NEW PROJECTS UNDERSCORE SAUDI’S GREEN ENERGY TRANSITION GOALS
The Saudi Power Procurement Company (SPPC) is developing five floating new projects to produce electricity powered by renewable energy, an initiative that supports the fourth phase of the kingdom’s National Renewable Energy Program under the supervision of the Ministry of Energy.
With a total capacity of 3,300 megawatts (MW), the projects comprise three wind energy stations and two solar power plants. The wind energy stations would generate a total of 1,800 MW of electricity, and will be located in Yanbu (700 MW), Al-Ghat (600 MW), and Waad Al-Shamal (500 MW). Meanwhile, the solar power plants will be based in Al-Henakiyah (1,100 MW capacity), and Tubarjal (400 MW).
“Floating these projects is part of the National Renewable Energy Program as part of the Kingdom of Saudi Arabia’s targets to reach the best energy mix to produce electricity in Saudi Arabia from renewable energy resources, and using gas with 50% for each of them and replacing the fuel used to produce electricity by 2030, in a bid to realise goals of the Saudi Vision 2030,” according to the company.
The National Renewable Energy Program (NREP) envisions an initial target of generating 9.5 gigawatts (GW) from renewable energy projects up to 2023. To ensure steady demand for the projects, NREP has pledged to be the principal buyer and will be the counterpart of all power purchase agreements of renewable energy power projects. Total electricity demand in the kingdom is expected to reach 365.4 terawatt hours (TWh) by 2030, from 299.2 TWh in 2018, according to a report by Riyadh-based King Abdullah Petroleum Studies and Research Centre. Saudi Arabia had an installed solar capacity of 518 MW by the end of 2021.
Fitch Solutions expects Saudi Arabia's solar power capacity to rise by around 5.1 GW between 2022 and 2031 as the kingdom accelerates its long-term power sector plans.
"We note upside risk to our solar power forecasts in the burgeoning green hydrogen industry, which will place upward pressure on renewable electricity supplies and drive further investment in solar power over the coming years,” Fitch noted.
CARBON MARKETS
The Public Investment Fund (PIF) launched the Regional Voluntary Carbon Market Company (VCM), acquiring an 80% stake, while Saudi Tadawul Group Holding Company owns the remaining equity.
The sovereign wealth fund will offer guidance and resourcing to support businesses and industry in the region as they join the global campaign to meet net zero. The VCM will be headquartered in Riyadh and it comes on the heels of PIF’s USD 3 billion inaugural green bond.
The newly launched company has already overseen the development of the world’s largest carbon credit auction in October.
“The inaugural auction represents the first step towards becoming a leading presence in the global voluntary carbon market ecosystem. With an expected one million tonnes of carbon credits available to trade, we predict that our auction will be the largest carbon credit auction to date,” said Riham ElGizy, director of VCM Initiative.
In October, PIF announced the successful auction of 1.4 million tonnes of carbon credits, in the largest-ever carbon credit sale held on the first day of the 6th Edition of the Future Investment Initiative in Riyadh.
As many as 15 Saudi and regional entities took part in the auction, including Aramco, Olayan Financing Company, and Saudi Arabian Mining Company (Ma'aden), which purchased the largest number of carbon credits.
Other successful bidders at the auction were Abdul Latif Jameel, ACWA POWER Company, ENOWA (a subsidiary of NEOM), Golf Saudi, Gulf International Bank, International Islamic Trade Finance Corporation, Saudi Basic Industries Corporation, and Saudi Motorsport Company.
“The auction offered high-quality CORSIA-compliant and Verra-registered carbon credits to support businesses operating in a diverse range of industries in the region as they play their part in the global transition to net zero, ensuring that carbon credit purchases go above and beyond meaningful emission reductions in value chains,” according to the Saudi Press Agency. “The auction will play an important role in PIF’s wider efforts to drive investment and innovation required to address the impact of climate change and support Saudi Arabia’s efforts to achieve net zero by 2060.
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