The Saudi Arabian government says it will build a $500 billion mega-city, with the goal of diversifying its economy to focus less on crude oil.

The project, called NEOM, will measure 10,230 square miles.

Saudi Crown Prince Mohammed bin Salman said the government will aim to make NEOM run on 100% renewable energy — a highly ambitious goal.

This month, the country started awarding contracts to build palaces there.

Saudi Arabia is the world's largest oil exporter, but falling oil prices have made it more difficult for the country to pay its oil workers.

Now the Saudi Arabian government has come up with a project that could give its economy a boost: a $500 billion mega-city that will connect to Jordan and Egypt and be powered completely by renewable energy.

In October 2017, Saudi Crown Prince Mohammed bin Salman announced the project, called NEOM, at the Future Investment Initiative conference in Riyadh. It will be financed by the Saudi government and private investors, according to Reuters.

The country is now starting to award contracts to local construction companies for the development of five palaces. Set to be located on the Red Sea coast, the palaces will be for the king, crown prince, and other senior royals. According to Reuters, the buildings will feature traditional Moroccan-style architecture, Islamic designs, and colorful ceramic tiles. The complex of palaces will include a marina, helipads, and a golf course.

The business and industrial-focused city will span 10,230 square miles. To put that size in perspective, 10,230 square miles is more than 33 times the land area of New York City.

A screenshot from the "Discover NEOM" website. Discover NEOM

NEOM's larger goal is to lessen Saudi Arabia's reliance on oil exports, which could expand the country's economy beyond oil, bin Salman said at the conference in October. The city will focus on a variety of industries, including energy and water, biotechnology, food, advanced manufacturing, and entertainment. Saudi Arabia hasn't released a masterplan yet for what it will look like.

The country appointed Klaus Kleinfeld, a former chief executive of Siemens AG and Alcoa Inc, to run the NEOM project. Officials hope that a funding program, which includes selling 5% of oil giant Saudi Aramco, will raise $300 billion for NEOM's construction.

Saudi Crown Prince Mohammed bin Salman, Masayoshi Son, SoftBank Group Corp. Chairman and CEO, and Christine Lagarde, International Monetary Fund (IMF) Managing Director, attend the Future Investment Initiative conference in Riyadh, Saudi Arabia October 24, 2017. Reuters The project could make NEOM one of the largest cities to run without fossil fuels. In the US, one of the largest cities to run on 100% renewable energy is Burlington, Vermont, which doesn't come close to the planned size of NEOM. Cities in Iceland and Norway also claim to be close to achieving entirely renewable electrical grids with help from natural resources like hydropower and geothermal heat.

Saudi Arabia expects to complete NEOM's first section by 2025.

"This place is not for conventional people or conventional companies, this will be a place for the dreamers for the world," bin Salman said on a panel at the conference. "The strong political will and the desire of a nation. All the success factors are there to create something big in Saudi Arabia."