meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi Arabia reinvigorates power sector

7 March 2023

 

Recent developments indicate that Saudi Arabia is more determined than ever to continue pursuing a multi-pronged energy diversification approach.

Between December 2022 and early March, the kingdom received bids for the contract to build its first nuclear power plant project; issued the tender for the development of 7,200MW of combined-cycle gas turbine (CCGT) independent power producer (IPP) schemes; and appointed a consultant to assess three solar parks with a potential capacity of 30GW.

The rush of new projects contrasts with the sector’s lacklustre performance in 2016-21, when the cumulative value of contracts awarded totalled a mere $5.5bn, reaching a record low of $55m in 2017.

The new-found momentum began last year, with $8.1bn-worth of contracts awarded, the highest over the 10-year period starting in 2013.

Last year’s contract awards include the estimated $4bn contract for the renewable energy and battery storage facility catering to the Neom green hydrogen project. Contracts for the 1.2GW third round of the kingdom’s National Renewable Energy Programme (NREP) and the Public Investment Fund's (PIF) 2.06GW Shuaibah 2 solar photovoltaic (PV) project were also awarded.

This has taken the overall capacity of solar projects under construction in Saudi Arabia to roughly 6,230MW, excluding the captive facility catering to the Neom green hydrogen project – a remarkable feat given that the kingdom has significantly lagged behind its renewable energy targets.  

As of last year, the kingdom only has an estimated 842MW of renewable energy installed capacity, mainly from the 300MW Sakaka solar PV facility and 400MW Dumat al-Jandal wind farm.

This equates to just 3 per cent of its initial national goal to install 27.3GW of renewable energy capacity by 2024 and 1.4 per cent of its 2030 goal of 58.7GW.

The impact of the Covid-19 pandemic and war in Ukraine has affected the delivery of most of the projects, according to a Saudi-based expert, due to disrupted supply chains and global inflation.

“The Covid-19 pandemic affected projects not just in Saudi Arabia, but everywhere in the world,” he says.

Other experts insist that the kingdom needs to make an unprecedented adjustment to meet its ambitious 2030 target.

In response, state offtaker Saudi Power Procurement Company (SPPC) launched the procurement process last year for NREP’s fourth round. 

Phase four comprises two solar PV IPP schemes with a total combined capacity of 1.5GW and three wind IPPs with a total combined capacity of 1.8GW. Bids for these contracts are due by April and May this year, respectively.

In early March, Germany-based ILF Consulting Engineers (ICE) also announced that it had been selected to undertake the pre-development studies for three solar PV parks in Saudi Arabia with a potential combined capacity of 30GW, the largest of its kind ever planned in the region, if not globally.

The locations and procurement timeline for the projects have not yet been announced, but the tendering process will most likely commence once the initial studies are complete, according to a source familiar with the projects.

Going nuclear

Saudi Arabia’s Finance Ministry’s disclosure that it received bids in late December last year for the contract to build the kingdom’s first nuclear power plant has also significantly raised the power generation sector’s momentum.

The entire project’s budget of roughly $33.5bn, as estimated by MEED Projects, accounts for over a third of the total value of planned and unawarded power generation projects across the kingdom.

The potential award of the nuclear power project – the initial phase of which is understood to be 2.8GW – is not expected to slow down the pace of contract awards for other power generation assets.

As previously stated, the kingdom’s energy diversification programme expects clean and renewable energy to account for half – up from roughly 1 per cent today – of its electricity production mix by 2030.

The long lead time to construct and develop a nuclear power plant could also mean the first reactor is not likely to be ready by the end of the decade.

While the kingdom has not disclosed the list of companies bidding for the project, there is mounting speculation that at least three companies, including Russia’s Rosatom, China National Nuclear Corporation and South Korea’s Kepco, may have submitted a proposal to develop the facility.

RELATED READ: Saudi nuclear move has geopolitical significance

Unlike the solar and wind energy projects, the results of the nuclear energy bids are expected to be announced only by the highest level of leadership within the kingdom due to the strategic and geopolitical importance of nuclear power.

Ramping up gas

In January, SPPC retendered contracts to develop its next gas-fired IPP projects. Initially comprising two projects, each with a capacity of 3.6GW, the Taiba and Al-Qassim IPPs were each split into two 1.8GW schemes, with bids for the four contracts due by mid-2023.

These are the first gas-fired power generation plants to be procured since 2016, when Saudi Arabia awarded the 1,500MW Fadhili IPP to a consortium led by France’s Engie.

Before the retender, SPPC received only a single bid for the 3.6GW Taiba IPP. Wary of net-zero carbon emission targets, many international utility developers declined to bid for the package citing insufficient decarbonisation provisions.

Despite this setback, SPPC sought consultants last year for the transaction advisory contract for its next round of CCGT projects, which will be developed using a build-own-operate model.

The two projects, to be located in Riyadh and Al-Khafji, will each have a design capacity of 3,600MW.

“It is a moving target,” a senior official with a utility developer said about the kingdom’s energy diversification goal.

Various official sources suggest that the country’s current installed power generation capacity stands at 80-90GW, with little to no publicly available figures in terms of the capacity forecast by 2030.

The original target to install 57.8GW of renewable energy capacity by the end of the decade vis-à-vis a goal for renewable energy to account for 50 per cent of the total implies that the 2030 figure could be around 110-120GW.

Keeping this in mind, and the need to retire ageing fossil fuel-fired fleets during the intervening period, appears to justify the need for the kingdom to build more gas-fired power plants while pursuing significant renewable and nuclear capacity.

In terms of attracting more bidders for its current and future CCGT schemes, much will depend on how SPPC and the Energy Ministry address developers’ concerns regarding measures to minimise carbon footprint at the same time as ensuring the assets’ long-term economic feasibility.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10654009/main.gif
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • Sharjah developer launches Al-Mamzar towers scheme

    9 June 2026

    Local real estate developer Alef Group has launched a mixed-use development in the Al-Mamzar area of Sharjah. The Linar project is valued at AED4bn ($1.1bn) and comprises five residential towers and one commercial tower. Across the development, the 50- to 55-floor towers will offer a total of 2,620 residential units.

    With 325 metres of sea-facing frontage overlooking Al-Mamzar Beach, the development also includes retail and service spaces. Tower A, which forms part of Phase 1 of the project, is expected to be completed from 2030 onwards. 

    In a statement, the developer said that following strong demand for expressions of interest (EoIs) in Tower A, Alef Group expanded EoIs to include towers B and C. All Phase 1 EoIs have now been fully reserved, representing a total of 1,572 residential units with a combined value of over AED2bn. The group is preparing to open EoIs for towers D and E.

    In April, Alef Group awarded Abu Dhabi-based construction firm A&M International a AED750m contract to build the next phases of its Hayyan residential community in Sharjah. The scope includes the construction of more than 700 villas and townhouses across three clusters – Samr 1, Samr 2 and Deem – along with Hayyan Mall, a clubhouse and associated infrastructure works.

    The Hayyan masterplan includes seven residential clusters: Alma, Arim 1, Arim 2, Arim 3, Samr 1, Samr 2 and Samr 3.

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

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17157150/main1720.jpg
    Colin Foreman
  • Record investment drives Jordan’s utilities market

    9 June 2026

     

    In April, Jordan signed the final technical and legal agreement for its landmark National Water Carrier Project, paving the way for the financial close of the kingdom’s largest planned water infrastructure project to date.

    The agreement represents a significant step forward for the scheme, which is now projected to reach $5.6bn in total costs, including financing, up from earlier estimates of $3.5bn.

    Paris-based investment and utility firms Meridiam and Suez were awarded the contract last year to develop the project in partnership with Jordan’s Water & Irrigation Ministry.

    Since then, multiple large-scale financing agreements have been put in place for the project, which is expected to supply about 40% of Jordan’s drinking water needs.

    While new contract awards have been limited in 2026, the successful execution of the Aqaba-Amman Water Desalination and Conveyance scheme will help reassure the market that large-scale infrastructure projects of this nature can move forward.

    The project is set to reduce the benchmark water cost from about $3 a cubic metre in 2024 to approximately $2.7 and is crucial to addressing Jordan’s severe water scarcity.

    Prime Minister Jafar Hassan recently said that the scheme, along with the Aqaba Port railway project, represented “the largest level of foreign investment in the kingdom’s history”.

    For its part, the government has said it will contribute $722m to the Aqaba-Amman project, representing the largest single capital expenditure in the state budget.

    Upcoming projects

    Looking forward, there is a healthier pipeline of new water projects, led by a two-phased wastewater treatment project at Wadi Zarqa.

    The first phase will have an initial capacity to treat 150,000 cubic metres a day (cm/d) of wastewater by 2030.

    The $150m second phase covers an independent sewage treatment plant with a capacity of 200,000 cm/d. Both tenders are expected to be released in the coming months.

    Two larger projects, valued at $300m each, are currently in the planning stages. Both are managed by Yarmouk Water Company and involve major transmission pipeline works in Ajloun and Irbid as part of the Jordan Water Sector Efficiency Project.

    The Jordan Water Sector Efficiency Project is a World Bank-backed programme aimed at reducing water losses, improving utility performance and enhancing the efficiency of water services across the kingdom.

    Power contracts

    Jordan’s power sector is set for a record-breaking year following the announcement that a $900m combined-cycle gas turbine (CCGT) plant will be developed in partnership with Etihad Development Company, a subsidiary of the UAE’s Etihad Water & Electricity (EtihadWE).

    The project will be developed under a build-own-operate model with Jordan’s National Electric Power Company (Nepco) purchasing electricity under a 25-year power-purchase agreement.

    For context, Jordan’s power sector saw just $33m in total contract awards in 2025, according to MEED Projects.

    The full-year total last exceeded $100m in 2022, when there were $111m of contract awards. The plant is expected to meet about 10% of Jordan’s electricity demand once operational.

    The kingdom has also been looking at other forms of power generation, such as Jordan’s first 450MW pumped hydroelectric energy storage project near Al-Mujib Dam.

    Earlier this year, US-headquartered K&M Advisors and France’s Artelia were appointed as transaction advisers to carry out the final feasibility study for the project, which is expected to be tendered in the third quarter of 2026.

    The Ministry of Energy & Mineral Resources (MEMR) is also planning to undertake the construction of a 1,000MW wind power plant and battery energy storage system near the Port of Aqaba in Jordan.

    The renewable energy scheme could potentially support the kingdom’s emerging green hydrogen industry, including a separate planned $1bn green ammonia and hydrogen project in Aqaba.

    In May, the project became the first publicly announced green ammonia project in Jordan to receive development approval from the Council of Ministers.

    The project would be developed by Jordan Green Ammonia, a special-purpose vehicle funded by the UAE-based 7Fidelity Group and Poland’s Hynfra.

    The project in Aqaba is expected to produce 100,000 tonnes a year of green ammonia from 2030

    Of approximately $6bn-worth of power projects in the pre-execution phase, it is worth noting that about $4.4bn are still in the early study or feed stages.

    Near-term awards are likely to come from several smaller substation and power generation schemes.

    Jordan-Syria power link

    Among the wider pipeline of regional opportunities, Jordan’s power sector could also benefit from efforts to restore electricity connectivity with neighbouring Syria.

    Syria’s Public Establishment for Transmission & Distribution of Electricity recently tendered a contract to repair the 400kV high-voltage interconnector transmission lines between the two countries.

    The works form part of Syria’s $146m Electricity Emergency Project, which is being financed through a World Bank grant and aims to restore critical electricity infrastructure across the country.

    The rehabilitation of the Syria-Jordan interconnector is expected to enable the import of up to 600MW of electricity and represents one of several initiatives under way to rebuild Syria’s power network following years of conflict and underinvestment.

    More broadly, Syria is emerging as an active power market in its own right. In April, Germany’s Siemens Energy signed manufacturing agreements for major power plant projects being developed by a consortium led by Qatar’s UCC Holding.

    The contracts cover combined-cycle power packages for the Zayzoun and Deir Azzour power plant projects, announced last year as part of a $7bn memorandum of understanding between the consortium and Syria’s Ministry of Energy.

    The May 2025 agreements include four combined-cycle gas turbine power plants in Traifawi, Homs and Zayzoun, Deir-Azzour and Mehardeh in Hama with an installed capacity of 4GW.

    Additionally, a 1GW solar power plant will be developed in Wedian Al-Rabee in Syria’s southern region.

    Most of these projects, awarded under concession agreements following a strategic memorandum of understanding framework, are due to come online in 2029.

    After years of inactivity, this is considerable progress. The next step is attracting sufficient interest in new and upcoming tenders. This will signal whether international contractors are ready to re-engage with the country’s power sector.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17157016/main.gif
    Mark Dowdall
  • PIF-owned Ardara tenders Al-Wadi sewer package

    9 June 2026

     

    Ardara, a subsidiary of Saudi Arabia’s Public Investment Fund (PIF), has issued a tender for the trunk sewer diversion and associated works package at its Al-Wadi development in Abha in Saudi Arabia’s Asir region.

    The scope includes the construction of rainwater and flood drainage networks, roads and transport infrastructure, and associated works within the wider Al-Wadi project.

    The bid submission deadline is 15 June.

    The sewer diversion package, valued at about $20m, is part of Ardara’s wider Al-Wadi development in Abha. The company, launched by PIF in 2023, is developing the 2.5-square-kilometre Al-Wadi destination in Abha as a mixed-use tourism and lifestyle development. The project will include residential, hospitality, commercial and recreational assets. 

    As MEED understands, the sewer diversion works are expected to facilitate the development of future phases of the Al-Wadi project by relocating existing wastewater infrastructure within the site.

    The tender follows demolition works completed on the site last year.

    Previously, in 2024, US-based Parsons was appointed to provide project management and supervision services for the project.

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

    GCC looks beyond the Strait; Iraq’s reform window narrows as fiscal assumptions shatter; MEED Top 100 companies.

    Distributed to senior decision-makers in the region and around the world, the June 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17156098/main.jpg
    Mark Dowdall
  • Abu Dhabi selects team for 3.3GW Al-Nouf IPP

    9 June 2026

     

    State utility Emirates Water & Electricity Company (Ewec) has selected a preferred developer and contractor for the 3.3GW Al-Nouf independent power producer (IPP) project in Abu Dhabi, according to sources.

    Located within the newly established Al-Nouf complex, the facility will be the largest single-site, carbon-capture-ready, combined-cycle gas turbine plant in the UAE. 

    Japan’s Sumitomo Corporation has been selected as the preferred developer, with the power-purchase agreement (PPA) expected to be signed in the coming weeks, sources said.

    It is also understood that a joint venture of Spain’s Tecnicas Reunidas and Egypt’s Orascom Construction has been picked as the preferred engineering, procurement and construction (EPC) contractor.

    Three developer consortiums submitted bids earlier this year, along with Sumitomo as the only company to bid individually.

    The bidders included:

    • Aljomaih Energy & Water (Saudi Arabia) / Sembcorp Industries (Singapore) / EDF Power Solutions (France)
    • Engie (France) / Korea Overseas Infrastructure & Urban Development Corporation (Kind) / Korea Western Power Company (Kowepo)
    • Korea Electric Power Corporation (Kepco) / Etihad Water & Electricity (EtihadWE) (UAE)
    • Sumitomo (Japan) 

    Ewec issued a request for proposals for the project last August. It had previously received statements of qualifications for the contract in April 2025.

    This follows confirmation earlier this month that Ewec has signed a PPA with a developer consortium for the 2.5GW Taweelah C IPP project.

    A team of UK-based Alderbrook Finance and US-based Sargent & Lundy is providing financial and technical advisory services to Ewec for the Taweelah C IPP.

    As MEED previously reported, both projects are following the model of Abu Dhabi’s IPP programme, in which developers enter into a long-term agreement with Ewec as the sole procurer. 

    This involves the development, financing, construction, operation, maintenance and ownership of the plant, with the successful developer or developer consortium owning up to 40% of the entity. The remaining equity will be held indirectly by the Abu Dhabi government.

    The project site for the Al-Nouf plant was selected for its ability to accommodate both seawater-cooled power generation and reverse osmosis desalination technologies. The plant will have the capacity to support several utility-scale energy and desalination projects in the future.

    The facility is scheduled to begin commercial operations in the third quarter of 2029.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17155245/main.jpg
    Mark Dowdall
  • Zoom launches new Saudi data centre at center3

    9 June 2026

    Zoom has announced a new data centre in Saudi Arabia to boost in-kingdom capacity for government and enterprise customers requiring local data residency.

    In a statement, Zoom said the data centre is located within center3, a Saudi-headquartered provider of carrier-neutral data centres and subsea cable systems linking Europe, Asia and Africa. Zoom said the data centre builds on its broader investment plans in the kingdom, including a $75m commitment made last year focused on artificial intelligence (AI)-enabled innovation and the advanced infrastructure required to scale it.

    Zoom said its existing regional data centre, established in 2023, already supports customers with local data residency requirements, while the new site will enhance services for government entities, enterprises and critical national infrastructure organisations.

    AI is an important part of Saudi Arabia’s economic growth plans leading up to 2030. In January, government officials confirmed that as the global economy is evolving rapidly with the rise of AI, some projects such as The Line at Neom have slowed down, while other projects related to the World Cup, Expo 2030, technology and AI have accelerated. 

    The largest AI project in the kingdom is being developed by Humain, which is owned by the Public Investment Fund (PIF). In May, it issued a tender inviting firms to develop infrastructure for its planned 6GW hyperscale AI data centre campus in Riyadh.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17155250/main.jpg
    Colin Foreman