NEW SAUDI WIND FARM RAISES THE RENEWABLES ENERGY BAR

The Dumat Al Jandal wind farm project in Al Jawf province created a new world record when it registered the lowest price for onshore wind power anywhere in the world.

The 400-megawatt (MW) wind farm achieved the lowest levelized cost of energy (LCOE) for onshore wind power, closing at 1.99 US cents per kilowatt hour (kWh).

The utility-scale wind farm project, which was awarded to a consortium led by France’s EDF Renewables and UAE’s Masdar earlier this year, secured the winning bid of 2.13 US cents kWh hour at the time – a record low for the MENA region in onshore wind power projects.

“At the time of financial close, the project had made a 6.5% gain on LCOE, a global record price for onshore wind generated electricity,” according to the Renewable Energy Project Development Office, which oversees Saudi Arabia’s National Renewable Energy Program (NREP).

The USD 500 million project is expected to start in 2022, create 800 jobs in the construction phase, and another 150 in operation and maintenance. It will generate enough power to supply electricity to 70,000 homes and is part of Round 1 of the National Renewable Energy Program.

In August, the Renewable Energy Project Development Office (REPDO) issued a request for proposal for the second round of the NREP initiative.

The six projects being tendered within Round Two represent the first half of REPDO’s 2019 project development pipeline. A further six projects will be tendered by the last quarter of the year and will constitute the third round of the NREP.

Sixty companies – including 28 from Saudi – have been pre-qualified to bid in the second round, which has a combined capacity of around 1.5GW of solar power for a combined value of SAR 5.25 billion.

In a bid to encourage more local participation and collaboration between international and domestic firms, the bids have been structured so that qualified companies will proceed to the RFP stage as either managing member, technical member, or under a newly created category of ‘local managing member’.

“Round Two projects have been divided into two categories: ‘Category A’ for smaller projects and ‘Category B’ for larger projects. ‘Category A’ projects require consortium members to partner with at least one local managing member,” NREP said. “Projects within Round Two will carry a minimum requirement of 17% local content as calculated by the mechanisms defined by the Local Content and Government Procurement Authority (LCGPA), which aims to increase the value-added contribution of products and services in the national economy.

“While looking to reduce the power sector’s reliance on fossil fuels, Vision 2030 also sees the move into renewable energy as a driving force for developing domestic industrial capacity,” according to the Oxford Business Group.

“The plan has identified growth opportunities in the localisation of the renewable energy value chain, particularly in the research, development and manufacturing segments of the sector.”

Supporting efforts to expand components production is the ready availability of raw and semi-processed materials such as silica and petrochemicals that can be used in the manufacture of solar cells and polymers for wind turbine components, the research firm noted.

The NREP has a target to raise the share of renewable energy in the kingdom’s total energy mix, to 27.3 gigawatts (GW) by 2024 and 58.7 GW by 2030.

In September, the Saudi Ministry of Energy appointed Faisal Abdullah Al-Yemni, a 15-year veteran of the energy industry, as head of REPDO.

‘Al-Yemni will be responsible for driving the delivery of Saudi Arabia’s ambitious National Renewable Energy Program, with the aim of increasing the kingdom’s renewable energy capacity to meet domestic needs while also creating a world-leading exporter and regional hub of renewable technology and manufacturing,” REPDO noted.

Major Saudi companies, including International Company For Water And Power Projects, or ACWA Power, in which Saudi Public Investment Fund has a 15.2% stake, is looking to focus more on renewable energy projects, lifting their share of its portfolio to 70% over the next decade.

The current value of the Saudi Arabian utility developer’s portfolio is more than USD 42 billion, with renewables accounting for 23%.

“By 2030, we expect to see 70% of renewables in our portfolio in terms of capital employed,” Paddy Padmanthan told Reuters. “We expect to see, in any given year, 60% of new investments in renewables.”