Morocco has awarded a Saudi International Company for Water and Power (ACWA)-led group a $1 billion contract for the construction of a solar power plant in southern Morocco, as the country expands its clean energy sector.

The agreement sees a consortium made up of ACWA, and two Spanish companies- ARIES IS, and TKK EE, who will own a 5 percent stake between them– win the contract to build a 160-megawatt solar power plant at an estimated cost of $1 billion. The plant will be located in the south of the Morocco, on 2,500 hectares of land near the desert-bordering town of Ouarzazate.

It is expected that construction will begin almost immediately, by the end of 2012, with completion of the plant and start of production billed for the end of 2014.

The contract refers to phase one of the Ouarzazate project, as it is hoped that operations at the plant will be increased in a second, later phase of development, in order to eventually achieve a production of 500-megawatts.

Tenders for the contract were judged by the Moroccan Solar Energy Agency, which finally selected the ACWA-led consortium over three other strong contenders. Mustapha Bakkoury, head of the Agency, announced the final decision and explained that the Saudi team had put forward the “best technical and financial offer”. ACWA has priced its offer at 1.62 dirhams ($ 0.18) per kilowatt/hour produced, as compared to competing tenders of 2.05 dirhams ($0.23).

This contract comes as part of a Moroccan government initiative known as the Moroccan Solar Plan, that hopes to see the resource-poor country’s clean energy sector boom over the coming years with the ultimate aim of exporting surplus energy to Europe. It is hoped that solar energy production will reach 2,000 megawatts by 2020, accounting for over 38 percent of the country’s energy consumption; with related plans in the pipeline to double this figure through the creation of wind-power plants off the coast of Morocco.

The Solar Plan stipulates the building of five solar power plants in the southern region of Morocco, with the government estimating costs of $9 billion to achieve the 2,000 megawatt production-capacity goal by 2020. Competition for contracts to build the remaining four power plants is scheduled to be opened before the end of the year.

The current project will be financed through a range of sources, including loans from the World Bank, the European Investment Bank, and the African Development Bank, and grants from the European Commission and the German government.