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Saudi Arabia accelerates power transformation

11 September 2025

 

It has been a busy year for Saudi Arabia’s power sector, which has recorded a steady flow of project activity in 2025, with contracts worth almost $16bn awarded to date.

While the total is below the record levels of 2023 and 2024, the market is progressing forward with more bid evaluations and tenders under way. 

By September, $15.9bn of contracts had been awarded across oil and gas, solar, wind, cable and substation projects. A further $10.4bn of developments are in bid evaluation and expected to be awarded in the near to medium term. More than $162bn of projects are also out to tender, dominated by nuclear and solar developments.

SEC investment

The outlook for the sector was reinforced on 8 September when Saudi Electricity Company (SEC) outlined plans to invest SR220bn ($58.7bn) in power projects between 2025 and 2030. 

The programme, presented at the Future Projects Forum in Riyadh, includes SR135bn ($36bn) and SR85bn ($22.7bn) for transmission and distribution, respectively, and is part of long-term plans to meet growing electricity demand while improving grid efficiency and reliability.

Reflecting the scale of the investment, SEC said its planned upgrades will cover 130 high-voltage substations, 135,000 MVA of capacity, 12,900 kilometres of overhead transmission lines and 1,100km of underground cables.

Renewables push

At the same time, the year’s biggest contract awards point clearly to positive momentum for renewables. In June, Acwa Power, Public Investment Fund (PIF)-owned Badeel and Saudi Aramco Power Company (Sapco) signed power purchase agreements worth $8.3bn with Saudi Power Procurement Company (SPPC). 

The deals cover five solar photovoltaic (PV) plants totalling 12,000MW and two wind farms with a combined capacity of 3,000MW, together adding 15,000MW under the National Renewable Energy Programme (NREP). 

Furthermore, the PIF is planning second- and third-phase extensions to five existing utility-scale solar plants. The independent power plant (IPP) projects will have a total capacity of 9GW. It is unclear when the PIF will award the five schemes, but official documents have stated the negotiation process for the directly-awarded concessions should start this year.

In parallel, SPPC is moving ahead with a 700MW wind IPP project at Yanbu, valued at $1bn. A consortium led by Japanese utility developer and investor Marubeni Corporation recently awarded the main engineering, procurement and construction (EPC) contract to Chinese contractor Sepco 3.

The project, situated in Medina Province, is the third such project tendered under the fourth round of Saudi Arabia’s NREP.

Data breakdown

A breakdown of contract data for the year confirms the shifting balance of investment. Solar power accounts for the largest share of contracts awarded so far this year, at $6.6bn, reflecting the government’s push to expand renewable generation capacity. Wind power follows with $3.9bn, underlining the emergence of utility-scale wind farms.

Transmission and distribution also remain a core focus. Substation and control centre projects account for $3.8bn of the total, while overhead cable schemes add a further $2.2bn. These projects align with SEC’s wider transmission and distribution investment programme, which is set to transform grid capacity over the rest of the decade.

By contrast, oil- and gas-fired power plants represent only $595m of contracts so far this year. However, it is worth noting that a significant number of these projects are already under way following more than $22bn-worth of contracts in 2024.

Additionally, in August, a consortium of Kepco, SEC and Acwa Power achieved financial close for the 3,600MW Rumah 1 and Nairyah 1 IPP projects. Together, the schemes represent a total investment of about $4bn, with SPPC acting as the principal buyer responsible for tendering and power offtake.

The PIF has ramped up investment plans this year, emerging as the dominant owner by value, despite owning relatively few projects. It secured $8.3bn across seven projects, a sharp rise from $3.2bn in 2024. 

SEC continues to have the highest volume with 62 projects worth $5.8bn, led by two standalone developments at Dawadmi and Riyadh, each 500MW/2000MWh and worth about $600m.

This also signals a growing emphasis on large-scale battery energy storage, with the local Alfanar Company awarded the contract from SEC’s subsidiary National Grid Saudi Arabia for five battery energy storage system facilities. These will have a total combined installed capacity of up to 2,500MW, equivalent to about 10,000 megawatt-hours (MWh).

The PIF and SEC dominate procurement activity, while other entities have also played a key role in 2025. Saudi Aramco is planning an estimated $500m second expansion phase of the Jafurah independent steam and power plant project. South Korea-based Doosan Enerbility will develop the project, while Kepco was awarded the main EPC contract, with no bidding involved. Both firms continue to be involved in the first phase, with construction works set to be completed next year.

The data points to a dual trend in the market. SEC continues to oversee the bulk of grid operations and delivery, while PIF is taking the lead on strategic, high-value investments. This division of roles reflects the kingdom’s wider strategy to modernise its power infrastructure while accelerating the energy transition.

MEED’s October 2025 special report on Saudi Arabia also includes:

> ECONOMY: Riyadh looks to adjust investment approach
> BANKING: New funding sources solve Saudi liquidity challenge
> GAS: Saudi Arabia and Kuwait accelerate Dorra gas field development
> CONSTRUCTION: Saudi construction pivots from gigaprojects to events
> TRANSPORT: Infrastructure takes centre stage in Saudi strategy

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Mark Dowdall

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