meed-logo

line1 line2 line3
SIGN IN / REGISTER

Saudi Arabia’s power sector motors on

11 September 2024

 

Saudi Arabia’s power sector has sustained its project activity momentum over the past six months.

The principal buyer, Saudi Power Procurement Company (SPPC), awarded the contracts to develop two publicly-tendered wind independent power producer (IPP) projects, with a total combined capacity of 1,100MW, under the fourth round of the kingdom’s National Renewable Energy Programme (NREP).

The Public Investment Fund (PIF), responsible for procuring through direct negotiations 70% of the kingdom’s 2030 target renewable energy capacity, let three large-scale solar photovoltaic (PV) projects with a total combined capacity of around 5,500MW.

State majority-owned Saudi Aramco also awarded a contract to develop an independent cogeneration project with an electricity generation capacity of 475MW.

During the same period, SPPC began the tendering process for two combined-cycle gas turbine (CCGT) projects, the Remah and Nairiyah IPPs, each with a capacity of 3,600MW, and for four solar PV schemes with a total combined capacity of 3.7GW under the NREP fifth round.

“It has been a very busy summer,” notes a senior executive with an international utility developer, referring to the submission of bids in August for the contracts to develop the Remah 1 & 2, Nairiyah 1 & 2, and the NREP round-five solar PV schemes.

Notably, the principal buyer has initiated the selection process for consultants who will advise on its next pair of independent CCGT power plants – the 2,400MW Al-Rais and the 3,600MW Riyadh 16 projects.

Saudi Electricity Company (SEC) and SPPC are also understood to be conducting bilateral talks for the development of five CCGT power plants, which, along with those currently being built or tendered, support the kingdom’s mandate to replace fleets running on liquid fuel.

Essentially, the reported SEC projects, each with a capacity of 1,500MW-2,000MW, bear some similarities to PIF’s directly negotiated renewable energy schemes.

These projects help substantiate previous reports that SEC has been seeking to lock in gas turbine equipment deals with a total capacity of 30GW, in line with an overall capacity expansion plan within and outside Saudi Arabia.

The next few years can only get busier, with Saudi Arabia's Energy Minister, Prince Abdulaziz Bin Salman Bin Abdulaziz Al-Saud, confirming in June plans to tender 20,000MW of renewable energy projects annually starting this year, in line with reaching 100GW-130GW of installed capacity by 2030, "depending on electricity demand growth".

This represents a major upward revision to the official 2030 renewable energy capacity target of 58,700MW.

However, it is unclear if this new target considers the renewable capacity that will be installed to power Neom, Saudi Arabia’s largest gigaproject, as well as the requirement of green hydrogen projects that the PIF plans to codevelop.

Wind IPPs

In May, SPPC awarded a team led by Japanese utility developer Marubeni Corporation the contracts to develop the 600MW Al-Ghat wind and 700MW Waad Al-Shamal wind IPPs.

The team of Marubeni and its partner, the local Alajlan Brothers, is also expected to win the contract to develop the 700MW Yanbu wind IPP, the final wind scheme included in NREP’s round four.

These are important awards for Marubeni, which last won an IPP contract in Saudi Arabia in 2021 for the 300MW Rabigh solar scheme.

Notably, the Al-Ghat and Waad Al-Shamal wind IPPs will be developed at world-record-low levelised electricity costs of $c1.565 a kilowatt-hour (kWh), or roughly 5.87094 halalas/kWh, and $c1.70187/kWh or 6.38201 halalas/kWh.

PIF projects

In June, three Saudi utility developers and investors signed power-purchase agreements (PPAs) with SPPC to develop and operate three solar PV projects with a combined capacity of 5,500MW.

The Haden and Muwayh solar PVs, located in Mecca, will each have a capacity of 2,000MW, while the Al-Khushaybi solar PV power plant in Qassim will be able to generate 1,500MW of electricity.

The team that will develop the three projects consists of Acwa Power, PIF-backed Water & Electricity Holding Company (Badeel) and Saudi Aramco Power Company (Sapco), a subsidiary of the state majority-owned oil giant.

The project companies formed for each solar IPP have since signed financing documents for the projects, which will require a total investment of SR12.3bn ($3.3bn). The financing sought was $2.6bn.

These projects comprise round four of PIF’s Price Discovery Scheme, with Acwa Power as the preferred developer partner.

Energy storage systems

The scale of new conventional and renewable energy capacity being developed in the kingdom – some 3,500MW of solar PV and wind capacity is now online, with over 10,500MW under construction – has increased the urgency to build energy storage systems to balance the kingdom’s energy system and stabilise its grid.

SPPC has signalled plans to procure gigawatt-sized battery energy storage systems (bess) using an IPP model. The tendering process for the first bess IPP package is expected to begin by the year-end or early 2025.

In parallel, National Grid Saudi Arabia, an SEC subsidiary, has started awarding contracts to build energy storage systems capacity using an engineering, procurement and construction (EPC) model. The local Algihaz Holding is understood to have won the contracts to build four energy storage systems in Najran, Madaya and Khamis Mushait, which will have a total combined capacity of 7.8 gigawatt-hours (GWh).

Also in August, SEC tendered contracts for the construction of five battery energy storage systems with a total combined capacity of 2,500MW, or roughly 10GWh.

The planned facilities, each with a capacity of 500MW or roughly 2GWh, are located in or within the proximity of the following key cities and load centres:

  • Riyadh
  • Qaisumah
  • Dawadmi
  • Al-Jouf
  • Rabigh

Saudi Arabia’s plan to build its first large-scale nuclear power plant in Duwaiheen, which appeared to be making progress before October last year, has faced delays following shifting geopolitics involving stakeholders that include the US and Israel. The tender bid deadline for nuclear technology providers is understood to have been postponed and no new date has been set.

As it is, Saudi Arabia’s ever-expanding power projects pipeline, particularly for renewables and bess, will require investors, contractors and lenders to allocate sizeable resources, perhaps more than they have historically done in the past, over the next several years as various stakeholders endeavour to meet Vision 2030-tied peak demand scenarios.

This applies less to CCGT projects, which, pending a clear carbon-capture strategy from the offtaker or the Energy Ministry, appear to attract a decreasing number of developers and investors.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12496716/main.jpg
Jennifer Aguinaldo

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

Click here to register
Exclusive from Meed
Related Articles
  • SPPC moves Dawadmi wind bid deadline

    22 May 2025

     

    Saudi Arabia’s principal buyer, Saudi Power Procurement Company (SPPC), has extended the bid deadline for the contract to develop a wind independent power project (IPP) under the sixth round of Saudi Arabia’s National Renewable Energy Programme (NREP).

    MEED reported in March that the prequalified developers had formed consortiums and were preparing their proposals for the contract, the fifth wind IPP to be tendered under the NREP.

    SPPC initially expected to receive bids by 15 May, but the deadline has since been extended to 23 June, according to industry sources.

    The new deadline is likely to be extended again, however, one of the sources told MEED.

    The consortiums that have been formed and will likely bid for the contract include teams led separately by UAE-based Abu Dhabi Future Energy Company (Masdar) and French firms Engie and EDF Renewables, sources said.

    MEED understands that Beijing-based PowerChina and one of its subsidiaries are part of separate bidding consortiums. 

    Located in Riyadh, the Dawadmi wind IPP will have a capacity of 1,500MW. It is the only wind scheme and the fifth package under round six of the the NREP.

    Four solar photovoltaic (PV) schemes, with a total combined capacity of 3,000MW, comprise the rest of the round six projects. 

    In addition to the firms cited above, SPPC prequalified the following companies to bid as managing and technical members of consortiums bidding for the contract:

    • Marubeni Corporation (Japan)
    • Sembcorp Utilities (Singapore)
    • Sumitomo Corporation (Japan)
    • Total Energies Renewables (France)
    • Goldwind Science & Technology (China)
    • Alfanar Company
    • SPIC Huanghe Hydropower Development

    The following eight companies were prequalified to bid as managing members:

    • Al-Jomaih Energy & Water (local)
    • Jinko Power (Hong Kong)
    • Saudi Electricity Company (local)
    • China Power Engineering Consulting Group International Engineering Company (China)
    • Posco International Corporation (South Korea)
    • Korea Electric Power Corporation (Kepco, South Korea)
    • Nareva Holding (Morocco)
    • Jera (Japan)

    Another firm, the local Nesma Renewable Company, has been prequalified as a technical member.

    In addition to the Dawadmi wind IPP, the following schemes comprise round six of the NREP:

    • 1,400MW Najran solar PV IPP (Najran)
    • 600MW Samtah solar PV IPP (Jizan)
    • 600MW Al-Darb solar PV IPP (Jizan)
    • 400MW Al-Sufun solar PV IPP (Hail)

    These schemes take the total capacity of solar and wind projects publicly tendered by SPPC to almost 15,000MW.

    SPPC is responsible for the pre-development, tendering and subsequent offtaking of the energy from the projects.

    US/India-based Synergy Consulting is providing financial advisory services to SPPC for the NREP sixth-round tender. Germany’s Fichtner Consulting and US-headquartered CMS are providing technical and legal consultancy services, respectively.

    The previous wind farms that SPPC has tendered include the 400MW Dumat Al-Jandal wind IPP, which is operational.

    Last year, SPPC signed the power-purchase agreements with Japan’s Marubeni Corporation for the contracts to develop and operate the 600MW Al-Ghat and 500MW Waad Al-Shamal wind IPPs. The projects reached financial close in November.

    The third wind IPP, a 750MW scheme in Yanbu, is undergoing review.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13931337/main.jpg
    Jennifer Aguinaldo
  • Local firm bids low for Kuwait grid contract

    22 May 2025

    Local contracting firm Power Grid Company has submitted a low bid of KD48.67m ($158.6m) for a contract to supply and install a 400-kilovolt (kV) overhead transmission line (OHTL) in Kuwait.

    The project will link a substation in Shagaya to a substation in Subiya.

    The two other bidders for the contract are the Kuwaiti branch of India-headquartered Larsen & Toubro, which offered KD65.9m, and Al-Khobar-based National Contracting Company, which offered KD57.7m.

    Kuwait’s Ministry of Electricity & Renewable Energy (MEWRE) tendered the contract in October last year.

    The planned OHTL network will link the solar energy transformer station at Shagaya to the Subiya power station, also known as SWPS-2.

    Kuwait plans to expand its renewable energy capacity through a multi-phased solar programme in Shagaya.

    MEWRE, through the Kuwait Authority for Partnership Projects (Kapp), prequalified six consortiums and companies to bid for the contract to develop the Al-Dibdibah power and Al-Shagaya renewable energy phase three, zone one project in August last year.

    The tender for the 1,100MW solar independent power project has yet to be issued.

    MEWRE, through Kapp, recently invited interested firms to prequalify for a contract to develop zone two of the renewable energy complex's third phase.

    The zone two solar photovoltaic project will have a net capacity of 500MW. Utility developers are expected to submit their statements of qualifications by 24 July.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13931091/main0058.jpg
    Jennifer Aguinaldo
  • GE Vernova confirms $14.2bn Saudi initiatives

    22 May 2025

    US-based energy equipment manufacturer GE Vernova announced initiatives worth up to $14.2bn in Saudi Arabia, which coincided with US President Donald Trump’s state visit to the kingdom last week.

    The initiatives aim to “accelerate Saudi Arabia’s energy transition with US technology and expertise”, the firm said.

    The announcements include up to $2bn in backlog or on a reservation agreement as of the first quarter of 2025, with future contracts and memorandums of understanding (MoUs) for agreements spanning across the next four years.

    Among the collaborations and initiatives is a deal between Saudi Electricity Company (SEC) and GE Vernova for the supply of US-made gas turbines, synchronous condensers and balance of plant equipment.

    The equipment deal will support grid stability by providing voltage regulation, reactive power and system strength, supplying inertia to maintain reliable operations as more variable renewable energy is integrated into the system. The deal with SEC also includes capital parts, maintenance and repair services.

    Saudi Arabia's principal buyer, Saudi Power Procurement Company, and GE Vernova are understood to have entered into several MoUs for the supply of advanced power generation equipment and services for future projects; the commercialisation of carbon capture technologies; and training and investments in power sector research and development activities, manufacturing and repairs.

    Saudi utility developer Acwa Power and GE Vernova also signed framework agreements to collaborate on identifying and exploring potential opportunities to supply high-efficiency gas turbines and electrification equipment for future projects in Saudi Arabia. 

    State-backed Saudi Aramco and GE Vernova also announced collaborations to provide maintenance services, repairs and spare parts to support the operations of several power plants in the kingdom.

    Scott Strazik, chief executive of GE Vernova, said that deploying “world-class technology” will help deepen the relationship between the US and Saudi Arabia, advance energy security and strengthen both nations' economic prosperity and competitiveness.

    GE Vernova, or GE, is understood to have been operating in Saudi Arabia for 90 years, with a power generation installed capacity of about 50GW in the kingdom running on its gas turbines.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13931061/main2152.jpg
    Jennifer Aguinaldo
  • May deadline for King Salman International airport terminals

    22 May 2025

     

    King Salman International Airport Development Company (KSIADC), which is backed by Saudi sovereign wealth vehicle the Public Investment Fund, has allowed firms until 28 May to submit proposals for a contract to develop the first phase of Terminal 6 and the Iconic Terminal at King Salman International airport (KSIA) in Riyadh.

    The tender notice was issued on 17 April. The previous bid submission deadline was 15 May.

    The client plans to deliver the package on an early contractor involvement (ECI) basis.

    The ECI process requires selected contractors to submit methodologies for the project and a design proposal.

    Earlier in May, MEED reported that US firm Bechtel Corporation had been appointed as the delivery partner for the terminals at KSIA in Riyadh.

    Bechtel will manage the delivery of three new terminals, including the terminal for commercial carriers, Terminal 6 for low-cost carriers and a new private aviation terminal with hangars.

    This was followed by an announcement by another US-based firm, Parsons Corporation, confirming its appointment as the delivery partner for the airside and landside packages at KSIA.

    In February, MEED exclusively reported that KSIADC had received prequalification statements from firms on 28 January for the project.

    The client prequalified firms in September 2024 for the main engineering, procurement and construction packages; early and enabling works; specialist systems and integration; materials and equipment; engineering and design; professional services; health, safety, security, environment and wellbeing services; modular installation and prefabrication; environmental, social and governance services; local content; and other services.

    The entire scheme is divided into eight assets. These are:

    • Iconic Terminal
    • Terminal 6
    • Private aviation terminal 
    • Central runway and temporary apron
    • Hangars
    • Landside transport
    • Cargo buildings
    • Real estate

    In August last year, KSIADC confirmed that it had signed up several architectural and design firms for the various elements of the project.

    KSIADC said that UK-based Foster+Partners will design the airport’s masterplan, including the terminals, six runways and a multi-asset real estate area.

    US-based engineering firm Jacobs will provide specialist consultancy services for the masterplan and the design of the new runways.

    The client also confirmed the appointment of UK-based engineering firm Mace for the delivery partner role on the project.

    The airspace design consultancy contract was awarded to local firm Nera.

    Project scale

    The project covers an area of about 57 square kilometres (sq km), allowing for six parallel runways, and will include the existing terminals at King Khalid International airport. It will also include 12 sq km of airport support facilities, residential and recreational facilities, retail outlets and other logistics real estate.

    If the project is completed on time in 2030, it will become the world’s largest operating airport in terms of passenger capacity, according to UK analytics firm GlobalData.

    The airport aims to accommodate up to 120 million passengers by 2030 and 185 million by 2050. The goal for cargo is to process 3.5 million tonnes a year by 2050.

    Saudi Arabia plans to invest $100bn in its aviation sector. Riyadh’s Saudi Aviation Strategy, announced by the General Authority of Civil Aviation, aims to triple Saudi Arabia’s annual passenger traffic to 330 million travellers by 2030.

    It also aims to increase air cargo traffic to 4.5 million tonnes and raise the country’s total air connections to more than 250 destinations. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13930956/main.jpg
    Yasir Iqbal
  • Petrofac oil bid in Kuwait is double proposed budget

    22 May 2025

     

    The low bid submitted by UK-based engineering company Petrofac for the Kuwaiti oil project focused on the installation of a separation gathering centre (SGC) known as SGC-2 has come in at more than double the project’s proposed budget, according to industry sources.

    Petrofac submitted a bid of KD422.45m ($1.37bn) and the provisional budget for the project is KD207m ($670.2m), according to industry sources.

    Petrofac’s bid beat that of India-based Larsen & Toubro, which was the only other bidder with a price of KD441.07m.

    The project is located in the eastern region of Kuwait referred to as EK-2 and its scope also includes debottlenecking work, in addition to the installation of the main units.

    The client on the project is state-owned upstream operator Kuwait Oil Company.

    When the project was originally tendered in June 2024, the following companies were prequalified to bid:

    • Hyundai Engineering & Construction Company (South Korea)
    • Samsung Engineering (South Korea)
    • Saipem (Italy)
    • Sinopec Luoyang Engineering Company (China)
    • Sinopec Engineering Incorporation (China)
    • Tecnicas Reunidas (Spain)
    • Larsen & Toubro (India)
    • Daewoo Engineering & Construction (South Korea)
    • Petrofac International (UK)
    • GS Engineering & Construction (South Korea)
    Petrofac’s problems

    Two weeks ago, Petrofac’s shares on the London Stock Exchange were temporarily suspended after the beleaguered engineering and construction contractor failed to publish its 2024 results on time.

    This suspension was enacted at the same time that Wood, another engineering and construction company, was also forced to suspend trading in its stock because it was unable to publish its annual report by 30 April.

    In March, Petrofac said that it would defer publication of its 2024 results amid its long-running restructuring process.

    Earlier this month, Petrofac received formal approval from the High Court of England & Wales to implement its restructuring plan.

    The company, which has billions of dollars-worth of projects in the Middle East and North Africa region, has said that the approved plan will unlock $355m in new funding for its operations.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/13930355/main.gif
    Wil Crisp