flow, based on which we have delivered a very strong reduction on the net debt to POCF this year. Overall, the track record for the last five years and since the IPO, Alhamdulillah, there is a double-digit increase in CAGR of operating income, net income, and parent operationing cash flow. Moving to the details.
We'll start off on the development side. As highlighted by Marco, specifically on the financial close, Alhamdulillah, record year, SAR 70 billion projects has been closed during 2025. This is definitely the best year in our history when it comes to the number of financial closes. We were able to have more than 23 GW of new capacity, with around 300,000 m³/ day of water desal, and 3,000 tons of green hydrogen. When it comes to capacity that we brought online with this 28 I CODs being delivered, it means that almost every month we are delivering one or two units during the course of 2025. That is significant, and you can see it also on the chart from 3.1 GW that we used to deliver on a yearly basis to operation. Last year, we have delivered 8.2 GW of our capacity.
It has been high records, and I will start with the highest ever been presented operating income of SAR 3.6 billion. A lot of new capacity that came online that we talked about it earlier. I will go through the details later on. A bit of detail I would like to share with you with the total investment amount that we have delivered last year. If you look at the SAR 76 billion, I think there is three messages that I would like to share with you here. One is that when it comes to our business model and the way that we have explained multiple times in the previous years, I think we have a clear demonstration in the 2025 financials where we have said every time for each $1 ACWA Power delivered, it's equal $10 of projects worth.
You can see in this chart specifically that in the SAR 76 billion, basically, that have been delivered of projects last year, ACWA Power equity was around 10% of that. We had our partners' equity, which is around 14%, and the remaining 76% was all built on a non-recourse basis outside our balance sheet. Deep diving into the details and looking at what last year used to be a big challenge, which is the liquidity in the Saudi market. We can show you that actually, we have relied only on 50% of all the debts have been raised in the Saudi market, whereas we have used more than 20% on the regional and 30% international. We have also tapped into a bit different liquidity pools, including ECAs, DFIs, and project bonds. That has been capturing almost one quarter of our liquidity pool last year.
This is definitely a landmark movement for a couple of reasons. One is that it's just a demonstration that refinancing is always achievable and that new liquidities can be formed within a short span of time that we have delivered. Project bonds, which is now 2% only of our portfolio. I suspect that within the coming years, it will be a big part of our refinancing initiatives. That's definitely a big liquidity that will come to our pool of operational assets that will free up the liquidity for our growth and fuel the future of ACWA Power. With that, I will also move to the next slide to talk specifically more about the plants that came online as well. Now building up to the largest number, which is the operating income, the SAR 3.5 billion.
If you just quickly reflect on how does that build up come from 2024 numbers, you will see that we have definitely did a great job on the development side. As mentioned earlier, the financial closes have delivered a very strong revenue, which is around SAR 672 million higher than last year. Also some of the construction and management service fees that you collect or we collect usually during the construction horizon and not only specifically for the first year of development. The second contributor mainly comes from the asset itself. This is mainly on the assets came into operation, along with the existing and big settlements that we have closed related to insurance, EPC settlements that I also have the breakdown later on to talk about it. There is also a small comparison of lower development costs and provisions and write-off compared to last year.
On the negative part, there was a big gain recognized last year or not last year, the 2024, related to the divestment of Bash and Dzhankeldy that was not recognized in any divestment in 2025. That's the SAR 402 million. Also, there was another gain that was in 2024 related to the restructuring of ACWA Güç, which is our projects in Kırıkkale that is not also visible or nothing similar in 2025. You can see that there is a good boost from the recurring less dependence on the one-offs. Still we have one-offs that we are trying to shy away from as we move through our journey. The next slide we talk about specifically the net income and adjusted net income.
Building up from what we had, the SAR 611 million increase in the operating income, there is a small gain of difference in increase in the higher financial and other income, including the lower NCI. Looking at a big drop, which is item number three, it's related to two main things. One is that we have taken additional impairment charges related to Noor 3, and we are also building up a new molten salt tank in Noor 3 project, which is immediately impacting our P&L as it is not capitalized. Along with in the previous 2024 numbers, we had a reversal from impairment of Barka that is not existing in this year, based on which cumulatively it's around SAR 500 million less in 2025. We have also have higher zakat and tax charges, including deferred tax impact as well, around SAR 100 million.
That brings us to SAR 1.8 billion. If you take the adjustment of both items and impairments, which is around SAR 250 million, it is only actually Noor 3. There was a termination of one project in Africa, which we believe that this is a non-recurring instance because this is the first time in our 22 years' experience that we had a project being terminated because of a couple of days delay in the long- stop date, based on which we are adjusting for that. This is another SAR 92 million adjustment. You arrive at the SAR 2.1 billion net income or adjusted net income. The next slide with the building blocks, it will give us a better link to our operating model.
You look at it here through the develop, invest, operate and optimize, and you will see the same numbers at the bottom. I will not go through the details that I have actually explained earlier, but just to highlight a few things. You can see immediately that item or bucket A, which is the develop bucket, significant improvement and a big development business increase in 2025. The second bucket, which is the invest, did not do well, I would say. You can see that it has not moved the needle in our year-on-year progress, and this is mainly driven by two things. One is that in 2024 number, we have RAWEC 100% shareholding, whereas from 2025 we have 70%. We have lost 30% of our strategic assets. That is contributing around SAR 130 million. That is one part.
The second part is Noor 3, which is mainly the building up of the tank. This is another hit of SAR 120 million. I suspect that is one-off, and hopefully we will not have that recurring in the future years. This is where we have the second bucket. For the third bucket, NOMAC continued to improve. You can see there is a increase of SAR 130 million. You have also the other operating incomes mainly coming from the higher service income and that is associated with the volume of the business. The capital gain, I would say we took a break in 2025, so you don't see that big gain of cash under D&P. However, this is something that we will continue to operate in and we will continue.
We have identified a couple of opportunities for capital recycling in 2026 that we are expecting to execute on these as well. This brings us to the last item, which is mainly the cost. You can see that there is a higher cost, mainly due to the hedging recognition and the termination that I have highlighted earlier on the project Dhow. Sorry, the South African projects that we have. We move to the next slide of the POCF. On the POCF, I will talk about the buckets related to the increase on year-on-year. You can see that the cash inflow, there is a big SAR 1.4 billion coming up from the distribution of mainly the project company.
There is another SAR 2.7 billion, which is higher, SAR 2.7 billion, which is related to the development business, construction, and management service and income that came into a record deal of development. There is a gain of around SAR 466 million related to refinancing mainly. This brings the total cash to around SAR 4.6 billion. If you take out all the costs related to the operating post, D&A costs, and the financial charges, zakat and tax, you would reach POCF of around SAR 3.6, sorry, SAR 3.226 billion. Moving to the sources, not to repeat it what I mentioned earlier, quickly, we have a SAR 3.2 billion of POCF.
We had in the beginning of the year around SAR 2.9 billion, we did a drawdown of around SAR 700 million. SAR 7.1 billion is the capital increase. You have a total cash position of around SAR 14 billion. We have consumed SAR 7.5 billion, to reach to a closing balance of SAR 6.3 billion. Looking at the details, Alhamdulillah, it's very clear on the chart, on the bar chart on the right side. That most of the funds are actually going for investment. 82% of all the spending of the cash was investing in projects, whereas around 16% is mainly financial charges for the Sukuk and existing facilities that we have. There is a small 2% related to the share buyback that we had did for our LTIP program.
We'll talk on the final slide I have is related to the leverage. Quickly on the net debt to POCF, let's talk about the leverage first. As we usually do, you look at the full balance sheet. If you look at the full balance sheet, it's around SAR 31 billion. You take the recourse funded facilities only, which is the primarily all the basically project company debt that is recourse to ACWA Power, Sukuk, and PIF loan. This is cumulatively SAR 10 billion. Then we add anything off balance sheet, but they have a corporate guarantees from ACWA Power, and this is a financial obligation. This is the SAR 13 billion. In total, our leverage is around SAR 23 billion. We subtract the cash position that we had toward the end of the year. This is around SAR 6.3 billion.
You reach a net leverage of SAR 16.7 billion. With that and what we have presented earlier, which is the POCF, we are reaching 5.2x multiple or 5.2x of net debt to POCF ratio. For those who are joining us for the first time, theoretically, this mean that if we continue to have the same POCF, we can pay all the debt in 5.2 years. We'll pause here. I think this is the end of our presentation. We'll open it up for Q&A. Thank you.
Thank you. We will now begin the question and answer session. If you'd like to ask a question and have joined the call via Zoom, please press the Raise Hand icon on your screen. Alternatively, you can use the Q&A chat box to submit a written question. If you have joined us on the phone lines, please press star followed by one on your telephone keypad to ask a question. When preparing to ask your question, please ensure that your line is unmuted locally. Our first question is an audio question from Zoom from Giuseppe Villari. Please state your company name and proceed with your question.
Hi, Giuseppe from Morgan Stanley here. Thank you for the presentation and for taking our questions. The first one a bit of an obvious one, what's the impact you're seeing currently from the geopolitical tensions? Are you seeing any impact to one of your plants or to your workforce? Is there some commentary that you can give whatsoever? Secondly, you mentioned capital recycling for this year. Could you give the market a little bit more color on that? That'll be helpful as well. Thank you very much.
Okay. In regard to the conflict, as I mentioned earlier, we really have around the clock, 24-hour command center, basically, with the three shifts rotating, we're really monitoring the situation with our employees, with our assets all around the world. Everything's under control. We're in very good shape. We're keeping an eye on what's really developing, which changes by the day. From operating assets, all is going well. We have many projects under construction. We have around SAR 47 billion worth of projects under construction. Everything also under control, the shipments. So far, so good.
Yes. I can add a bit more there, I will talk about the capital recycling. Just to keep highlighting the way that how we build up the insurance program for our projects.
For all the assets under operation, we just did the big renewal of last year, there is a specific coverage related to political violence including wars. For the marine cargo for the projects under construction, we also have that covered. There is, of course, triggers for termination or renegotiating if we want to keep that basically coverage. Depending on the situation of the project, we might decide to delay the shipments or renew the program at a higher premium. That's something that we are also looking at. In relation to the projects under construction, usually we don't have similar coverage, we'll keep monitoring and see how things develop. So far, there is no impact specifically in any of that. I think that's the key. Correct. Yeah. When it comes to the capital raise, I highlighted that for two reasons.
One is that to demonstrate that the POCF increase is not only deliver the higher year-on-year, but also if you look at 2025, we delivered that without any capital gain. We did some divestment, but it was mainly through EBL replacement, so there was no capital gain for us. When it comes to 2026 and beyond, definitely there is a plan for capital recycling for the following reasons. As we stated earlier, any asset that we own more than 30%-40%, it is a position that we would like to partially divest and recycle, and reach to the optimum level of 30%-40% ownership in the project. That will be a priority for us. Second is that we have actually, and as we highlighted in the previous calls. We are shying away from single asset divestment to bring a portfolio divestment.
We also mentioned that it might take time, and indeed we are seeing that taking time for our first plant divestment. That's both points. To answer the question, yes, the recycling remains a core business for ACWA Power.
Clear. Thanks a lot.
Thank you.
Thank you. Our next question comes from the phone lines. The question comes from Prateek Bhatnagar with Jefferies.
Yeah. Hi, good afternoon, and thank you for taking the questions. I have two. The first one is on the project pipeline, specifically in Saudi. If you look at the advanced project pipeline, there is no project from Saudi. Could you help us understand the growth you are seeing in Saudi, given all the announcements, the pullback from the gigaprojects? That's number one on the project in Saudi. The second one is on the, recently you have announced the power purchase agreement you have done in Turkey. Could you give some color that how is it different from the early ACWA Power project which you implemented in Turkey? What are the fundamental changes why you believe that the recent project will be successful? Thank you.
Sorry. In the beginning of the first question, you mentioned that the KSA development is what? Because we lost you.
The project pipeline, the advanced project pipeline, there is no project from Saudi. If you could give some color, what kind of projects you are seeing, the pipeline you are seeing from Saudi in terms of power generation.
When it comes to the pipeline in Saudi, actually, we see it as a rich pipeline. I do not really understand why you have highlighted it that there is no pipeline for 2026. First, if you look at ACWA Power mandate, we have 70% of the renewable program in Saudi under execution. We have delivered up to PIF Round 6 last year, and you have seen we have signed the largest renewable program, which is 15 GW of last year. We are indeed working today with off-takers and relevant stakeholders to deliver on the next PIF round, potentially PIF 7 and 8. That is definitely one part. We are now in the final process of closing a second expansion to the CCGT plant. We are also waiting results for two IWP projects in Saudi.
We are looking forward as well for the results for the BESS. Overall, there is actually a very rich pipeline of growth in Saudi Arabia in 2026, and I also expect the same to continue in 2027. Given the recent geopolitical volatility, how sustainable this pipeline are concerned, we have to wait and see. I think that is definitely there could be delays two months here and there, but we are uncertain, and we are working as business as usual. For the PPA in Turkey, we have indeed signed. The program is 5 giga-
2 giga, not 4 gigas.
2 giga. One is already signed with the heads of terms. Once we sign the PPA, we will announce it in the Saudi exchange. We are reflecting on the lesson that we had in the previous project in Turkey. We are making sure that first there is a PPA, which is a power purchase agreement, which did not exist in the Kirikkale project. That is the first principle to proceed with the project in Turkey. The second is that we are structuring the tariff of the payment aligned with the financing of the project. Whether it is euro or any other currency, we will have to make sure that there is a natural hedge to avoid the risk of that we had in the earlier.
If you look at the previous Kirikkale project of ACWA Power, we had a fuel risk, we had a merchant risk, and we had a currency risk. With this structure that we are standing, we are trying to avoid these big three risks. As we eliminate these three big risks, we are confident to proceed with the project in Turkey.
Thank you. Our next question is a written question from Nada Al Shalbanat. How should we think of development and construction revenue in 2026? Since the last two years, this revenue stream was pretty strong. Should we expect it to be as strong as 2026?
Thank you. I will link it really to a few things. One is that what we are planning to do in the next five years. We have highlighted since 2023 that we are planning to invest between SAR 2 billion - SAR 2.5 billion equity for the next few years. By considering that, it means that we are remaining planning to invest and developing projects on the same speed. The commitment from ACWA Power side is there, and we are ready with a strong balance sheet after the capital raise to deliver these projects. How does the market comes? Far, we are seeing a very rich pipeline for developing projects, and we believe that we'll continue to deliver on these numbers in 2026 and 2027. Yes, there will be years of slightly lower numbers. There will be years of slightly higher numbers.
There will be years of that. Development is not going to be an immediate hit if there is zero development because some of these services is extended to the full execution period, and that's specifically to the development phase. With these two in mind, I think you can run your sensitivity, first on how does different off-takers deliver these projects as per the pipeline. Second is that how we will be able to close some of these projects on time and some of them could be delayed. Based on these two scenarios, you can see a bit of movement in these development phase.
Thank you. Just as a reminder to all of the participants that you can use the raise hand button if you have joined us here on Zoom, or you can also use the Q&A chat box to submit a written question. If you have joined us on the phone lines, hit star one on your telephone keypad. Our next question comes from Uma Menon. A few from my side. First question, can you please share the latest renewable pipeline details awarded by pending contract signing and bid deals in pipeline? The second question is, what's the renewable and conventional capacity that KSA plans to tender out in current year and 2027? The third question, could you again explain how we plan on mitigating project execution risk due to ongoing global conflicts? Thank you, and best wishes.
Okay. If you look at this slide, we are showing you the breakdown of the projects into different sectors, which is power, water, and green hydrogen. Then there is the AD. The AD is the advanced development project. These are projects that been awarded to ACWA Power when it comes to our physical award, we have not yet achieved financial close. This is considered the first step on our development pipeline. The second step is related to the pipeline, is the projects that are in early developments, which is not presented here. There is definitely a big pipeline that we are looking at. I just highlighted what is there in KSA. I also highlighted, which is there in Turkey, which is the 5 GW, meaning that there's two plus three technically between advanced development and early development.
We are looking at several projects in Africa and Egypt specifically. We are waiting results for two projects in Morocco, Midelt 2 and 3. There is a project of Senegal water that we are looking at, there is a potential renewable project as well there. We are just recently opened our offices in Malaysia-- Sorry, in Philippines, and we have an office in Malaysia and that's also looking at development there along with Indonesia. Southeast Asia remaining a big part of upcoming development that we are expecting a decent pipeline coming from there. Finally, China, now we have scaled up big time last year, there is a potential big pipeline coming up from the China projects. Perhaps on the end of the annual report that is attached to the financials, there is more detail that you can refer to as well there.
When it comes to the project execution, we're currently working with our EPC contractor partners and also suppliers, really monitoring the situation and adjust as we go. It's very dynamic, the majority of our projects in the area are really in Saudi Arabia. They're all performing well. We really have no negative impact. We have also a project in Kuwait that we just started and one also in the Emirates. We're still going ahead with these, no changes really, and we're trying to manage as the situation develops around us. So far it's been going very well.
Yeah. Maybe the last question related to. Sorry, what was the question ?
Can you explain again how the mitigation risk for the ongoing global conflicts?
I talked about the insurance. Maybe I don't need to repeat that.
On the structuring of the contracts, it's important to highlight that our almost 90% of our projects are based on an EPC Lump Sum Turnkey solution. Really, the execution risk falls under the responsibility of the EPC contractor. This is definitely is built in in the overall EPC price that they have shared. Definitely, there is force majeure event that can be escalated by the EPC contractor to our project company, which is mirroring the same clauses for us as the project companies to the offtakers. We expect, and we have seen during our COVID-19 experience, that the relevant offtakers can give us a relief and time extension when it comes to the execution of these projects, depending on how far this geopolitical conflicts extend and how much impact it's happened when it comes to the lockdown period.
The structuring of the contract is fairly solid to protect us, and we have to work hand in hand with the EPC contractor to deliver the project safely and with a win-win positioning for us along with the EPC contractor.
Abdulhameed, I just would like to add one more thing because Uma has asked another question whereby she was asking for KSA's plans for the existing current tenders for the current year. Uma, I think this topic is widely covered in the press anyway. Saudi Arabia is pretty transparent with respect to their renewable energy transformation targets. Round by round, it's only hitting the news as soon as the government is ready to do that. What I would like to highlight there is obviously, you remember we just, last year we have closed 15 GW of PIF pipeline, which was a record capacity that was PPA'd in one sitting. Obviously, again, you know that as soon as we announce one round of PIF, we already started negotiating for the next round.
This round is now being obviously discussed between us and the Ministry of Energy and PIF. That is on one side. In the long term, again, the second point is our 2030 renewable target of Saudi Arabia has not changed. It is still sitting at 130 GW that was announced. It reflects to our numbers because of the AC/DC conversion is 103 GW. You all know about this from your discussions with us. This has not changed despite several rounds of budget recalibration, and I think this is another testament to Saudi Arabia's, the government's seriousness of transforming the energy mix in Saudi. Thank you.
Okay. Is there a question to repeat the three risks of Turkey?
Correct.
I have analyzed the three risks, which is the fuel risk that we used to have on Kirikkale project. We are not having it here obviously because it is a renewable project. There is a currency risk where we raise USD funding to fund a Turkish lira merchant project , which again, we are trying to mitigate by raising the funding with the same offtake funding that potentially could be a euro link. The third risk is that merchant risk in Turkey that is existing in the market, that we are trying to mitigate it with the forward purchasing units fixed from day one. With these three, our upcoming projects are adjusted for these three main risks that we have seen in the past.
The contract will be in euros?
Yes. If it comes in euro.
Yeah
I mean, we will have the funding raised in euro.
Yeah. Mm-hmm.
Thank you. Our next question comes from Ildar Khaziev. Please state your company name and proceed with your question.
Hello. Thank you so much. This is Ildar Khaziev from HSBC. I joined the call a bit late, so apologies if this was already discussed, but just to understand better the numbers in Q4. I understand that there had been quite a few financial closes, and is my understanding correct that the 2025 results capture the associated project fees, or we might see some of them spilling over and showing up in first half of 2026? This is my first question. Secondly, on China, you mentioned a strong pipeline of projects there. I have just learned recently and forgive my ignorance if I'm missing something, but I've learned that as of mid-last year, I think Chinese government stopped approving the feed-in tariffs for the new solar projects. Has that changed the outlook for investments at all in China for you? Thank you.
Yeah. Thank you. Maybe for the first question, we covered a bit earlier before you joined. Just to reflect on our first half guidance, definitely we cannot give a full visibility on what is the expectation on the development because simply it's linked to so many different variables. Some projects we are getting very close to the financial close, but also it relies on certain CPs linked to the different stakeholders. Whenever we reach them, we are going to achieve the financial close, we can also expect the construction service fees to be fixed then. For some of the development projects, we have actually been awarded, but we are waiting for the PPA or the SHA to be signed. On an overall basis, from a year perspective, we are expecting a solid year when it comes to development.
On the first half, I think we'll have to wait and see, especially with the recent development of the market dynamic and the geopolitical challenges. For China, we had delivered around.
Let me take China because I understand what you are talking about. June 1st changed the rules of the market. The feed-in tariff had expired already before, and there was a big question on receivables on feed-in tariff, but those are not our projects. Our projects are already in the next phase, where basically the price is set in the market. There is not an explicit subsidy. What happened on 1st of June is that they made a further step in the liberalization of the market about the price-setting mechanism, which was anticipated. Actually, we had already taken into account the potential curtailment and price-setting mechanism because we need to look at 20, 25 years ahead, and we know that there are models like PLEXOS and so on to define basically the demand supply in the different areas and calculating your own vision of prices.
This is already embedded when we take the investment decision. Of course, what the impact was in the market, that there was an acceleration in the first half of the growth, and the second half was a bit slower, and that's why in the second half, you have not seen a lot of activity also by ACWA in terms of new projects. Now, we brought at the end of the year a number of projects for approval in our investment committee, throughout the year, you will see progress on those.
Thank you. One more question, if I may, on the M&A side. I've seen that you have completed quite a few deals in the region. Are you interested to continue to acquire assets in the region, in the Middle East? Is there a pipeline of assets being offered at the moment? Thank you.
Yeah. If you look at basically our acquisition, it's complementary to our business model. When we say that we are targeting $2 billion-$2.5 billion of equity investments per year, this is including both greenfield and brownfield. You have seen that we completed the acquisition successfully for the ENGIE assets in Kuwait and Bahrain, and definitely this you will see the impact in 2026 because we closed it towards the end of December. There was no impact in 2025. You saw also that we have announced the acquisition of 30% or 32% of the huge share on Shuaibah IWPP. Now we're waiting for the clearance on the completion of the CPs to go ahead with that. That's definitely another acquisition that we are waiting results on.
We definitely are open for greenfield opportunities in multiple locations, including Africa, Southeast Asia, and China. In the KSA market is quite less active because we have been quite understanding the market well, we have seen that we are capturing most of the greenfield and most of the existing assets. In the GCC, we are very selective. I think we have satisfied our desire with the latest acquisition of the portfolio of ENGIE. We don't see anything that is materially coming up, especially that most of the countries in the GCC, we have almost hit the limit when it comes to single developer targets capacity.
Thank you very much.
Thank you.
Thank you. Just as a reminder that if you'd like to ask a question, please use the raise hand button if you have joined us here on Zoom. You can also use the Q&A chat box to submit any written question. If you have joined us on the phone lines, please press star followed by one on your telephone keypad. Our next question is a written question from Abdullah Al Thinayyan with MAIC. Should we expect a dividend distribution this year? If not, what factors need to be met for management to consider one? Thank you, and best wishes.
Yes. Thank you. At the IPO time, we have announced our three years dividend policy, or let's say three years dividend plan, which has been executed successfully, and we have delivered on that. Actually, quite higher than what we have expected or what we have shared with investors when it comes to the dividend distribution. Last year, we decided not to distribute any dividends at the level of the board, and it was basically a year of focus for the capital base. This was, alhamdulillah, delivered very well last year. Today we are actually working with the management, the board, to design what can be the dividend plan for the upcoming period, which is from 2026 to 2030. We have yet to share this with the board, with the shareholder later on for endorsements.
Today, we don't have anything handy to be sharing it with you. However, from your side, you should be expecting that we will deploy most of the cash for reinvesting in our pipeline, giving a strong visible pipeline that we have in front of us. The guidance definitely is to go big in investing, we can discuss once the board approves the dividends plan for the upcoming period, we'll share it with you and the rest of our investors.
Thank you. Just as a final reminder that if you'd like to ask a question, please use the raise hand button here on Zoom, or you can also use the Q&A chat box if you have joined us here on Zoom. On the phone lines, please press star followed by one. As we have no further questions in the queue, I will hand back over to the management team for any final comments.
Thank you, Carla. Thank you very much, everyone, for your participation and joining us today. It was a very good call, at least as far as I can see it from here, and thanks for your active questions. If you have any further questions, you know the protocol. You can just reach out to us at IR, or you can use our email addresses. We will be more than happy to answer them as quickly as we always do. With this, I would like to close the call. I would like to thank Marco, Abdulhameed, and Dr. Samir, as well as everybody who has worked for the preparation and answering all these questions. For you, of course, for your joining us today. Thank you very much. This concludes the call.
Thank you.
Thank you.
Thank you.
Thank you.
Thank you. Have a great rest of your day.