Saudi Arabia to Offer 1 Gigawatt of Renewable Energy Contracts in 2017

BE2C2 Report — Saudi Arabia will offer as much as 1 gigawatt (1000MW = 1GW) of contracts to buy renewable electricity by the fourth quarter of this year, a government official said, putting more detail on a program designed to stimulate the kingdom’s emerging solar and wind industry.

The government will auction power-purchase agreements (PPAs) covering 620 megawatts of photovoltaic installations and 400 megawatts for wind farms in its second round of tenders for the technologies, said Turki al-Shehri, head of renewable energy project development at the Ministry of Energy, Industry and Mineral Resources.

The oil exporting nation’s goal is to install 3.45 gigawatts of renewable by 2020 and 9.5 gigawatts by 2030, about 10 percent of its current electricity generation capacity. With a growing population, the kingdom is consuming more of its own oil and natural gas resources to feed its utilities. It has decided to invest $50 billion in renewable energy in the next ten years.

“It is truly unprecedented for the kingdom,” Al-Shehri said at the Bloomberg New Energy Finance conference in New York on Monday. “The kingdom has set a truly wonderful vision. The tenders that were recently issued, this is only the beginning of our accomplishment. We are open for business.”

Al-Shehri said there would be local-content requirements in the program designed to encourage manufacturers to build capacity in Saudi Arabia. Those rules will be raised in successive years.

Last week,  Energy Minister Khalid Al-Falih, announced establishment of an information hub called “National Center for Renewable Energy Data” during a 2-day public-private investment conference in Riyadh that attracted more than 800 local and foreign delegates.

The minister said it cleared 27 companies to bid for a 300-megawatt solar plant in Sakaka, and 24 firms for a 400-megawatt wind farm on the the eastern cost of Gulf of Aqaba. That revived a process that was held up by a suspension of the tender process in March announced by the national utility, Saudi Electricity Co.

The projects are being developed on a build, own and operate (“BOO”) basis — 100% owned by the successful Bidder. There will be no investment from any Government entity in the Project Company. The successful bidder will finance the greenfield project and its operation through raising of limited or non recourse debt facilities.

Al-Shehri said the long-term power-purchase deals will be guaranteed by the government, since the kingdom also is intending to privatize the utility in the coming years. The government is in the process of offering to investors a stake in its oil company, Aramco. It has appointed company veteran Motassim al-Maashouq to officially oversee preparations for its initial public offering (IPO), industry sources told Reuters.

The KIngdom plans to list up to 5 percent of the oil giant on the Saudi stock exchange in Riyadh, the Tadawul, and on one or more international markets. Analysts think this could raise $100 billion, based on Aramco being valued at $2 trillion.

The IPO is the centerpiece of the government’s plan, known as Vision 2030, to diversify the economy away from oil.

 

BE2C2 is a business unit of Irshad Salim Associates  which produces reports, infographics, analytics and analyses based on data and information from sources readily available on the web and in the public domain.

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