Saudi Arabia earmarks millions of riyals for renewables

The latest details of Saudi Arabia’s diversification roadmap reveal that millions of riyals have been earmarked for renewable energy initiatives over the next four years that will help to create thousands of jobs and open up the industry to private sector participation.

The kingdom has approved a 268 billion-Saudi riyal (Dh262.46bn) National Transformation Plan for 2020, which includes hundreds of initiatives scheduled for launch this year and aimed at the diversification of the country’s oil-dependent economy, as part of its overall Vision 2030.

A big focus will be on incorporating alternative forms of energy such as solar, wind and nuclear power.

The kingdom will develop 3.45 gigawatts – enough to power millions of homes – of renewable energy capacity, including wind and solar, while also targeting potential sites for a nuclear power plant. At present, it has negligible renewable energy capacity.

As part of the transformation plan, Saudi Arabia will earmark 5.17 million riyals for initiatives by the King Abdullah City for Atomic and Renewable Energy (Ka-Care) to expand renewable energy and nuclear capabilities.

By meeting its renewables target the kingdom will create more than 7,000 jobs, according to the transformation plan.

This is an incremental step towards the overall Vision 2030 plan, which will involve 9.5GW of renewable energy being added.

Groundwork is already being laid, with the country’s utility provider, Saudi Electricity Company, currently accepting expressions of interest for the development of two solar photovoltaic (PV) independent power plants totalling up to 50 megawatts of capacity each.

There is a push to get the private sector more involved – also part of the kingdom’s strategy – and industry players are gearing up.

Abdul Latif Jameel (ALJ), a local company, is hoping to bring its international expertise back home. With its acquisition of the Spanish company Fotowatio Renewable Ventures (FRV) a year ago, the firm has positioned itself to “become a major player in the Saudi market”, Roberto De Diego Arozamena, the chief executive of ALJ Energy and Environmental Services, told The National.

The company currently has 4.3GW of solar energy projects in the pipeline, which is enough power to supply about 2 million homes. ALJ is also in the running for major solar projects in the UAE.

“We vow our full support for Saudi Arabia’s Vision 2030 and are waiting in anticipation for the government’s next steps and direction for the renewable energy market,” he said.

But there has been scepticism on the sidelines about Saudi Arabia’s renewable energy ambitions given its less-than-successful establishment of Ka-Care in 2010. The programme had an original target of 41GW of solar energy and 17GW of nuclear to total about 50 per cent of the country’s power-generation mix for 2032, which was pushed back by eight years.

However, Ka-Care’s renewable energy plan was intended as a scenario rather than an official target, according to a GCC market analysis by the Abu Dhabi-based International Renewable Energy Agency.

Ahmed Nada, US photovoltaic manufacturer First Solar’s vice president and regional executive for the Middle East, said the latest announcement for renewable energy was different.

“What differentiates this from previous initiatives announced by the country is that Vision 2030 is the highest level commitment to renewable energy ever seen from the kingdom,” he said. “The ‘initial’ target suggests that the country will grow its renewable energy capacity in increments, taking advantage of future cost declines and efficiency improvements, while also leaving the door open for emerging technologies.”

Mr Nada said that by placing an emphasis on public-private partnerships to help increase private sector participation, “Saudi Arabia effectively signals that it is open for business”.

Read the full National Transformation Program here.

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LeAnne Graves

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