(CNBC)– Saudi Arabia and Japanese telecom giant-turned-tech investor SoftBank expanded their partnership on Tuesday, announcing the world’s biggest solar power generation project at a press conference in New York.
The project was projected to cost $200 billion through 2030. That’s about how long it’s anticipated it will take to build out all 200 gigawatts of the project.
By comparison, there are roughly 70 gigawatts of solar capacity in operation, under construction or in development in the United States, according to a list of large-scale projects kept by the Solar Energy Industries Association.
The project is so large, it will support the creation of a domestic solar equipment manufacturing industry in the kingdom, said SoftBank CEO Masayoshi Son.
The project remains in the early phases, and it is not yet guaranteed it will be built. Saudi Crown Prince Mohammed bin Salman and Son signed a memorandum of understanding between Saudi Arabia’s Public Investment Fund and the SoftBank Vision Fund on Tuesday evening, which kick starts the process of forming a new power generation company. The intention is to complete due diligence on the project by the end of May.
“This kind of a project would never have been feasible without the big vision we shared with the crown prince,” Son told reporters.
“The kingdom has great sunshine, great size of available land, great engineers, great laborers,” he said. “But most importantly it has the greatest vision.”
Expanding into renewable energy is a key part of Saudi Arabia’s Vision 2030, a plan spearheaded by Prince Mohammed to diversify the nation’s oil-dependent economy.
The 200 gigawatts of capacity announced Tuesday will be spread throughout the kingdom. The first two solar parks will be able to generate 7.2 gigawatts of power and are scheduled to begin construction this year and start generating electricity in 2019.
The cost of the two parks will be about $5 billion, with $1 billion coming from Softbank’s Vision Fund and $4 billion from project financing.
Son said revenues from early stage solar parks will help fund the construction of future projects in the kingdom. Each park will have a 25-year power purchase agreement, a long-term contract to supply electric power to customers, which is common in the solar energy industry.
The first parks will not include battery storage, but the new Saudi electricity generation company will begin adding that feature to solar farms within two to three years, according to Son.
The estimated $200 billion project cost includes building the solar parks, integrating battery technology and constructing a massive new facility that will vertically integrate solar equipment manufacturing, according to Son. The venture also plans to build centers for research and development and education and training, he said.
The growth of the solar industry is expected to create 100,000 jobs and increase Saudi gross domestic product by $12 billion. It is also expected to save the kingdom $40 billion by obviating the need to burn domestically produced oil to generate power.
The announcement happened during the New York leg of Prince Mohammed’s trip across the United States. The 32-year-old king-in-waiting and a Saudi delegation are cementing ties with the Trump administration and lining up American investors as the kingdom embarks upon an ambitious plan to diversify its economy.
Earlier on Tuesday, the Saudi-U.S. CEO Forum gathered American and Saudi business leaders in New York, where the kingdom announced about three dozen memorandums of understanding with U.S. firms, which are often the first step in establishing business ventures.
Saudi Arabia’s Public Investment Fund is the largest investor in Softbank’s $100 billion Vision Fund. The kingdom’s sovereign wealth fund has reportedly committed $45 billion to the massive technology investment vehicle, which counts Uber, Nvidia and WeWork among its largest investments.
The fund, which was at $93 billion, reached its target after raising $7 billion from U.S. corporates and managers of the Vision Fund in the last few months, according to a source familiar with the fund. The fund is now closed.