SAUDI SCALES UP ITS GREEN POWER AMBITIONS
Saudi Arabia has set ambitious targets to reduce its carbon footprint and introduce more green power in its growing energy grid.
The kingdom is aiming to source 50% of its electricity output through renewable energy by 2030, according to Dr. Khalid bin Saleh Al-Sultan, chairman of King Abdullah City for Atomic and Renewable Energy (KACARE).
“The Kingdom of Saudi Arabia began planning to stimulate the private sector and interested investors in this field to invest in the renewable energy sector in addition to the Kingdom's commitment to creating a local competitive market for renewable energy with a clear methodology to ensure the competitiveness of renewable energy, in line with the kingdom's Vision 2030,” according to the chairman.
To accelerate the developments, the National Renewable Energy Program (NREP) has set up a portal for domestic businesses to showcase their products and services to international developers participating in the NREP.
“The portal offers domestic suppliers access to a multi-billion-dollar renewable energy investment programme that aims to increase the share of renewable energy in the kingdom energy mix,” according to a web portal developed by NREP.
The portal offers international companies direct access to the on-ground expertise necessary to comply with the local content requirements of the NREP. Registered local companies are searchable by company size, region, product, service or technology.
The Arab Petroleum Investment Corporation estimates NREP has projects valued at USD 6 billion.
As the coronavirus disrupted plans, the country’s Ministry of Energy has extended the RFP timeframe for Round 3 of the NREP, in light of business and travel restrictions. Round 3 is comprised of four solar PV projects with a combined generation capacity of 1,200 MW.
INVESTING IN CLEAN ENERGY
Saudi Arabia has either committed or is planning to invest in power projects to the tune of USD 40 billion over the next three years, APICORP said in a new report.
“The kingdom targets a staggering 27.3 GW of renewable energy capacity by 2024, 30% of which will come from REPDO projects and the remaining 70% from Public Investment Fund (PIF) projects. The PIF projects are awarded on a direct basis to fast-track localisation, foster technology transfer to the kingdom and hasten project delivery,” APICORP noted.
The kingdom is also looking to get a head start in new energy sources as it diversifies its revenue streams. The country is especially eyeing the nascent hydrogen market, expected to be a USD 700 billion industry, according to Bloomberg New Energy Finance.
In a landmark development last June, Air Products announced a USD 5 billion joint green hydrogen project with ACWA Power in the futuristic Saudi city of NEOM powered by 4GW of renewable energy. The plant will use solar and wind power to produce hydrogen from water then mix it with nitrogen from the air to produce 1.2 million tonnes per annum of ammonia as a carrier for green hydrogen.
Air Products also plans to invest USD 2 billion in distribution infrastructure, including depots to turn the ammonia back into hydrogen for buses, trucks and cars. The project is expected to start operating by 2025.
SEC RESTRUCTURING
In order to accelerate the kingdom’s power infrastructure upgrade, the government stepped in to restructure some of Saudi Electricity Co.’s (SEC) liabilities and place it on a solid financial footing.
In November, SEC secured approval to convert government liabilities into a perpetual deeply subordinated equity-like financial instrument. The conversion is considered non-dilutive and will have no impact on the company’s existing shareholders’ stakes.
“The reforms will help the sector and SEC overcome several financial and structural challenges faced in the past, and will ultimately improve the quality of service to consumers and enhance the sector’s reliability and its ability to provide electricity transmission and distribution grids in order to further boost electricity generation efficiency levels,” said Dr. Khaled bin Saleh Al Sultan, chairman of SEC.
“The recently approved reforms will also help the kingdom achieve an optimal energy mix for electricity generation, which is in line with the goals of Vision 2030.”
The chairman added that the relief from liabilities will allow the SEC to fulfil its obligations and fund projects that will help develop “a stronger, more sustainable, and diverse electricity sector.”
The restructuring is timely, as the SEC is going to play a critical role in helping the kingdom achieve its target of developing its renewable energy sources, bring more electricity efficiency and meet rising demand from residential, commercial and industrial sectors.
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