Saudis accelerate plans for renewable energy
Washington - 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 (MW) 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 north-west.
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 (GW) 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% 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 5-year National Transformation Programme as part of Saudi Vision 2030, the programme established a renewable energy target of 3.45 GW by 2023, the equivalent of 4% 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 privatised power generation capacity, both part of the move to privatise portions of the energy sector, which includes the highly anticipated initial public offering of up to 5% of state oil giant Saudi Aramco.
The government plans to sell off stakes in the partially privatised Saudi Electricity Company’s (SEC) 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 programme, the Renewable Energy Project Development Office (REPDO), 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 north-west. 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 Corporation and Mitsui & Company; and Saudi ACWA Power. Among the 24 firms shortlisted for the kingdom’s first wind project are: Abu Dhabi Future Energy Company (MASDAR); General Electric; Spain’s Cobra Instalaciones y Servicios, S.A.; Saudi ACWA Power; Korean Electric Power Corporation; and Japan’s JGC Corporation.
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.