Saudi Arabia wants to pour $200 billion into solar to build the world’s largest solar project.

The Saudi sovereign wealth fund and SoftBank Group Corp. of Japan jointly announced plans to build a solar project that is staggering in size – 200 gigawatts (GW) by 2030. That would be about 100 times larger than some of the largest projects in the world right now. “It’s by far the biggest solar project ever,” Masayoshi Son, CEO of SoftBank said at a news conference Tuesday in New York after signing a nonbinding agreement with Saudi Crown Prince Mohammed bin Salman (MbS).

The project would begin with a $5 billion investment, initiated this year, which would translate into about 7.2 GW, slated to come online in 2019.

The logic of massive and aggressive development of solar in Saudi Arabia is obvious. Sunshine is not a scarce resource. The country burns oil for about a third of its electricity, a costly way of generating power both environmentally and in terms of lost oil exports. SoftBank’s Son said the 200 GW of solar would cut electricity costs by $40 billion while creating some 100,000 jobs.

The scale of the construction would alone help develop a domestic solar manufacturing industry in Saudi Arabia, SoftBank’s Son said. The project will eventually integrate energy storage, although not right away.

Moreover, the project would be a cornerstone of MbS’ long-term economic strategy, with clear spin off benefits in terms of economic diversification, employment, and a strategy for a post-oil economy. Related: Trump Looks To Undo Fuel Efficiency Standards

The project is ambitious, to say the least, but raises a lot of questions. First, where will the money come from? The Wall Street Journal reports that much of the project will be debt-financed. SoftBank and the Saudi sovereign wealth fund announced a $100 billion technology fund in 2017, the Saudi-SoftBank Vision Fund. The Vision Fund will reportedly provide the first $1 billion.

Beyond that, the financing mechanism was left vague. SoftBank’s chief said electricity sales would generate the revenue needed for further expansion. “The project will fund its own expansion,” Son said. “New investment comes from the profit of the earlier project we don’t need to secure total $200 billion in one day. It will be step by step.”

One possibility would be using the proceeds from the Saudi Aramco IPO, which Saudi officials have repeatedly boasted would raise around $100 billion, although independent analysts question that figure. Moreover, the potential of the IPO would be constrained if Aramco opted for a domestic-only listing rather than a public offering in London, New York or Hong Kong.

Another question: What makes this project any different from the other announcements in the past, promising massive investments in solar that failed to materialize? A half decade ago Saudi Arabia announced plans to build 24 GW of solar by 2020, and 54 GW by 2032. The first projects only began to inch forward in 2017, according to Bloomberg, with bids received on a relatively paltry 300 megawatts of solar.

The lofty promises from Saudi Arabia in the past, many of which stayed on the drawing board, have apparently not humbled the Crown Prince. “It’s a huge step in human history,” bin Salman said. “It’s bold, risky and we hope we succeed doing that.” Related: The End Of The Status Quo In LNG Markets

Yet another uncertainty is what Saudi Arabia wants to do with 200 GW of power when its total electricity capacity only amounted to 77 GW in 2016, according to Bloomberg New Energy Finance. The size is extraordinary, and is about triple the size of the total capacity that is either online, under construction, or being developed in all of the U.S. right now.

The solar announcement also begs the question of what Saudi Arabia plans on doing with its plans to spend $80 billion to build around 16 nuclear reactors over the next 25 years? It seems unlikely that all of these investments will go forward. It should be noted that the solar agreement between the Saudi sovereign wealth fund and Japan’s SoftBank is a nonbinding agreement with little to guarantee that it moves forward.

Nonbinding agreements don’t necessarily mean much without evidence that there will be a serious effort to follow through. We will just have to wait and see.

By Nick Cunningham of Oilprice.com

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