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.
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
-
-
-
-
Aecom to supervise Dubai Loop construction11 May 2026
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Iraq enters era of resilience, reform and rising risks
11 May 2026
Iraq’s projects market is at an inflection point. The country has built a sizeable and increasingly diverse projects pipeline, backed by ambitious national plans and an improving reform narrative. But according to MEED’s newly updated Iraq Projects Market report, the near-term outlook is now being tested by renewed regional volatility and persistent structural constraints at home.
Iraq is the Middle East and North Africa’s fifth-largest economy by nominal GDP, yet it remains heavily exposed to the hydrocarbons cycle. Oil and gas generate about 90% of government revenues and more than 40% of GDP, a dependency that shapes annual capital spending and the bankability of public-private partnership (PPP) deals. Earlier this year, the IMF forecast GDP growth of 3%-4%. In light of the latest regional conflict dynamics involving the US and Israel with Iran, that growth outlook is expected to soften as investor risk perceptions rise and supply chains face renewed stress.
Even so, Iraq’s projects market is not starting from a blank slate. By the end of March 2026, almost $120bn of contracts were in execution, with a further $300.4bn in the broader pipeline. The scale of that opportunity is underpinned by enduring reconstruction requirements, urgent energy-sector needs and a policy push to translate oil wealth into long-lived productive assets.
Reconstruction needs
Nearly a decade after the official end of the Islamic State conflict, Iraq’s reconstruction gap remains substantial. Estimates put the shortfall at about $88bn, reflecting the long tail of damage to housing, utilities, public buildings and transport links. Southern and central regions dominate the live pipeline, largely because they sit close to Iraq’s oil heartlands. Basra, in particular, is pivotal, anchoring major upstream activity and vital export infrastructure.
At the policy level, Iraq Vision 2030 signals a long-term ambition to diversify into tourism, agriculture, industry and digital transformation. The government’s immediate delivery vehicle is the National Development Plan (NDP) 2024-28, which commits more than $17bn a year in capital expenditure and prioritises energy, transport, housing and water infrastructure. This shift is reinforced by Iraq’s Green Growth Framework (2026), indicating that future procurement may place greater weight on efficiency, emissions reduction and climate resilience.
Macro risk
Despite policy ambition, the most immediate determinant of Iraq’s fiscal room is the oil price. A $10-a-barrel drop can reduce government revenue by an estimated $7bn-$9bn annually. Such sensitivity matters because infrastructure spending is still largely funded by the public purse. Oil price swings affect project awards, payment cycles and the government’s willingness to assume up-front capex obligations.
Iraq’s execution environment continues to be defined by bureaucratic delays, unclear land titles and opaque procurement processes. These factors can add 12-24 months to average delivery timelines. Nevertheless, there are signs of adaptation. PPP legislation is advancing, and developer-led models are gaining traction in large housing programmes. Furthermore, there is a growing reliance on international project management consultancy (PMC) firms—such as Hill International, Worley, and AtkinsRealis—to bridge capacity gaps and improve governance, cost control and scheduling.
Hydrocarbon driver
Oil and gas upstream remains the single largest driver of capital expenditure. Major developments, including the Gas Growth Integrated Project (GGIP) and Mansouriya, sit alongside a push to reduce gas flaring and expand downstream processing. The objective is to sustain export revenues while improving domestic fuel availability.
The power sector is even more urgent. Iraq faces an estimated 8-10GW generation shortfall, which keeps electricity supply at the centre of political risk. This gap is driving rapid procurement of generation capacity and grid upgrade contracts. Beyond traditional infrastructure, Iraq is also moving on digital adoption. Smart city pilots and fibre rollouts are attracting regional technology investors, while AI-enabled data centre projects are beginning to emerge.
Investment targets
Foreign direct investment (FDI) remains below $3bn a year, a low figure relative to market size. The most active investors outside the oil sector include the UAE, Saudi Arabia and Kuwait. To convert interest into deals, the National Investment Commission (NIC) is pursuing streamlined licensing and investor-protection reforms. A “one-stop shop” approach has reportedly reduced registration timelines for foreign investors from months to weeks in key sectors.
Investor protection mechanisms, such as access to international arbitration, are being strengthened, though enforcement remains a concern. Iraq’s three free zones—Basra, Karbala and Nineveh—offer additional incentives including tax holidays and customs exemptions, provided they can be paired with reliable utilities and bankable arrangements.
Conflict premium
The latest escalation involving the US and Israel with Iran has increased Iraq’s security risk premium. This is inflating materials costs and disrupting supply chains near eastern border zones. Even where projects are far from conflict areas, contractors are pricing in higher contingency for logistics and insurance. Iraq must also balance deep economic ties with Iran—particularly in energy—with Western investor expectations and sanctions-related compliance.
With more than 60% of its population under 25, Iraq has a potential demographic dividend, but it also faces immediate employment pressure and a shortage of skilled technical labour. Iraq’s projects market outlook for 2026 is best described as cautiously constructive. The pipeline is deep and the need is undeniable, but delivery will hinge on whether Iraq can translate plans into predictable execution. If progress on procurement and contract enforcement continues, Iraq can sustain a broad-based market that extends beyond hydrocarbons.
Click here to learn more about MEED’s newly updated Iraq Projects Market report
https://image.digitalinsightresearch.in/uploads/NewsArticle/16782507/main.gif -
Retal to develop project in Oman’s Sultan Haitham City
11 May 2026
Saudi Arabia’s Retal Urban Development Company has entered Oman with its first development agreement, signing a deal to build more than 2,000 residential units in Sultan Haitham City in Muscat.
In a statement to the Saudi Stock Exchange (Tadawul) on 11 May, the company said it had signed an agreement with Oman’s Ministry of Housing & Urban Planning to develop an integrated residential community at an estimated cost of SR3bn ($823m).
The community will be developed across zones 3, 15 and 17 within Sultan Haitham City, covering a total area of 1.3 million square metres.
The project will include villas and apartments, alongside commercial and mixed-use elements and community facilities.
Retal said the development will be delivered through an off-plan sales model and is expected to take nearly nine years to complete.
The first phase of the Sultan Haitham City project includes the development of a 5 square-kilometre city centre and six of the development’s 19 planned neighbourhoods. The first phase is set for completion by 2030.
US-based architectural firm SOM unveiled masterplan proposals for Sultan Haitham City in August 2024.
The final phase of the project is expected to be completed by 2045.
> Be recognised among the best in the industry at the MEED Projects Awards 2026 …
https://image.digitalinsightresearch.in/uploads/NewsArticle/16781867/main.jpg -
Qiddiya seeks firms for light rail transit system
11 May 2026
Saudi gigaproject developer Qiddiya Investment Company (QIC) has requested contractors to express interest in a contract to design and build the first phase of the light rail transit system at Qiddiya Entertainment City.
The notice was issued on 5 May, with firms given until 20 June to submit expressions of interest.
The project, also known as the Primary Urban Axis, comprises a 22-kilometre automated, driverless rail line as part of its first phase.
The contract scope includes about 16 stations – 11 elevated and five underground – along with 8km of tunnels, viaducts and other associated structures. It covers all civil, architectural, and mechanical, electrical and plumbing works.
Stations will be located at Resort Core East Village, Grand Central Station, Anime Hub Integrated Station and Primary Urban Axis 1 & 2 Hub Station.
A subsequent phase will extend the railway network by a further 11km.
QIC is accelerating plans to develop additional assets at Qiddiya City.
Separately, QIC, the Royal Commission for Riyadh City and the National Centre for Privatisation & PPP received prequalification statements from firms on 30 April for the public-private partnership (PPP) package of the Qiddiya high-speed rail project in Riyadh. This follows submission of prequalification statements for the engineering, procurement, construction and financing package on 16 April, as previously reported by MEED.
The Qiddiya high-speed rail project, also known as Q-Express, will connect King Salman International airport and the King Abdullah Financial District (KAFD) with Qiddiya City. The line will operate at up to 250 kilometres per hour, reaching Qiddiya in 30 minutes.
Contractors are also preparing bids for a 13 May deadline for a contract covering new infrastructure works at Qiddiya Entertainment City. The scope includes two infrastructure development packages for District 0, including the construction of four event park-and-ride facilities.
QIC’s other major projects include an e-games arena, Prince Mohammed Bin Salman Stadium, a motorsports track, the Dragon Ball and Six Flags theme parks, and Aquarabia.
QIC officially opened the Six Flags theme park to the public in December last year.
The park covers 320,000 square metres and features 28 rides and attractions, including 10 thrill rides and 18 aimed at families and young children.
The Qiddiya project is a key part of Riyadh’s strategy to boost leisure tourism in the kingdom.
https://image.digitalinsightresearch.in/uploads/NewsArticle/16779176/main.jpg -
RCRC awards $1bn Sheikh Jaber Al-Sabah Road contract
11 May 2026
Register for MEED’s 14-day trial access
Saudi Arabia’s Royal Commission for Riyadh City (RCRC) has awarded an estimated SR5bn ($1.3bn) contract for the construction of the Sheikh Jaber Al-Sabah Road project in Riyadh.
The contract was awarded to the joint venture of Riyadh-based Al-Rashid Trading & Contracting Company (RTCC) and Turkiye’s IC Ictas.
The project stretches 12 kilometres (km) from Khurais Road to Al-Thumama Road in Riyadh.
The Sheikh Jaber Al-Sabah Road project is a key component of the Second Eastern Ring Road scheme.
The project includes the construction of five interchanges: Prince Bandar interchange, King Abdullah interchange, Imam Abdullah interchange, Dammam Road interchange and Al-Thumama interchange.
The latest contract marks another significant project award to the RTCC-IC Ictas joint venture by RCRC.
In June 2024, RCRC awarded an estimated SR4bn ($1bn) design-and-build contract to upgrade the Wadi Laban cable bridge in Riyadh to the joint venture of RTCC and IC Ictas.
The project aims to ease traffic congestion around the Western Ring Road in the area extending from Ibn-Hazm Road to Jeddah Road. The contract also covers the construction of an intersection at Jeddah Road.
The construction of the bridge originally began in August 1993 and was completed in 1997.
The existing bridge is 763 metres long and 35 metres wide, with two 14-metre-wide carriageways.
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.
> Be recognised among the best in the industry at the MEED Projects Awards 2026 …
https://image.digitalinsightresearch.in/uploads/NewsArticle/16775717/main.jpg -
Aecom to supervise Dubai Loop construction
11 May 2026
Register for MEED’s 14-day trial access
US-based Aecom has been selected for a contract to undertake design review and construction supervision services for the Dubai Loop transportation system.
The contract was tendered by Dubai’s Roads & Transport Authority (RTA), which signed a construction agreement with Elon Musk-backed firm The Boring Company.
The first phase comprises a 6.4-kilometre route with four stations, linking the Dubai International Financial Centre (DIFC) and Dubai Mall.
Stations will be located at DIFC 2, ICD Brookfield Place, Dubai Mall Zabeel Parking and Burj Khalifa.
The first phase is expected to cost about AED565m ($154m) and be delivered within one year of design work and other preparations being completed. Tunnelling is expected to begin in the second half of this year.
The latest update follows the appointment of Parsons Corporation to deliver programme management services for the Dubai Loop transportation system.
Next phase
The second phase will connect the Dubai World Trade Centre and DIFC with Business Bay.
The tunnels will extend up to 22km and include 19 stations.
The total cost across both phases is expected to be around AED2bn ($545m), with completion scheduled within three years.
The pilot route is expected to serve around 13,000 passengers a day, while the full route is projected to have a capacity of about 30,000 passengers a day.
The RTA and The Boring Company signed a memorandum of understanding on the sidelines of the World Governments Summit in Dubai in February last year to explore the development of the Dubai Loop transportation system.
The Dubai Loop is expected to be similar to The Boring Company’s Las Vegas Convention Centre (LVCC) Loop project. The LVCC Loop is a 2.7km underground tunnel system that connects different convention centre halls, reducing walking time across the site to about two minutes.
The LVCC Loop has been in operation since 2021. It uses Tesla Model 3 cars to carry passengers between five stations. The Boring Company began construction in November 2019 at an estimated cost of $49m.
> Be recognised among the best in the industry at the MEED Projects Awards 2026 …
https://image.digitalinsightresearch.in/uploads/NewsArticle/16775632/main.jpg