Saudi power sector enters busiest year
10 March 2025

Contracts worth more than $90bn are under execution in Saudi Arabia’s power sector, making 2025 the busiest year ever for generation and transmission capacity buildout in the kingdom.
The construction of conventional and renewable power generation plants accounts for two-thirds, or 66%, of the contracts under execution, while transmission and distribution projects account for the rest, based on the latest available data from regional project tracker MEED Projects.
In addition to gas-fired and renewable energy generation plant projects, the kingdom has awarded several contracts in the past two years to modernise and expand its domestic grids in light of the solar photovoltaic (PV) and wind power plants, and industrial complexes, which are being built in remote areas – as well as Riyadh's plan to trade electricity beyond the kingdom's GCC partners and with countries such as Egypt.
In the past 12 months, the kingdom also awarded the first contracts to build on-grid battery energy storage system (bess) facilities, in line with fostering greater grid flexibility and countering the intermittency of renewable power.
“It has been a very, very busy year, despite some projects – particularly those catering to Neom – being re-scoped,” notes a Dubai-based senior executive with a transaction advisory firm.
The $500bn Neom gigaproject in southwestern Saudi Arabia aims to be powered 100% by renewable energy, which it initially expected to generate independently.
However, ongoing discussions are understood to include an option to meet future demand through renewable power sourced from the grid.
Overall, combined-cycle gas turbine (CCGT) projects – procured on either an independent power project (IPP) or engineering, procurement and construction (EPC) model – account for 56% of the total power generation contracts under execution in Saudi Arabia, with solar and wind accounting for the remaining 44%.
The principal buyer, Saudi Power Procurement Company (SPPC), awarded contracts for two pairs of CCGT plants – projects one and two of the Rumah and Nairiyah schemes – last year.
SPPC also signed the offtake agreements for four solar PV IPPs, which were tendered under the fifth round of the National Renewable Energy Programme (NREP). These were contracts for the 2GW Al-Sadawi, 1.25GW Al-Masaa, 500MW Al-Henakiyah 2 and 300MW Rabigh 2 solar IPPs.
An EPC contract for a high-voltage, direct current transmission network connecting the kingdom’s central and southern electricity grids was also one of the largest deals signed last year in the kingdom.
In the second half of 2024, the developer arm of Saudi Electricity Company (SEC) selected the preferred bidders for several greenfield CCGT expansion plants: Ghazlan 1 and 2, Riyadh PP12 and Marjan.
SEC subsidiary National Grid also awarded the second phase of its bess projects that are being procured on an EPC basis to local firm AlGihaz Holding last year. The three battery energy storage facilities, each with a capacity of 800MW, or about 2,600 megawatt-hours, are to be located in Najran, Khamis Mushait and Madaya.
The extent of work on hand is exerting pressure on contractor capacity, according to some experts.
"I think the Chinese EPC contractors are already at capacity, so SEC has started tapping Egyptian and Spanish EPC contractors," an industry source told MEED, referring to Tecnicas Reunidas, Orascom and Elsewedy, which are understood to have been selected last year to undertake the EPC contracts for several CCGT plants that SEC is developing.
South Korean EPC contractors are also executing several cogeneration and generation power plants in the kingdom.
Outlook
The need to expand, connect and stabilise the kingdom’s electricity grid will be a primary preoccupation for Saudi utility stakeholders in the short to medium term.
This is crucial given the large capacity of renewable energy power generation plants that are scheduled to come on stream, and as the kingdom deploys new gas-fired plants in line with its need to displace liquid fuel in some of its ageing fleet.
Oil fuel still accounted for 36% of Saudi Arabia's total electricity generation in 2023, at 422.9 terawatt-hours, according to the Energy Institute.
Data from MEED Projects suggests that at least $68bn-worth of power generation and transmission contracts are in the pre-execution phase as of March 2025.
Clean energy fuel-powered plants, using solar, wind, hydro and nuclear, dominate the $47bn-worth of planned power generation units, with thermal plants accounting for just 13% of the total.
This signals a shift to clean energy, despite the overall figure excluding a significant volume of renewable energy projects that are still in the concept stage. This is in line with a plan by the Energy Ministry to procure up to 20GW of renewable energy capacity annually until 2030, subject to demand growth.
Planned transmission and distribution projects, including several independent battery energy storage projects, together account for about $21bn of contracts that have yet to be awarded.
Local developers
Local companies are increasingly visible in the procurement proceedings for new power generation and transmission plants in the kingdom.
The decisions made by several European and Japanese developers to retreat from thermal power plant tenders that do not offer a clear carbon capture, utilisation and storage (CCUS) path – which would be necessary for them to meet their 2045 or 2050 net-zero targets – has contributed to this trend.
The exclusion of dominant utility developer Acwa Power in the prequalification process for the NREP’s fifth and sixth procurement rounds has also opened up opportunities for other international and local developers that are keen to win more contracts in Saudi Arabia.
Aljomaih Energy & Water, Ajlan & Brothers, Alfanar, Algihaz and SEC’s developer arm have been pursuing new contracts, usually in cooperation with an international developer.
Battery energy storage
Large-scale solar PV projects and limited wind capacity in the kingdom create a major market for battery energy storage going forwards.
Independent battery energy storage projects, in particular, offer neutral opportunities for both international and local developers, and are expected to attract more bidders compared to conventional thermal or standalone solar PV projects.
“We are definitely interested,” says a senior executive with a European utility developer, referring to the first phase of the kingdom’s independent storage provider (ISP) programme.
In addition to its net-zero merits, the ISPs will follow the same model as an IPP project, where the successful bidders will hold 100% equity in the special purpose vehicles set up to develop and operate the project.
While such strong interest is expected to benefit the principal buyer, which can expect to receive competitive prices from bidders, an over-competitive or crowded landscape could also be off-putting to developers and investors that are keen to maintain their internal rate of return, or which are shifting their global focus to other geographies.
“We prefer to wait and see,” one source tells MEED, indicating that their company does not intend to participate in upcoming battery tenders, not only in Saudi Arabia but also in other GCC states.
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