meed-logo

line1 line2 line3
SIGN IN / REGISTER

Riyadh rides power projects surge

7 September 2023

This package on Saudi Arabia's power sector also includes: 

> Israeli talks decisive for Saudi nuclear programme
> Jinko outprices other bidders for Tubarjal solar contract
> Synergy wins 7.2GW Saudi advisory role
> Team submits lowest Hinakiyah solar bid
> Saudi offtaker holds Taiba and Qassim bidder meetings
> Saudi Arabia confirms Shuaibah financial close

 

Recent months have been busier than usual for the Saudi power generation sector. Riyadh’s plan to build its first large-scale nuclear power plant has gathered momentum, with the tendering process under way for the project’s main contract.

In May, the Public Investment Fund (PIF) awarded three solar photovoltaic (PV) power plant contracts with a total combined capacity of 4,550MW.

In August, utility developer Acwa Power reached financial close for the Shuaibah 1 and Shuaibah 2 solar PV independent power producer (IPP) projects, which have a total combined capacity of over 2,600MW.

French energy heavyweight TotalEnergies has also reached financial close for the 120MW Wadi al-Dawasir solar scheme, tendered under round three of the kingdom’s National Renewable Energy Programme (NREP).

During the past few months, the state-backed power offtaker, Saudi Power Procurement Company (SPPC), has received proposals and shortlisted two bidders each for the two solar PV contracts under NREP’s round four.

Riyadh has also accelerated the procurement of gas-fired capacity over the past year.

SPPC is simultaneously evaluating bids for four combined-cycle gas turbine (CCGT) plants, the Taiba 1 and 2 and Al-Qassim 1 and 2 IPPs, which have a total combined capacity of 7,200MW.

In addition to the potential award of these four contracts over the next few months, the state offtaker is expected to tender two more gas-fired projects – the PP15 IPP in Riyadh and another power generation plant in Al-Khafji – next year. Each will have a design capacity of 3,600MW.

Overall, close to $30bn-worth of power generation projects are in execution or about to start construction in Saudi Arabia, according to the latest data from MEED Projects. 

At least $44bn are in the pre-execution phase, excluding the kingdom’s $35bn nuclear power plant programme.

Liquid fuel displacement

Given the kingdom’s ambitious plan to boost its renewable energy installed capacity to 58,700MW by 2030, up from about 1,100MW today, the pace of renewable energy contract awards is no surprise.

CCGT projects support the kingdom’s plan to cut down on burning liquid fuels. The Energy Ministry’s liquid fuel displacement programme, launched as part of Saudi Vision 2030, aims to displace 1 million barrels a day of liquid fuels across the utilities, industry and agriculture sectors by 2030.

The latest data from the King Abdullah Petroleum Studies & Research Centre (Kapsarc) shows that liquid fuels, comprising crude oil, heavy fuel oil and diesel, accounted for up to 43 per cent of Saudi Arabia’s fuel mix for power generation and water desalination processes as of 2018.

This translates to about 1,670 trillion BTUs, roughly equivalent to 760,000 barrels a day, of liquid fuels.

Meanwhile, natural gas consumption across the kingdom’s power generation and water desalination sectors is estimated at 2,226 trillion BTUs, or 6 billion cubic feet a day.

Kapsarc research fellow Rami Shabaneh noted in a 2020 report: “Overall fuel consumption saw a significant decline of almost 8 per cent year-on-year in 2018. This was due to increased energy-efficiency regulations and energy price reforms.”

This trend – along with other energy-efficiency measures in the power generation, water desalination, and transmission and distribution network – suggests there has been a decrease in fuel consumption in the intervening years too.

However, much still needs to be done to reach the kingdom’s 2030 liquid fuel displacement target, as well as its energy diversification objectives.

While the massive expansion of gas-fired capacity seems inconsistent with cutting emissions, the significant number of fleets that still burn liquid fuel appears to justify the dual approach to expanding both renewable and gas-fired capacity to meet rising demand and security of supply.

“Plants running on highly efficient CCTG technologies is the way to go,” says an expert who works for an international utility developer.

This approach also dovetails with the kingdom’s goal for 50 per cent natural gas and 50 per cent clean or renewable energy in its energy mix by 2030.

Saudi’s ambition to achieve carbon neutrality by 2060 – 10 years later than typical targets – could also be advantageous in terms of procuring more efficient CCGT plants in the interim.

With the kingdom’s power-purchase agreements (PPAs) generally lasting 25 years, gas-fired IPPs procured this year and next will reach commercial operations by 2027 or 2028. This takes the validity of upcoming PPAs into the early 2050s, still well within the country’s energy transition period.

Different tunes

As things stand, not everyone is convinced of the need for the scale of the new natural gas fleet planned in the kingdom.

“I think they should focus more on renewables,” says a Dubai-based industry expert, who notes the large gap between Saudi Arabia’s current renewable energy installed capacity and 2030 target.

Given that renewable energy accounts for, roughly, just 1 per cent of known power generation installed capacity, 70-fold growth is needed to hit the end-of-the-decade target.

Some international utility developers, with internal carbon-neutrality deadlines of 2050 or before, may not be able to participate in the ongoing CCGT tenders, unless they integrate decarbonisation measures. This could affect the competitiveness of bid prices.

However, Paddy Padmanathan, former CEO of Saudi utility Acwa Power, says the kingdom has room for both technologies.

“I see no reason why a fast or even faster pace of renewable energy procurement cannot run in parallel with CCGT procurement,” he tells MEED.

“[The] Saudi procurement process, PPA risk allocation and certainty of projects moving forward to the timetable set out in the requests for proposals are well recognised and appreciated,” the executive, who is a member of Acwa Power’s board following his retirement as CEO earlier this year, explains.

Padmanathan says there is no shortage of equity and debt funding for these projects. He also cites the kingdom’s “very high” credit rating.

These factors, along with abating supply chain challenges for solar PV modules and the keenness of CCGT original equipment manufacturers for new contracts, mean the kingdom will continue to be an exciting market for power projects well into the next decade, Padmanathan asserts.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11115963/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Oman begins procurement for truck road PPP

    2 July 2026

     

    Oman’s Ministry of Transport, Communications & Information Technology (MTCIT) has tendered a contract for the sultanate’s second public-private partnership (PPP) road scheme.

    The project spans 66 kilometres between Al-Buraimi and Al-Dhahirah governorates, starting at the Al-Khatm border crossing in Mahdah and ending at the Al-Fath area in Dhank.

    Under the scheme, the winning bidder will design, build, finance and transfer the project, which is specially designed for heavy vehicles.

    MTCIT issued the tender on 30 June. The deadline to purchase tender documents is 11 August, and the clarification period will run from 11 to 18 August.

    The bid submission deadline is 30 January 2027.

    In August 2023, Oman shortlisted five of the eight prequalified teams to compete for the Salalah-Thumrait truck road (STTR) project, the sultanate’s first PPP road project.

    The project failed to materialise beyond that point.

    In January, MEED reported that Oman is planning to establish a new commercial railway line to transport essential supplies between Salalah and Thumrait – an initiative understood to have preceded the STTR project. The railway is planned to be implemented as a PPP.

    The scheme comprises the construction of a railway line approximately 150-170km long. Two main stations are planned: Salalah Station, near the port and food storage facilities, and Thumrait Station, which will serve as a distribution hub for the surrounding areas.

    Trains are expected to be equipped with refrigerated and dry containers. The scheme aims to reduce transport costs between the two areas by 20%-30%, and Oman plans to pitch the project to major food companies to secure long-term transport contracts.

    The proposed project timeline is:

    • 2025: Conduct economic, technical and environmental feasibility studies
    • 2026: Launch the project for investment on a PPP basis
    • 2027-30: Construction of the railway line
    • 2031: Trial operations
    • 2032: Full commercial operations

    The project is touted as a key initiative under Oman Vision 2040, which aims to transform the sultanate into a global logistics hub.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17525698/main.jpg
    Yasir Iqbal
  • Acwa signs Mauritania gas IPP agreements

    2 July 2026

    Saudi Arabia’s Acwa has announced it has signed the public-private partnership (PPP) and power-purchase agreements for the 230MW N’diago combined-cycle gas turbine (CCGT) power plant in Nouakchott, Mauritania.

    The agreements cover the development, financing, construction and operation of the project. They were signed in Nouakchott in the presence of senior officials from the Mauritanian government and Acwa chairman Mohammad Abunayyan.

    The project is Mauritania’s first large-scale gas-fired independent power project (IPP). It is also expected to be the country’s first major gas-fired power plant procured through a PPP structure.

    The CCGT plant will provide 230MW of baseload generation capacity. It will use Mauritania’s domestic natural gas resources to supply the national grid.

    Separately, Mauritanian Electricity Company (Somelec) has been advancing procurement for the construction of a 50MW solar power and battery energy storage system IPP project. It issued an expression of interest request in May.  

    Mauritania currently has several wind and solar power projects in the early study stages, according to regional project tracker MEED Projects.

    There are also plans to build a 1,200MW wind power plant near Port Etienne in the Bay Province of Nouadhibou, for which China Energy Engineering was appointed as the main contractor in 2024. 

    Meanwhile, Acwa’s portfolio comprises 111 assets that are operational, under construction or in advanced development. These represent investments of SR468.9bn ($125bn).

    According to the company, it has a power generation capacity of 98GW, including 52.3GW of renewable energy, and manages 9.7 million cubic metres a day of desalinated water globally.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17525605/main.jpg
    Mark Dowdall
  • Saudi water sector awaits next catalyst

    2 July 2026

    Commentary
    Mark Dowdall
    Power & water editor

    Saudi Arabia’s water sector is entering a critical period as developers and investors wait for the next signal that the kingdom’s project pipeline is moving forward.

    Seven months have passed since preferred bidders were announced for the Arana and Hadda independent sewage treatment plant (ISTP) projects, which together will provide 350,000 cubic metres a day (cm/d) of treatment capacity. The projects had been expected to reach financial close in the second quarter of this year, but have yet to do so.

    In parallel, Saudi Arabia’s Vision Invest was selected as preferred bidder last December for the estimated $2bn Riyadh-Qassim independent water transmission pipeline (IWTP) project. It was reported at the time that the company had submitted a levelised tariff of SR2.627 ($0.70) a cubic metre, almost 20% below the next nearest bid. The project, which will comprise an 859-kilometre pipeline with transmission capacity of 685,000 cm/d, had been tipped to reach financial close this quarter.

    The uncertainty extends beyond projects awaiting financial close. The developer tender bid deadline was recently pushed back again for the $150m Riyadh East ISTP. Meanwhile, Saudi Arabia’s Water Transmission Company (WTCO) is understood to be reviewing the delivery model for the Jubail-Buraidah and Ras Mohaisen-Baha-Mecca independent water transmission system (IWTS) projects.

    According to sources familiar with the plans, WTCO is considering establishing a special purpose vehicle that would take equity stakes in both schemes. This could further delay procurement for a project that has already seen multiple deadline extensions. Sharakat’s next wave of independent water projects (IWPs) is also in the pipeline. The first of these is not expected to be tendered until early 2027.

    According to regional project tracker MEED Projects, Saudi Arabia’s water infrastructure sector recorded $3.14bn-worth of awards in the first half of this year, substantially lower than the $7.58bn recorded during the same period in 2025.

    While activity has slowed, the longer-term outlook remains unchanged. Population growth and industrial expansion continue to drive demand for desalination, wastewater treatment and water transmission infrastructure. In the meantime, key stakeholders are looking for the next clear signal that the project pipeline is regaining momentum.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17510220/main.jpg
    Mark Dowdall
  • Contractor wins Jeddah road expansion deal in Riyadh

    2 July 2026

     

    The Royal Commission for Riyadh City (RCRC) has awarded a contract for the Jeddah Road Development Project in Riyadh.

    Local construction firm Saudi Pan Kingdom (Sapac) won the contract.

    Spanning 29 kilometres, the scheme includes 14 bridges and five lanes.

    Designed to handle up to 353,000 vehicles a day, the road is expected to be completed by 2028, with mobilisation works already under way.

    The project forms part of the third package of the RCRC’s Riyadh Main and Ring Road Axes Development Programme, which was announced in January.

    The other schemes include:

    > Taif Road Development Project: The project stretches 15km and includes four bridges, each with four lanes. It also features two tunnels. It will have a capacity of up to 200,000 vehicles a day and will enhance connectivity between Riyadh’s southern and western districts and the city centre.

    > Thumamah Road Development Project: The eastern section of the project will span 8km and include three bridges and three tunnels, linking the northern and eastern parts of Riyadh. The project will have a daily capacity of up to 200,000 vehicles.

    > King Abdulaziz Road Development Project: The northern section of the project stretches 4.7km and will include four bridges, four lanes and one tunnel, with a capacity of up to 450,000 vehicles per day.

    > Othman Bin Affan Road Development Project: The northern section will span 4.3km and include seven bridges and other related upgrades to enhance traffic flow across northern Riyadh. The project will have a daily capacity of up to 500,000 vehicles.

    > Second phase of engineering enhancements for congested areas: This project targets eight locations across the city’s road network, where advanced engineering solutions will be applied to reduce congestion and improve intersection performance, increasing traffic capacity by 40% to 60%.

    The contract for the Jeddah Road Development Project is the latest of several high-profile deals awarded by the RCRC recently. In May, it awarded an estimated SR5bn ($1.3bn) contract to construct the Sheikh Jaber Al-Sabah Road project in Riyadh.

    That contract went to a joint venture of Riyadh-based Al-Rashid Trading & Contracting Company (RTCC) and Turkiye’s IC Ictas.

    Stretching 12km, the project runs from Khurais Road to Al-Thumama Road and is a key component of the Second Eastern Ring Road scheme.

    Works include five interchanges: Prince Bandar, King Abdullah, Imam Abdullah, Dammam Road and Al-Thumama.

    In 2021, Saudi Arabia’s Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud said the population of Riyadh would double to 15-20 million people by 2030. 

    He directed government entities to work closely with the RCRC to prepare the city’s development strategy.

    The RCRC’s major projects include Riyadh Metro, Riyadh Art, Sports Boulevard, King Salman International Park, Green Riyadh and several road development projects in the capital.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17523376/main.jpg
    Yasir Iqbal
  • Dubai announces First Al-Khail road development project

    2 July 2026

    Register for MEED’s 14-day trial access 

    Dubai’s Executive Council has announced the First Al-Khail Street Development project, which will run parallel to Sheikh Zayed Road.

    The scheme comprises a 15-kilometre elevated carriageway with three lanes in each direction.

    According to a Dubai Media Office statement, “The project will provide access to areas including Al-Barsha, Al-Quoz, Business Bay and Meydan.”

    “It is expected to serve more than 2.6 million people and reduce travel time on Sheikh Zayed Road by 51% during peak hours,” the statement added.

    Designed to accommodate more than 9,000 vehicles an hour, construction is expected to begin in the third quarter of 2027, with completion targeted for 2030.

    The development forms part of a wider AED18bn ($5bn) programme covering initiatives related to culture, trade, infrastructure, Emiratisation, finance, investment, urban planning and the city’s population census.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17523587/main.jpg
    Yasir Iqbal