Market Trends of Saudi Arabia Renewable Energy Industry
Solar Energy to Dominate the Market
- Saudi Arabia is naturally endowed with renewable energy sources, particularly solar energy. The country lies in the middle of the "sun belt" and receives an average of 8.9 hr/day of sunshine and an average horizontal solar radiation of 5,600 Wh/m2. The solar irradiation in the country is 250 w/m2, which is above the average irradiation of high-potential solar areas globally of 100-200 w/m2. The country's capital, Riyadh, has an average of 3,230 sunshine hours yearly, which is the condition of the entire landscape. This creates a massive potential for solar power generation.
- Under Vision 2030, more than 35 solar and wind energy farms are expected to be developed in the country by 2030. The Renewable Energy Project Development Office (REPDO) within the Ministry of Energy, established in 2017, is responsible for delivering on the goals of the National Renewable Energy Program (NREP) in line with Vision 2030.
- The government of Saudi Arabia is actively working to scale renewable energy projects, where solar energy technology installation is expected to lead. The NREP plans to develop 40 GW of solar energy by 2030 out of 58.7 GW of renewable energy projects by 2030. Solar energy generation has witnessed an increasing trend in recent years. According to the International Renewable Energy Agency (IRENA), the country's solar energy installed capacity stood at 2,285 MW in 2023, about threefold higher than the previous year.
- The country has been actively developing its renewable energy capacity with many large-scale solar projects. For instance, in February 2024, The Saudi Power Procurement Company (SPPC) disclosed the qualified bidders for the fifth round of 3.7 GW solar projects under the National Renewable Energy Programme (NREP) in Saudi Arabia, including various significant renewables developers. Further, the SPPC announced that EDF Renouvelables, Masdar, Itochu Corporation, Total Energies Renewables, and Saudi Electricity Company were among the companies that won the bid.
- Hence, based on the factors mentioned above, the solar energy segment is expected to dominate the renewable energy market in Saudi Arabia during the forecast period.
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Supportive Government Policies and Incentives Driving the Adoption of Renewable Energy
- To revitalize and diversify the economy and reduce overreliance on fossil fuel exports, the country’s government has decided to invest heavily in its Vision 2030, launched in 2016. Vision 2030 is a comprehensive strategic transformation roadmap consisting of financial, social, and environmental targets set by the Saudi government to invest and develop various nascent sectors, such as tourism and renewable energy, sustainably to improve the financial situation and the quality of life of the average Saudi citizen.
- Following its Vision 2030, the country has created several government-led schemes and plans to achieve its ambitious targets. It aims to reduce centralized control over different industrial sectors by encouraging private investments and fostering open competition in the market.
- To achieve this target, the country plans to install nearly 58.7 GW of renewable energy capacity by 2030. The sector is being developed as per the Kingdom’s ambitious National Renewable Energy Programme (NREP), developed by the Renewable Energy Project Development Office (REPDO), the clean energy arm of the Saudi Ministry of Energy, Industry, and Mineral Resources. REPDO would be responsible for realizing this ambitious target and overseeing the development of 30% of this target through competitive tendering. In comparison, the remaining 70% will be developed by the Saudi Government’s Public Investment Fund (PIF) through direct negotiation with developers.
- According to the International Renewable Energy Agency (IRENA), Saudi Arabia had a total renewable energy installed capacity of 2689 MW in 2023, about a threefold increase from the previous year.
- Such instances provide ample evidence that the Saudi government is working together at an institutional level to encourage the adoption of renewable sources and attract foreign investments in the domestic renewable energy market. The helpful government policies and economic incentives are expected to be one of the most significant factors driving the market during the forecast period.
