The Armenian government has set its terms for a potential multimillion-dollar deal with an Abu Dhabi-based company that has offered to build two big solar power plants in Armenia.

Abu Dhabi Future Energy Company, also known as Masdar, and the Armenian National Interests Fund (ANIF) signed a tentative “joint development agreement” to that effect in the capital of the United Arab Emirates (UAE) on November 30.

In a joint statement, they said Masdar is ready to invest at least $300 million in the construction of the two power plants which would have a combined capacity of 400 megawatts. It would nearly match the design capacity of the Metsamor nuclear plant generating more than one-third of Armenia’s electricity.

Prime Minister Nikol Pashinian’s cabinet discussed the project proposed by Masdar and shed more light on it at a weekly meeting held late last week.

In particular, government officials said the two solar plants would be built by 2024 and 2025. Masdar needs not only vast plots of land for these facilities but also government guarantees that the Armenian power distribution network will pay around 3 U.S. cents for every kilowatt/hour of electricity to be generated by them.

Pashinian said the UAE firm is offering “a very good and low tariff” which is well below the current cost of electricity production in Armenia. Nevertheless, he said, the government should try to attract an “even better proposal” from other renewable energy companies.

Accordingly, the government decided to hold in 2020 and 2021 international tenders for the right to build two 200-megawatt solar plants in the country. “If it turns out there is no better offer, the project will be implemented by the investor that has authored the proposal,” Pashinian explained, referring to Masdar.

Masdar has already invested at least $8.5 billion in renewable energy projects in the UAE and abroad.

Both the current and former Armenian governments have pledged to significantly increase the presently modest share of renewables in domestic electricity production. According to Deputy Prime Minister Tigran Avinian, Armenia could and should have up to 1,000 megawatts of solar power capacity by 2030.

The first Armenian solar power plant with a capacity of 0.5 megawatts went on stream in September 2017. Six more such small facilities were connected to the national power grid by November 2018. Armenian private firms began building several more solar plants in the following months.

A much larger, 55-megawatt plant is due to be built by a Spanish renewable energy firm in northeastern Gegharkunik province by the end of 2020. The $50 million project is mostly financed from a World Bank grant allocated to Armenia in 2015.