Powering New Alliances: ACWA’s Clean Energy Pivot to China

The transition to renewable energy is reshaping the global economic and geopolitical landscape. In this emerging order, ACWA Power has become a key player in this transition—not only in driving Saudi Arabia’s domestic transition from an almost entirely fossil-fuel-based electricity system to one in which renewables are front and center, but also in extending its reach into China and other major Asian markets. ACWA Power’s story is a microcosm of Saudi Arabia’s wider effort to diversify its economy and amplify its diplomatic influence—all while navigating an environment in which energy, trade, and technology are increasingly politicized.

ACWA’s Role in Saudi Arabia’s Green Ambitions

To grasp ACWA Power’s pivotal role in this new era, and how it is aiding both the Kingdom and its foreign partners to manage the complexities of climate, technology, policy, and rivalry, is to understand a key strand in the global green transformation.

Across the Middle East, renewable energy generation is projected to grow at a remarkable 14% per year during the 2025–2027 period, with its share of the overall energy mix expected to rise from 5 percent to 7 percent. That figure alone illustrates the pace at which the region, long synonymous with oil and gas, seeks change. Saudi Arabia’s bold ambitions under the National Renewable Energy Program (NREP) provide a telling case. Here, ACWA Power emerges as more than a “national champion” or a mere investor. It is the orchestrator, developer, operator, and in a sense, the public face of Saudi’s renewables quest.

At home, ACWA Power is at the heart of a dramatic acceleration. With the support of Saudi Arabia’s Public Investment Fund (PIF) and Water and Electricity Holding Company (Badeel), and its coordination with Saudi Aramco Power Company (SAPCO), ACWA Power recently secured agreements to deliver 15 gigawatts (GW) of new renewable capacity to the Kingdom within just a few years. The portfolio includes five utility-scale solar PV sites and two wind farms across the country—together capable of powering over 11 million Saudi homes and significantly cutting carbon emissions in line with Riyadh’s 2060 net-zero ambitions.

This partnership among ACWA, Saudi Arabia’s sovereign wealth fund, and Saudi Aramco echoes a new alignment in which state and quasi-state actors mobilize their collective financial muscle to achieve non-oil growth. The $8.3 billion investment represents the largest single-phase renewable energy commitment in the world to date. The projects’ size, scope, and geographic spread underscore how the energy transition in Saudi Arabia is as much about national brand-building as it is about climate targets.

ACWA Power Is Going All-In on China

While reshaping the energy future at home, ACWA Power is equally focused on global expansion. At the forefront of its plans for international investment is China, which has indicated a willingness to partner with Saudi Arabia on green technology. ACWA’s motives in this arrangement blend commercial opportunity, tech transfer, strategic hedging, and diplomacy.

So far, ACWA Power has not been forced to choose between aligning with China or the United States. Nor has either Washington or Beijing demanded such exclusivity. Instead, the company is pursuing a calibrated approach that enables parallel collaboration with both sides, even amid intensifying U.S.-China competition in other areas.

This global orientation is central to ACWA’s evolution. By operating across the Middle East, Africa, and Asia, ACWA Power leverages global scale to achieve risk diversification, ongoing learning, and synergistic growth. What began as opportunistic forays abroad have become a pillar of the company’s growth model. Nowhere is this more evident than in China. As ACWA founder and chairman Mohammad Abunayyan noted during the “Summer Davos” meeting held in Tianjin, China, in late June, China is the world’s largest renewable energy market—having already surpassed its own 2030 green energy goals—and presents both unprecedented demand for and supply of advanced clean technology systems.

This shift in global market leadership creates a gravitational pull for companies attuned to the future, and ACWA Power is unequivocal in its pursuit: it wants to scale expertise, secure supply chains, lower costs, and plug directly into the main artery of global green manufacturing. Through multi-billion-dollar investments in Chinese projects and long-term partnerships with domestic giants, ACWA Power is aligning itself with the world leader in solar panel, wind turbine, and battery production. By 2030, the company aims to have $30 billion to $75 billion in assets in China.

These partnerships are not only about power plants. They represent a deliberate effort to localize the components and supply chain for innovative sectors such as water desalination—another Saudi strategic priority, given the Kingdom’s arid location—and green hydrogen, for which ACWA Power is a global first-mover. China’s manufacturing capacity is being harnessed not just for the domestic market, but as a platform for exporting Saudi-developed green technologies to other markets in Asia—and even back to the Middle East and Africa, blending technology transfer with market access and investment return.

What does the deepening of Saudi-Chinese clean energy ties mean for the broader economic and diplomatic relationship? Here, the convergence of interests is striking. As the United States has become entangled in a cycle of trade conflict with China and has increasingly retreated from its own renewable energy commitments under the Trump administration, Riyadh and Beijing have reinforced their partnership. Since 2021, China has poured $21.6 billion into greenfield foreign direct investment in Saudi Arabia, much of it in clean tech.

The collaboration has a distinctly two-way character. ACWA Power is leveraging Chinese manufacturing for its megaprojects in Saudi Arabia, while also investing in and jointly operating new renewable assets—including desalination and hydrogen projects—across the Chinese mainland. Several recent partnerships illustrate this trend. ACWA Power has partnered with Sungrow to operate high efficiency solar photovoltaic (PV) projects in Guangdong Province, and with Mingyang Smart Energy Group on wind farms. Meanwhile, major deals such as ACWA’s deal with JinkoSolar to acquire 3GW of PV modules, signal the deep entwining of Chinese supply chains with Gulf renewable deployments.

ACWA’s Strategic Expansion: Supply Chains, Innovation, and Global Energy Shifts

ACWA Power’s deepening presence in China marks a bold bid to enhance competitiveness and resilience—but at what cost, and with what contingencies in place amid escalating global trade tensions?

ACWA’s bold pivot eastward brings potential vulnerabilities, including:

• Heavy reliance on Chinese supply chains that could face disruption from U.S. and EU trade restrictions or geopolitical tensions.
• Exposure to political, regulatory, and currency risks in emerging markets such as Indonesia, Uzbekistan, and Malaysia.
• Operational challenges in scaling nascent green hydrogen exports due to infrastructure, logistical, and cost barriers.

ACWA Power seeks to mitigate these risks through deliberate diversification. Its portfolio spans 14 countries, supported by diverse capital sources; furthermore, it works with a range of partners to stay flexible and avoid relying on any one supplier. It typically builds projects using affordable Chinese construction firms, while Saudi investment helps cover costs and manage political risks.

By embedding itself directly in Chinese manufacturing and project development, the company hedges against the volatility of U.S.-China trade tensions and Western regulatory barriers. This strategy ensures reliable access to the world’s most cost-competitive solar modules, inverters, and other essential components, reducing the risk that tariffs, sanctions, or future trade disruptions will delay projects or increase costs. Simultaneously, ACWA Power’s localization of critical supplies not only strengthens its Chinese operations, but also enhances resilience across its global portfolio, particularly in water-stressed regions like Africa and the Middle East.

Beyond securing supply chains, ACWA Power’s strategy also emphasizes knowledge transfer and innovation. Its recently established Shanghai-based Overseas Innovation Centre serves as a hub for collaborative development, bringing together Chinese R&D expertise, Saudi engineering talent, and the company’s operational experience. Partnerships with leading academic institutions like Shanghai Jiao Tong University (SJTU) further nurture this ecosystem, fostering advancements both in renewables and in complementary sectors such as battery storage, smart grids, and seawater desalination.

Strategically, this deepening Saudi-China energy partnership is reshaping the broader architecture of Asian and Eurasian energy flows. Aligned with China’s Belt and Road Initiative (BRI), these reciprocal investments and joint ventures enable Saudi and Chinese companies to co-invest in emerging markets across Southeast Asia and Central Asia, amplifying their regional influence.

Implications Amid U.S. Policy Shifts

These cross-border investments and the strategic alignment they represent take on added significance amid shifting U.S. energy policy and the deepening of Saudi-China ties.

The Trump administration has not only left the Paris Agreement, but has also sought to repeal or dilute fundamental green legislation such as the Inflation Reduction Act, which unlocked unprecedented funding for American clean energy projects. The Trump administration’s “energy dominance” agenda has instead reprioritized oil, gas, and coal, sought to unravel environmental regulations, and imposed tariffs on imported solar panels and other green tech from China. While these policies may temporarily bolster domestic fossil fuel competitiveness, they simultaneously slow the U.S. energy transition, reduce export opportunities for American clean tech companies, and create a leadership vacuum on the global climate stage—a void Beijing and its Middle East partners are eager to fill.

Despite the risks posed by geopolitical fragmentation and policy uncertainty, ACWA Power’s multinational footprint, strategic partnerships, and diversified supply chains chart a distinct path grounded in geographic and technological diversification rather than isolationism. The company’s chief executive, Marco Arcelli, explicitly stated that ACWA Power will “move ahead with its China plans despite growing concerns of a trade war and will not invest in the US in the short term.” Arcelli’s statement reflects a strategic focus on expanding in China and other Asian markets, which the company views as its main international growth engines, at the expense of the backward-looking United States. Nevertheless, ACWA has also significantly expanded collaborations with American firms, now exceeding $6 billion. This strategy not only buffers ACWA Power against geopolitical volatility, but also enhances its competitive edge in fast-growing regions.

The broader significance is notable. As U.S. energy policy pulls back from a leadership role in global climate efforts, a new “Asia–Eurasia–Gulf” energy alignment is taking shape, with ACWA Power emerging as both a symbol and a key driver. This emerging framework is supported by strong state backing from Saudi Arabia and China, a sustained focus on localized innovation, and a flexible approach to navigating varied regulatory and commercial landscapes.

ACWA Power’s Global Nexus

A vital aspect of this transformation is the integration of clean water infrastructure into the equation. As the world’s largest private desalination company, ACWA Power is investing in the localization and R&D of high-efficiency desalination technologies in China, including energy-saving innovations. This development ties water security closely to energy sustainability, completing the critical “water-energy nexus” that is essential for sustainable growth in water-scarce, energy-intensive regions.

This recalibration is supported by a unique ownership structure. China’s Silk Road Fund now owns a 49% stake in ACWA Power, making it not only a financial but also a strategic partner. Through this vehicle, Beijing solidifies its involvement in the regional energy transition, ensuring both access to the Gulf market for its companies and a hand in shaping the future commercial and technical standards for clean energy in emerging markets.

The real-world impacts of these trends are already being seen. ACWA Power has extended into Indonesia and Malaysia, mirroring its model of using deep Chinese partnership to unlock local markets. In these instances, the corporation’s playbook is to form consortia with local sovereign funds, bring Chinese manufacturing and construction partners into the fold, and leverage Saudi capital and diplomatic ties to gain entry and advantaged terms.

ACWA Power’s journey is not merely about constructing power plants or desalination facilities. Nor is it about chasing short-term returns in any single market. Its ambitions are far broader: it intends to construct a resilient, scalable, and innovation-driven platform for renewable energy development, rooted in Saudi ambitions but global in scope and method. By embracing a “China Strategy”, weaving global partnerships, and strategically avoiding overexposure to politically volatile markets like the US in the near term, ACWA Power is writing the playbook for emerging market energy transition leadership.

In this light, the company’s significance lies not primarily in the scale of its operations, but  the transformation it represents and enables. Its projects at home anchor Saudi Arabia’s economic future beyond oil. Its investments in China and partnerships with local players ensure stable access to the world’s fount of green innovation. Its presence in Southeast Asia, Central Asia, and Africa demonstrates the viability and competitiveness of a “south-south” and “east-east” model of energy transition.

While the United States and some other Western countries risk marginalizing themselves through policy ambiguity and protectionism, ACWA Power and its partners are charting a course in which the energy transition’s benefits are distributed across boundaries. Its path is a signal of the shape of things to come—a future in which the energy transition is as much about who is willing to rethink the map of partnerships and priorities as it is about who can build the biggest or cheapest solar farm.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.