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February 27, 2019

Riyadh sets out its stall as a global renewables hub

To reduce dependence on hydrocarbons for power production, the aim is for renewables, supported by nuclear power, to meet the future demand for power.

By MEED   

The launch of Saudi Arabia’s new renewable energy targets has received a mixed reaction from international experts.

While Saudi Arabia’s new 58.7GW clean energy target for 2030 outstrips anything else planned in the Middle East, it also creates a feeling of deja vu. In 2013, the kingdom launched a 54 GW renewables programme that was subsequently dropped before a single project was executed.

“When talking about such large targets, we have to be realistic that this may not be reached, particularly after what happened last time,” according to a source with an international developer interested in the programme.

“However, the situation is different now. Projects are moving forward and there seems to be a better understanding of what is required and how it will be done.”

Saudi renewable energy: Fuel diversification

The ambitious renewable energy goals are part of the kingdom’s drive to diversify fuel resources away from a heavy reliance on oil for power production.

The volatility in oil prices over the past four years has strengthened resolve to maximise revenues from selling oil on the export market rather than providing it at a subsidised rate to power producers.

It is estimated that the kingdom currently burns about 800,000 barrels of oil a day for domestic power generation.

Riyadh is also aware its finite gas resources can be diverted for higher-value use in the petrochemicals sector. To reduce dependence on hydrocarbons for power production, the aim is for renewables, supported by nuclear power, to meet the future demand for power.

New renewables targets

After the failure of its previous large-scale renewables programme under the King Abdullah City for Atomic & Renewable Energy, in 2016 the government established the Renewable Energy Project Development Office (Repdo), an office within the Ministry of Energy, Industry & Mineral Resources, to deliver the 9.5GW clean energy target set out in Vision 2030.

While the new 58.7GW target is a significant increase on the previous target of 9.5GW, 70 per cent of the new capacity will be developed by the Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, with Repdo overseeing the remaining 30 per cent.

It is understood that the new 2030 target will involve the development of 40GW of photovoltaic (PV) solar capacity, 16GW of wind capacity and 2.7GW of concentrated solar power (CSP) capacity.

The revised five-year target of 27.3GW will involve the development of 20GW of PV capacity, 7GW of wind capacity and 300MW of CSP. The total capacity will be installed at 35 different parks across the kingdom.

While the Repdo projects will be developed on an independent power producer (IPP) basis through competitive tendering, the PIF capacity is expected to be developed through direct negotiations with an international partner, according to documents seen by MEED.

A key facet of the proposed PIF capacity is that the equipment is set to come from local manufacturing facilities that will be established in line with Vision 2030.

Making progress

Following the announcement of the new renewables target, Repdo awarded the contract for its first wind power project under the National Renewable Energy Programme (NREP). A consortium led by France’s EDF and the United Arab Emirate’s Masdar was appointed to develop the 400MW Dumat al-Jandal wind project.

The contract award completed the 700MW first round of the NREP, which had earlier involved the award of a contract to a consortium led by the local Acwa Power to develop the 300MW Sakaka PV project.

“Awarding the contracts and breaking ground on the projects sends the message that Saudi Arabia is serious [about renewables] this time,” says a consultant who had worked on the initial projects.

In 2019, Repdo is planning to tender 12 solar projects with a total capacity of 2,225MW and a wind project with a capacity of 850MW. Developers were invited to submit expressions of interest by 14 February for the first batch of projects – seven PV solar projects that will have a total capacity of 1.151GW.

While some within the region’s power sector regard the kingdom’s new renewable energy targets as unrealistic, there is also optimism that the programme offers an opportunity for the Middle East to build a sustainable renewable energy supply chain supported by local manufacturing.

Riyadh needs to ensure its first two renewables projects provide a platform for the region’s exciting clean energy programme to succeed.

MEED
This article is sourced from Power Technology sister publication www.meed.com, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme. https://www.meed.com/registration/

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