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
  • 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
  • Saudi Landbridge finds its moment in Gulf turmoil

    15 April 2026

    Commentary
    Yasir Iqbal
    Construction writer

    The strategic case for the Saudi Landbridge has never been more urgent. SAR’s appointment of Spain’s Typsa as lead design consultant, reported by MEED this week, is more than a procurement milestone. After two decades of delays, it reflects how the long-deferred project has become a strategic necessity.

    The conflict reshaping the Middle East has made that necessity more immediate. Red Sea transits are costly and unpredictable. The Strait of Hormuz carries risk no insurer can fully price. Saudi Arabia’s most valuable exports, including crude oil, refined products, petrochemicals and industrial goods, move almost entirely by sea through routes that are no longer reliably secure.

    The kingdom sits between two coastlines with no rail link connecting them. That gap is now an economic exposure.

    The $27bn project addresses it directly. More than 1,500 kilometres of track, anchored by a 900km railway between Riyadh and Jeddah, will provide direct freight access from King Abdullah Port on the Red Sea, with upgrades to the Riyadh-Dammam line and a new connection to Yanbu.

    Together, they create what Saudi Arabia has never had: a continuous land corridor linking Gulf industrial ports to Red Sea export terminals, entirely within its own borders.

    The commercial implications are substantial. Aramco’s downstream output, Sabic’s chemicals, and the manufacturing clusters of Jubail and Yanbu gain flexible access to both coasts.

    Exporters targeting Europe and the Americas load at Jeddah; those serving Asia pivot east to Dammam by rail, on demand, without Hormuz risk or Red Sea freight surcharges.

    No neighbouring economy has that optionality. The network also underpins a broader economic ambition. Connecting Jeddah, Riyadh, Dammam, Jubail, Yanbu, King Abdullah port and King Khalid airport by rail positions the kingdom as a genuine logistics corridor between East and West. 

    With design now under way and construction tenders expected imminently, the Landbridge is closer to reality than at any point in its troubled history. Regional disruption did not create this project. But it has made the argument for it unanswerable.

    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/16401567/main.png
    Yasir Iqbal
  • Indian firm selected for Saudi sewage treatment project

    15 April 2026

     

    Saudi Arabia’s National Water Company is understood to have recently selected Indian contractor VA Tech Wabag as its preferred bidder for a contract to expand a sewage treatment plant (STP) in Al-Majmaah in Riyadh Province.

    The engineering, procurement and construction (EPC) package for the Al-Majmaah STP has an estimated value of $65m.

    The scope includes the construction of sewage treatment plant units, a pumping station and an effluent surplus line. It also covers the installation of a Scada system, supervisory control systems and associated facilities.

    As MEED understands, six bids were submitted last year, including from local firms Alkhorayef Water & Power Technologies, Al-Rafia Contracting, Civil Works Company, Saudi Sdn Water & Energy and Washnah Trading & Contracting.

    The project forms part of Saudi Arabia’s broader push to expand treatment and reuse infrastructure under Vision 2030, particularly across the Riyadh region.

    MEED recently revealed that NWC had awarded an EPC contract for the latest phase of its long-term operations and maintenance sewage treatment programme.

    The contract to build and upgrade sewage treatment plants with a combined capacity of about 440,000 cubic metres a day was awarded to a consortium led by China’s Jiangsu United Water Technology.

    Elsewhere, a joint venture of Kuwait-based Heavy Engineering Industries & Shipbuilding and Wabag is awaiting the formal contract award for phase two of Kuwait’s Doha seawater desalination plant project.

    The firms submitted the lowest bid of $373.2m for the project last year.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16401155/main.jpg
    Mark Dowdall
  • SAR extends phosphate rail track deadline

    15 April 2026

     

    Saudi Arabian Railways (SAR) has extended the bid submission deadline to 26 April for a multibillion-riyal tender to double the tracks on the existing phosphate transport railway network connecting the Waad Al-Shamal mines to Ras Al-Khair in the kingdom’s Eastern Province.

    The new tender – covering the second section of the track-doubling works and spanning more than 150 kilometres (km) – was issued on 9 February. The previous bid submission deadline was 15 April.

    The new tender follows SAR receiving bids from contractors on 1 February for the project’s first phase, which spans about 100km from the AZ1/Nariyah Yard to Ras Al-Khair.

    The scope includes track doubling, alignment modifications, new utility bridges, culvert widening and hydrological structures, as well as the conversion of the AZ1 siding into a mainline track. It also includes support for signalling and telecommunications systems.

    The tender notice was issued in late November, with a bid submission deadline of 20 January 2026.

    Switzerland-based engineering firm ARX is the project consultant.

    MEED understands that these two packages are the first of four that SAR is expected to tender for the phosphate railway line. Other packages expected to be tendered shortly include the depot and systems packages.

    In 2023, MEED reported that SAR was planning two projects to increase its freight capacity, including an estimated SR4.2bn ($1.1bn) project to install a second track along the North Train Freight Line and construct three new freight yards.

    Formerly known as the North-South Railway, the North Train is a 1,550km-long freight line running from the phosphate and bauxite mines in the far north of the kingdom to the Al-Baithah junction. There, it diverges into a line southward to Riyadh and a second line running east to downstream fertiliser production and alumina refining facilities at Ras Al-Khair on the Gulf coast.

    Adding a second track and the freight yards will significantly increase the network’s cargo-carrying capacity and facilitate increased industrial production. Project implementation is expected to take four years.

    State-owned SAR is also considering increasing the localisation of railway materials and equipment, including the construction of a cement sleeper manufacturing facility.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16400986/main.jpg
    Yasir Iqbal