| SAUDI POWER SECTOR SETS SIGHTS ON RENEWABLE ENERGY |
Fresh into the New Year, Saudi Arabia has already announced plans to accelerate its renewable energy capacity.
Eng. Khalid bin Abdulaziz Al-Falih, the minister of energy, industry and mineral resources, said during a speech in Abu Dhabi in January that the Renewable Energy Project Development Office will offer at least 12 renewable energy projects this year.
He added that the electricity sector in the kingdom will switch from oil-and-gas-based energy sources to sustainable resources, expanding renewable generation capacity to 40 gigawatts (GW) of solar photovoltaic energy, 16 GW of wind power and 3 gigawatts of concentrated solar power by 2030 through significant investments.
The minister said his office is working closely with the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, to attract international companies to the kingdom to localise and manufacture renewable energy technologies to meet domestic demand, while exporting surplus to international markets.
The industry is aiming to produce more than 200 GW from renewable energy technologies, with 30% of clean energy targets in tenders announced by the Renewable Energy Project Development Office (REPDO), while the remaining 70% will be developed by the PIF and its selected partners
LARGEST WIND FARM
REPDO and the Ministry of Energy, Industry and Mineral Resources have already contracted out the first of these projects. A consortium led by France’s EDF Renewables and Masdar (Abu Dhabi Future Energy Company PJSC), said they had won the tender for the Dumat Al Jandal wind farm, located 560 miles north of Riyadh in the Al Jouf region.
The project will be Saudi Arabia’s first wind farm and the largest in the Middle East, with an installed capacity of 400 megawatts (MW). The consortium had announced in June 2018 that it had submitted the most cost-competitive bid, or USD 21.3 per MWh.
The wind farm will benefit from a 20-year power purchase agreement (PPA) with the Saudi Power Procurement Company, a subsidiary of Saudi Electricity Company, the country’s power generation and distribution company.
The Kingdom of Saudi Arabia has set a clear energy strategy to substantially increase the share of renewables in its total energy mix to 10% by 2023,” said Mohamed Jameel Al Ramahi, chief executive officer of Masdar, which owns 49% of the project, while EDF owns the remainder.
10% by 2023,” said Mohamed Jameel Al Ramahi, chief executive officer
of Masdar, which owns 49% of the project, while EDF owns the
remainder.
Meanwhile, other major Saudi entities are playing a role in expanding the sector. In October, the Saudi Arabian General Investment Authority (SAGIA) and King Abdullah City for Atomic and Renewable Energy (KACARE) signed a memorandum of understanding to attract investments in the country’s atomic and renewable energy sectors.
Dr. Khalid bin Saleh Al-Sultan, chairman of KACARE, said the agreement is "part of the bilateral co-operation with SAGIA to support local content of nuclear and renewable energy, as well as provision of data and information on renewable energy, in the kingdom, exchange of market and data information and information storage rules.
GROWING DEMAND
The flurry of contracts set to be awarded this year is vital as the country’s power consumption has surged 6.6% annually over the past decade, driven by rising income levels, population, urbanisation and economic expansion.
As demand grows unabated, the Arab Petroleum Investment Corporation (APICORP) has recommended utilising the independent power producers (IPP) model to expand capacity.
IPPs have been playing an increasing role in the kingdom’s power-generating sector over the past decade and non-SEC capacity represents around 30% of the country’s total,” APICORP said in a report. “IPPs in the kingdom provided a quick solution to the problem of rising demand, along with several other benefits to the government.
represents around 30% of the country’s total, APICORP said in a report.IPPs in the kingdom provided a quick solution to the problem of rising
demand, along with several other benefits to the government.
The research noted that IPPs can help alleviate fiscal pressure on the Saudi Electricity Corporation, and they are more cost-competitive than government projects, as was evident by the lower cost of bids that were presented in Dumat Al Jandal wind farm project.
Third, IPPs are usually quicker to execute than government power plants, which normally issue EPC tenders. IPP projects allow for governments to identify project or capacity needs, and allow private developers to bid,” APICORP reported.
On average, IPPs take three to four years to develop, compared to government power plants that often have longer lead time.
Integrating renewable energy in the new market structure will also be important. The kingdom announced plans to seek USD 30 to 50 billion in investments by 2023 to help meet the 9.5 GW target for solar and wind energy,” APICORP said.
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