Coverage of the Saudi energy and utilities sectors tends to focus on the forthcoming IPO of Saudi Aramco, but there are a number of other initiatives that are relevant both to regulatory projects and to investment opportunities for foreign and local players.
A key objective of Vision 2030 and the National Transformation Plan is to develop the sector further to include competitive renewable energy that takes advantage of the potential for both solar and wind power. Vision 2030 set a target of generating 9.5 gigawatts of renewable energy together with localisation of the sector, including R&D and manufacturing. In 2017, the King Salman Renewable Energy Initiative was launched, with the aim to generate 10% of the Kingdom’s power from renewables, and the intention to ultimately scale production up to 75 and then 100 gigawatts.
Additionally, in line with the objectives of Vision 2030, the Renewable Energy Project Development Office (“REPDO”) (part of the Ministry of Energy, Industry and Mineral Resources) was established in 2017 to deliver on the goals of the National Renewable Energy Program (“NREP”), and it has been working with other relevant authorities, including King Abdallah City for Atomic and Renewable Energy (“KACARE”), The Electricity and Cogeneration Regulatory Authority, and the Saudi Electricity Company (“SEC”). In August 2019, REPDO announced that it was inviting bids for Round Two of the NREP, which included six projects that amounted to 1.47 gigawatts of solar power and a combined value of SR5.25 billion. Round One of the NREP, launched in 2017, comprised bids for two projects located in the northwest of Saudi Arabia: (i) a 300 megawatt solar facility in Sakaka, Al Jouf, and (ii) the 400 megawatt Dumat Al Jandal wind power plant. Further evidence of the government’s support for the sector is shown by the October 2019 launch of the Saudi Industrial Development Fund’s Mutjadeda programme, which will finance a range of renewable energy projects and manufacturers.
Also launched in 2017, under the authority of KACARE, was the Saudi National Atomic Energy Project (“SNAEP”). The project has four components:
KACARE announced in 2017 that it was seeking bids to provide 2.9 gigawatts of nuclear power from each of South Korea, China, Russia, and Japan, and in 2018, Worley Parsons was awarded a contract to provide consultancy services for SNAEP, including project governance, resource management, project services, training, and compliance.
The Kingdom is a leading country in the water sector, with the largest number of water desalination plants in the world. The Saline Water Conversion Corporation (“SWCC”) was established in 1974 and is responsible for the desalination of seawater for consumption, the production of electric power, and the supply of desalinated water.
The Kingdom plans to privatise 17 of SWCC’s plants to achieve 50% privatisation of the overall desalination market, with investment opportunities arising from the privatisation initiatives as the desalination market diversifies. Since 2017, more than 75 water and sewage projects, with a value exceeding SAR 2 billion, have been signed by the government.
Electricity consumption in the Kingdom is expected to increase by more than 40% across the residential, commercial, and industrial sectors. This increase in demand will be driven in part by the many mega-projects in the Kingdom, such as Neom and the Red Sea project. By 2021, SEC (a joint stock company listed on the Saudi Stock Exchange and owned 74% by the Public Investment Fund and 6.9% by Saudi Aramco) intends to have raised generating capacity to 91,000 megawatts of power, increased the length of its transmission network by 21,500 kilometres, added 162,000 kilometres of distribution lines, and increased its total number of customers to more than 10.8 million.