Saudi Arabia accelerates the development of renewable energy sources, benefits from wind

Saudi Arabia is taking significant steps to fully realize its renewable energy potential as the oil producer plans to triple its renewable energy capacity by 2030 and achieve net-zero emissions targets by 2060. And while the kingdom’s solar energy potential is widely known, due to the fact that very large projects began last year and more are expected in the coming decade, it is also currently accelerating plans to use the equally promising potential of wind energy.

Last week, Saudi Arabia achieved a significant milestone by signing power purchase agreements (PPAs) for two onshore wind projects with a total capacity of 1.1 gigawatts with Japanese company Marubeni, achieving a new historically low global levelized cost of electricity (LCE) for energy wind .

The Kingdom has set very ambitious plans to diversify its energy mix. It wants to rely on 50% renewable energy sources and 50% natural gas for its electricity generation by 2030 as it seeks to eliminate the burning of liquid fuels such as crude oil and diesel in its power plants. To achieve this goal, Saudi Arabia also increased its renewable energy capacity target, initially set at 59 GW, to 130 GW by 2030.

Unlocking the potential of the wind

Saudi Arabia is blessed with plenty of solar energy, but unlike neighboring United Arab Emirates, the kingdom also has rich wind energy potential that it plans to unlock. “The windiest regions in the kingdom are the north-east and north-west,” Amro el-Shurafa, director of utilities and renewable energy at the Petroleum Studies and Research Center, told Energy Intelligence. King Abdullah in Riyad, adding that – because they are “the most resourceful in terms of wind energy equipment” – wind projects are likely to be located there.

Last week at the Saudi-Japan Vision 2030 business forum, state-owned Saudi Power Procurement Co. (SPPC) and the Marubeni-led consortium have signed two PPAs for two onshore wind projects: the 600-megawatt Al-Ghal project in Riyad and the 500 MW Waad Al-Shamal project located on the northern border of Saudi Arabia. Both projects achieved new record low costs globally, with LCE of $1.57 per kilowatt hour for Al-Ghal and $1.70 per kWh for Waad Al-Shamal.

Saudi Arabia has been producing wind energy since 2022, when it connected the 400 MW Dumat al Jandal wind farm, operated by Masdar and EDF Renewables from the United Arab Emirates, to the grid. The Kingdom is also planning 1.6 GW of onshore wind power and 2.2 GW of solar power in the ongoing Neom Green Hydrogen project.

20 GW per year?

With Saudi Arabia currently planning to install 130 GW of renewable energy by 2030, Saudi Energy Minister Abdelaziz bin Salman told an industry event earlier this year that the kingdom would tender for projects of 20 GW per year between 2024 and 2030 to meet requirements of these goals.

And while some in the industry may question the feasibility of such a large-scale program in such a short time, some also believe that the kingdom’s advantage in pushing policy and its “bottom-up” approach to decision-making – involving both the public and the private sector and encouraging it to continue projects – will help Saudi Arabia achieve its goals or at least make the necessary progress.

Saudi Arabia’s total renewable capacity reached an estimated 2.84 GW earlier this year, up from just 700 MW in 2022. The kingdom is expected to add at least 1.5 GW of renewable capacity to the grid this year, with another 4.7 GW in the future in 2025, with further projects under construction.

The tenders are being floated under Saudi Arabia’s National Renewable Energy Program (NREP), which was launched in 2017 to maximize the kingdom’s renewable energy potential and increase renewable energy efficiency to 50% as part of Vision 2030. The NREP is implementing two engagement programs both society and the private sector. Most of the added renewable capacity falls on the state-owned Public Investment Fund, which must secure 70% of the total target capacity. The remaining 30% was awarded to SPPC through public tenders in order to attract more investment from the private sector.

So far, SPPC has awarded over 12.6 GW of renewable capacity in four rounds of tenders announced between 2017 and 2021, and at the beginning of this year, the fifth round began, covering four photovoltaic investments with a total capacity of 3.7 GW. Pre-qualified companies include Masdar, French major TotalEnergys, EDF Renewables, Marubeni, China’s Jinko Solar and Korea Electric Power.

This ambitious program has prompted the kingdom to accelerate the construction of renewable energy capacity and continue implementing projects. Now the question will be whether these efforts will be enough to achieve the goals on time.