Saudi Arabia Accelerates Plans for Renewable Energy

Published June 13th, 2017 - 07:00 GMT
Saudi Arabia's Energy, Industry and Mineral Resources Minister and chairman of Saudi Aramco, Khalid Al-Falih. (AFP/ File)
Saudi Arabia's Energy, Industry and Mineral Resources Minister and chairman of Saudi Aramco, Khalid Al-Falih. (AFP/ File)

The Saudi government is making good on its pledge to introduce solar and wind power into the kingdom's energy mix so that renewable energy becomes a growing part of the feedstock for the country's electricity genera­tion. This will free up more of the Gulf country's crude products and natural gas for export sales.

In April, Riyadh announced the names of 51 companies, primarily foreign, that have been shortlisted for two renewable energy projects: 27 firms were selected to bid on a 300 megawatt solar project to be developed in the northern part of the kingdom and 24 firms were chosen to vie for a 400 MW wind farm project in the country's northwest.

The projects are the first of up to 30 ventures the Saudi govern­ment is planning as part of a $30 billion-$50 billion investment in renewable energy by 2023, the year by which Riyadh intends to produce around 10 gigawatts of electricity from solar, wind and geothermal power.

Speaking at the start of the Saudi Arabia Renewable Energy Invest­ment Forum in April, Saudi Oil Min­ister Khalid al-Falih said 10 percent of the kingdom's total electricity genera­tion will be from renewable energy by 2023.

Falih noted: "The market re­sponse to the kingdom's invita­tion to its first renewable energy projects has been overwhelmingly positive, demonstrating market confidence in our vast renewable energy potential and investment environment."

The Saudi government must be feeling confident about the level of interest from domestic and inter­national firms in its solar and wind power plans because it has substan­tially raised its target goal for 2023. Last June, when Riyadh unveiled its five-year National Transformation Program as part of Saudi Vision 2030, the program established a renewable energy target of 3.45 GW by 2023, the equivalent of 4 percent of to­tal power consumption. The target of 3.45 GW has since been pushed ahead to 2020 with 10 GW of power generated from renewables expect­ed by 2023.

Falih has said the projects will be financed and operated by pri­vate investors with international financial institutions expected to participate. He stressed that the kingdom's energy sector is being restructured to include an autono­mous board of regulators as well as privatized power generation capac­ity, both part of the move to priva­tize portions of the energy sector, which includes the highly antici­pated initial public offering of up to 5 percent of state oil giant Saudi Aramco.

The government plans to sell off stakes in the partially privatized Saudi Electricity Company's power generation units, with addi­tional restructuring to occur so that transmission and distribution units can operate independently.

In February, the Saudi Energy Ministry announced it had formed a new division to oversee and im­plement the kingdom's renewable energy program, the Renewable Energy Project Development Of­fice, which is led by rep­resentatives from the kingdom's major energy players, including Saudi Aramco, SEC, Electricity and Cogeneration Regulatory Authority and King Abdullah City for Atomic and Renewable Energy.

REPDO's first order of business was to process applications from firms wishing to participate in a 300 MW solar plant in the Al Jawf area in northern Saudi Arabia and the 400 MW wind plant in Tabuk in the northwest. REPDO has announced the list of firms qualified to move forward in the bidding process for the two projects, with those chosen delineated as managing members, technical members or both. The projects are expected to be award­ed in September.

Among the 27 firms shortlisted for the solar project are: France's EDF Energies Nouvelles; Spain's ACCIONA Energia Global S.L.; It­aly's Green Power S.p.A.; Japan's Marubeni Corp. and Mitsui & Co.; and Saudi ACWA Power. Among the 24 firms shortlisted for the kingdom's first wind project are: Abu Dhabi Future Energy Co.; General Electric; Spain's Cobra Instalaciones y Ser­vicios, S.A.; Saudi ACWA Power; Korean Electric Power Corp. and Japan's JGC Corp.

Falih said a second wind power project would be open for bids in the fourth quarter of this year fol­lowed by more solar projects. The Saudi government has suggested that its plans for renewable energy development in the kingdom in­clude exporting electricity as well as technology and equipment, such as solar panels.

It is telling that Saudi Aramco recently signed memorandums of understanding with Abu Dhabi Na­tional Oil Company and MASDAR, which could provide the kingdom with additional renewable energy expertise.

By Jareer Elass, The Arab Weekly

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