meed-logo

line1 line2 line3
SIGN IN / REGISTER

Riyadh to sustain power spending

12 March 2024

Latest news on Saudi Arabia’s power sector:

> Neom to start qualification for $2.7bn hydropower scheme
> Saudi power buyer holds Remah and Nairiyah meetings
> Enowa gives extra day for Gayal and Shiqri bidders
> Gayal and Shiqri bidders race to meet deadlines
> Neom extends Duba Energy Park bid deadline
> Data centre activity soars in Saudi Arabia
> US firm wins Al Kahfah solar tracker package
> Saudi-Omani team to set up transformers plant

 

The project pipeline in Saudi Arabia’s power generation sector continues to expand unabated.

The value of projects in execution or about to start construction has increased by 17% to $34bn compared to six months earlier, according to the latest available data from regional projects tracker MEED Projects.

The value of projects in the pre-execution phase similarly increased by 16% to reach $51bn during the same period. New schemes are expected to be announced in the coming 12-18 months, including power generation projects catering to the $500bn Neom development.

Two key factors underpin the ramp-up of both conventional and renewable energy generation capacity in the kingdom, notes a Dubai-based senior executive with an international developer.

“Saudi Arabia intends to become the renewable supplier of choice on the GCC grid,” the executive said, referring to the regional network linking the electricity grids of Bahrain, Kuwait, Oman, Qatar, the UAE and Saudi Arabia.

The second factor is the kingdom's push for industrialisation and urbanisation, including the adoption of electric vehicles and data centres.

“Saudi Arabia has very strong regulations to keep data within its domicile and the digitalisation needed to achieve the kingdom’s modernisation plans needs large data centres and corresponding electricity supply,” she notes.

Overall, Saudi Arabia awarded power generation contracts worth more than $16.1bn in 2023, which is higher than the total value of contracts awarded in the preceding eight years and nearly six times the value of contracts awarded in 2022.

The kingdom’s principal buyer, Saudi Power Procurement Company (SPPC) and its sovereign wealth vehicle, the Public Investment Fund (PIF), awarded the bulk of these contracts.

Shrinking renewables share

The share of renewable energy in the total value of awarded contracts shrunk to 28%, from about 82% in 2022, due to the award last year of the first gas-fired independent power producer (IPP) projects since 2016.

SPPC awarded a consortium comprising Saudi Electricity Company and Saudi utility developer Acwa Power the $3.9bn contract to develop and operate the Qassim 1 and Taiba 1 IPP projects in November 2023. Each combined-cycle gas turbine (CCGT) plant has a capacity of 1,800MW.

A team comprising the local Al Jomaih Energy & Water, France’s EDF and the local Buhur for Investment won the contract to develop the other pair of CCGT-based plants – the Taiba 2 IPP and Qassim 2 IPP schemes, each of which has a capacity of 1,800MW.

SPPC also awarded the contracts for the solar photovoltaic (PV) schemes under the fourth procurement round of the kingdom’s National Renewable Energy Programme (NREP).

A consortium that includes France's EDF Renewables, Abu Dhabi Future Energy Company (Masdar) and the local company Nesma won the contract to develop the 1,100MW Hinakiyah solar IPP project. A consortium led by China's Jinko Power won the contract to develop and maintain the 400MW Tubarjal solar IPP scheme.

The PIF, meanwhile, awarded contracts last year for the development of three solar PV schemes with a total combined capacity of 4.5GW to Acwa Power and its partner Water & Electricity Holding Company (Badeel). The 2GW Al Rass 2, 1.1GW Saad 2 and 1.4GW Al Kahfah solar PV IPPs require a total investment of about $3.4bn.

Unawarded projects

Following the award of these contracts, SPPC started the procurement process for four solar PV schemes with a total combined capacity of 3.7GW under the NREP fifth round, and four new CCGT schemes with a total combined capacity of 7.2GW.

Bids are due on 10 June for the 2GW Al Sadawi, 1GW Al Mas, 400MW Hinakiyah 2 and 300MW Rabigh 2 solar PV IPP schemes.

Bids are also due in late June for the Remah 1 and 2 and Al Nairiyah 1 and 2 gas-fired CCGTs.

As of early March, Neom’s utility subsidiary, Enowa, had received bids for two renewable energy engineering, procurement and construction (EPC) contracts, the 1.2GW Gayal wind farm and 800MW Shiqri solar farm.

Enowa is understood to be preparing a site for two CCGT plants to be built on a fast-track basis at Duba Energy Park. The first phase comprises a transportable gas turbine generator (GTG) with a capacity of 300MW, which is designed to deliver emergency power to Neom.

The second phase is a permanently installed 500MW facility comprising heavy-duty GTGs. Both are considered fast-track projects, with the first phase due for completion in early 2024 and the second phase in early 2025.

The first phase of a multi-gigawatt programme to build renewable energy capacity in Neom using a public-private partnership model is also expected to start soon.

Soaring costs

The raft of new projects coming to the pipeline is exerting pressure, particularly for the CCGT supply chain, experts tell MEED. “On average, the EPC prices have more than doubled since before the Covid-19 pandemic began,” says an executive working for an original equipment manufacturer (OEM).

The average EPC cost per kilowatt for CCGT plants with a capacity of over 1.5GW is understood to have reached approximately $750 a kilowatt in 2023, which is more than twice the average cost in 2019. EPC costs for smaller plants have similarly posted significant increases.

Industry sources say the turbine supply chain problem arises from the decision by some OEMs to reduce capacity over the past few years, driven by a combination of the Covid-19 pandemic and the threat of curtailed demand due to the push to decarbonise electricity systems.

The post-Covid-19 recovery, as well as the resurgence of demand for gas-fired power plants in the Middle East – and even in some countries in Europe – along with the expressed preference by most GCC clients for European-made gas turbines, has resulted in a seller’s market.

A Dubai-based OEM executive told MEED last year that its EU-made turbines are booked for several years, but order deliveries can still be shuffled between customers, so they do not expect major delays in delivering to clients. "It's definitely a seller's market right now for turbines. We have capacity in other regions like China, but customers prefer [turbines made in] EU factories”.

In comparison, the jury is still out on solar PV costs, although historical tariff data indicates a general upward trend between the record-low tariffs seen in 2021 and those submitted last year.

Transmission and distribution

Transmission and distribution (T&D) contracts exceeding a total of $12bn are under execution in Saudi Arabia, with an estimated $22.4bn in the pre-execution phase.

The value of contracts awarded in 2023, which sits at $4bn, exceeded the previous year’s total by 41%. The contract to build a high-voltage, direct current transmission system between Neom’s Oxagon industrial cluster and Yanbu is the largest T&D contract to have been awarded last year.

Volume-wise, 59 T&D contracts were awarded in Saudi Arabia last year compared to 64 in 2022.

Saudi Arabia has been gradually expanding the reach of its grid, both domestically – due to the development of new communities and industries and the growth of renewable energy capacity – as well as internationally.

Projects to link with Egypt and other countries in the GCC, as well as with Iraq and Jordan, are under way, while preliminary studies are ongoing to link the kingdom’s power grid further afield, including to the grids of India and Greece.

Energy storage and nuclear

A new project activity segment within Saudi Arabia’s power sector is emerging. SPPC intends to start the procurement process this year for the 2GW first phase of a project to procure 10GW of battery energy storage system (bess) capacity by 2030.

Bess comprises rechargeable batteries that can store and discharge energy from various sources when needed.

Saudi Arabia plans to locate its bess facilities near demand centres to boost the electricity grid's spinning reserves as more renewable energy is expected to enter its electricity production mix.

The 2GW first phase of the project entails building several plants at different locations, with individual capacities ranging from 50MW to 300MW each. 

Finally, the procurement process is moving – albeit slowly – on the Duwaiheen nuclear power plant, Saudi Arabia’s first large-scale nuclear power project. Bids for the main contract are due in late April, following several deadline extensions since the kingdom invited selected companies to bid for the contract in 2022.

https://image.digitalinsightresearch.in/uploads/NewsArticle/11584212/main2905.gif
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • Public Investment Fund backs Neom

    16 April 2026

    Commentary
    Colin Foreman
    Editor

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Public Investment Fund (PIF) has backed Neom by including it as one of six strategic ecosystems in its newly approved 2026-30 strategy.

    The future of the $500bn gigaproject had been thrown into doubt following the postponement of the 2029 Asian Winter Games at the Trojena mountain resort, the cancellation of construction contracts – such as the $5bn deal with Italian contractor Webuild for dam works at Trojena – and the slowdown of development at The Line, where tunnelling contracts were cancelled and staff left the project.

    The backing comes as Neom’s operational focus appears to be evolving in response to shifting regional dynamics and global economic conditions. For example, on 15 April Neom posted on its official X account about a new Europe-Egypt-Neom-GCC corridor, describing it as a faster route for time-sensitive goods. It said the corridor combines trucking and ferry services to move goods quickly into the Gulf, adding that importers from several European markets are already using it to reach the UAE, Kuwait, Iraq, Oman and beyond.

    Powered by Pan Marine, DFDS and regional RoPax services, the initiative is positioned as a way to add flexibility and resilience to regional supply chains. This emphasis on logistics and immediate trade utility suggests a shift away from the more speculative architectural announcements that characterised Neom’s early years, towards activity more directly tied to current market realities.

    PIF’s broader 2026-30 strategy places heavy emphasis on “delivering competitive domestic ecosystems to connect sectors, unlock the full potential of strategic assets, maximise long-term returns and continue to drive the economic transformation of Saudi Arabia”.

    The inclusion of Neom as a standalone ecosystem within the Vision Portfolio suggests that while the project remains part of the kingdom’s Vision 2030 goals, it will be subject to the fund's focus on working with the private sector.

    That means the long-term success of Neom will increasingly depend on its ability to attract external investment and function as a viable economic hub rather than just a state-funded construction site.

    MEED’s April 2026 report on Saudi Arabia includes:

    > COMMENT: Risk accelerates Saudi spending shift
    > GVT &: ECONOMY: Riyadh navigates a changed landscape
    > BANKING: Testing times for Saudi banks
    > UPSTREAM: Offshore oil and gas projects to dominate Aramco capex in 2026
    > DOWNSTREAM: Saudi downstream projects market enters lean period
    > POWER: Wind power gathers pace in Saudi Arabia
    > WATER: Sharakat plan signals next phase of Saudi water expansion
    > CONSTRUCTION: Saudi construction enters a period of strategic readjustment
    > TRANSPORT: Rail expansion powers Saudi Arabia’s infrastructure push

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16417262/main.jpeg
    Colin Foreman
  • Kuwait gas project worth $3.3bn put on hold

    16 April 2026

     

    State-owned Kuwait Gulf Oil Company’s (KGOC’s) planned tender for the development of an onshore gas plant next to the Al-Zour refinery has been put on hold due to uncertainty created by the US and Israel’s war with Iran, according to industry sources.

    The project budget is estimated to be $3.3bn, and the last meeting with contractors to discuss the project took place in Kuwait on 10 February.

    Previously, it was expected to be tendered in late March, but the tendering process was delayed due to the regional conflict and disruption to shipping through the Strait of Hormuz.

    One source said: “This tender is now effectively on hold while KGOC waits for increased stability in the region before it invites companies to bid for the contract.”

    Under current plans, the plant will have the capacity to process up to 632 million cubic feet a day of gas and 88.9 million barrels a day of condensates from the Dorra offshore field, located in Gulf waters in the Saudi-Kuwait Neutral Zone.

    Ownership of the field is disputed by Iran, which refers to the field as Arash.

    Iran claims the field partially extends into Iranian territory and asserts that Tehran should be a stakeholder in its development.

    It is believed that the Dorra field’s close proximity to Iran will make development difficult due to the current security environment.

    The offshore elements of the project are expected to be especially difficult to protect from attacks from Iran.

    In July last year, MEED reported that KGOC had initiated the project by launching an early engagement process with contractors for the main engineering, procurement and construction tender.

    France-based Technip Energies completed the contract for the front-end engineering and design.

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

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16413221/main.png
    Wil Crisp
  • Iraq pushes to revive oil pipeline through Saudi Arabia

    16 April 2026

    Iraq is pushing to revive an oil pipeline that passes through Saudi Arabia, allowing it to diversify export routes.

    Saheb Bazoun, a spokesman for Iraq’s Oil Ministry, said the pipeline would help to insulate Iraq from any future blockades of the Strait of Hormuz, which has been largely closed since 28 February.

    The original pipeline through Saudi Arabia has not been used for more than 30 years and would need work to be done in order to bring it online.

    It is 1,568km long, extending from the city of Zubair in Iraq to the Saudi port of Yanbu on the Red Sea.

    The pipeline was built in two phases during the 1980s. The first phase stretches between Zubair and Khurais, while the second extends to Yanbu. The pipeline’s operating capacity reached over 1.6 million barrels a day (b/d).

    Following the Gulf War, the pipeline was shut down in August 1990. It has remained out of operation for decades, despite Iraq’s several attempts to restart it.

    The original pipeline project cost over $2.6bn, including storage tanks and loading terminals.

    In the wake of the US and Israel attacking Iran on 28 February, global markets have lost 11 million barrels a day (b/d) of oil supply due to the effective closure of the Strait of Hormuz.

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

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16413290/main.jpg
    Wil Crisp
  • Algeria opens bidding for water treatment plant

    15 April 2026

     

    State-owned Cosider Pipelines, part of Algeria’s public infrastructure group Cosider, has issued a tender for the construction of a demineralisation plant in In Salah in Algeria.

    The contract covers the design, supply, installation, testing and commissioning of a plant with a treatment capacity of 62,000 cubic metres a day (cm/d).

    The tender is open to local and international companies specialising in the design and construction of demineralisation and reverse osmosis desalination plants.

    The bid submission deadline is 26 April.

    The project will be located at In Salah, a key industrial area in southern Algeria, where treated water supply is important for both municipal and industrial use.

    Cosider said that individual bidders must demonstrate that they have completed at least one reverse osmosis demineralisation or desalination plant with a capacity of 20,000 cubic metres a day or more.

    They must also show an average annual turnover of at least AD1bn ($7.7m) for their five best years over the past decade.

    For consortium bids, all partners must share full responsibility for the contract, while the lead company must meet the technical and financial requirements.

    Recent projects

    In 2023, MEED reported that Riyadh-based water utility developer Wetico had won two contracts to develop water desalination plants in Algeria.

    Societe Algerienne de Realisation de Projects Industriels (Sarpi) awarded the contract for the El-Tarf desalination plant, while Entreprise Nationale de Canalisations (Enac) is the client for the Bejaja facility.

    Both plants were commissioned in 2025, each with a production capacity of 300,000 cm/d.

    Separately, Wetico was the main contractor on a third plant commissioned last year. The Cap Dijinet 2 seawater desalination plant in Boumerdes province covers 18 hectares and also has a capacity of 300,000 cm/d.

    Like many countries, Algeria is facing pressure on resources due to longer and more frequent droughts. Seawater desalination is seen as a key driver of the government’s strategy to guarantee drinking water supply.

    According to previous reports, the government is planning to build up to six additional plants by 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16404325/main.jpg
    Mark Dowdall
  • WEBINAR: UAE Projects Market 2026

    15 April 2026

    Webinar: UAE Projects Market 2026
    Tuesday, 28 April 2026 | 11:00 GST  |  Register now

    Agenda:

    • Overview of the UAE projects market landscape
    • 2025 projects market performance
    • Value of work awarded 2026 YTD
    • Impact of the Iran conflict on the projects market and real estate, assessing supply chain disruptions, material cost inflation and war risk premiums
    • Key drivers, challenges and opportunities
    • Size of future pipeline by sector and status
    • Ranking of the top contractors and clients
    • Summary of key current and future projects
    • Short and long-term market outlook
    • Audience Q&A

    Hosted by: Colin Foreman, editor of MEED 

    Colin Foreman is editor and a specialist construction journalist for news and analysis on MEED.com and the MEED Business Review magazine. He has been reporting on the region since 2003, specialising in the construction sector and its impact on the broader economy. He has reported exclusively on a wide range of projects across the region including Dubai Metro, the Burj Khalifa, Jeddah Airport, Doha Metro, Hamad International airport and Yas Island. Before joining MEED, Colin reported on the construction sector in Hong Kong.

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16401868/main.gif
    Colin Foreman