Saudi Arabia's Neom plans first tenders for renewables power grid this year
Minimum energy consumption at 50 TWh to 60 TWh
Neom to use 8 GW to 10 GW of wind power
Solar power capacity will be around 16 GW to 20 GW
Saudi Arabia's planned $500 billion futuristic city known as Neom is set to issue its first tenders to build a renewable power grid later this year, according to the executive director of Neom Energy.
"Regarding the technical design of our high voltage power grid, we expect to reach out to the market later this year," Jens Madrian told S&P Global Platts in an interview.
The first tender packages to be issued will be in the range of 400 MW to 800 MW, he added.
"Not huge, but it's reasonably sized at this stage, with way more to come," Madrian said.
Neom, which will be built along Saudi Arabia's borders with Jordan and just across the narrow Strait of Aqaba from Egypt's Sinai Peninsula, is a linchpin of the world's largest oil exporter's plans to diversify its fossil fuels-dominated economy. It will be home to one of the world's largest green hydrogen projects and is expected to span across 26,500 sq km. It is also expected to function as a carbon-neutral city that will be able to accommodate up to 1 million people.
Energy consumption from the planned region is expected to be around 50 TWh to 60 TWh "at the very minimum," Madrian said. "We could also see a substantial growth depending on the uptake of energy-intensive industries which are in demand of 100% renewable power supply," he said.
Energy industry activities will include the planned green hydrogen project as well as renewables-based desalination for both public consumption and for use in electrolysis to produce green hydrogen.
Saudi Arabia is building one of the world's biggest green hydrogen projects in Neom. The project developed by Riyadh-based ACWA Power and Air Products will be completed by Q1 of 2026. It will produce 240,000 mt/year of green hydrogen, which will in turn be processed into 1.2 million mt/year of ammonia.
Power consumption
Neom will look to tap 8 GW to 10 GW of wind power and between 16 GW and 20 GW of solar power generation based on its current set of assumptions, Madrian said.
With new planned additions such as the Oxagon industrial city and The Line, which will have no cars and no streets, demand for energy is expected to be considerably higher.
"If demand in Oxagon, Neom's re-imagined industrial city, would pick up on large industrial customers, need for additional renewable supply will increase correspondingly," Madrian said.
A big challenge for the development is to provide clean drinking water with low energy impact.
The arid oil-producing regions of the Middle East account for nearly half of the world's desalination capacity.
The plants operate on largely natural gas-powered generation, which accounts for a significant chunk of overall electricity demand.
Neom, which plans to have zero-carbon impact, could tap into Saudi Arabia's geothermal energy reserves as well as use large-scale concentrated solar power to produce clean water, Madrian said.
"You can go down the route of supplying power on a stand-alone basis and source heat from somewhere else," he said. "Or you can do it in an integrated fashion and could consider concentrated solar power (CSP) and geothermal. With regard to renewables at Neom, everything is on the table, and we're looking essentially at every opportunity."
Saudi Arabia's planned $500 billion futuristic city known as Neom is set to issue its first tenders to build a renewable power grid later this year, according to the executive director of Neom Energy.
www.spglobal.com
Strong momentum in Saudi Arabia’s drive toward renewables and infrastructure
January 4, 2022
Lama Kiyasseh
Saudi Arabia’s strategy to push through its portfolio of clean and renewables assets was further strengthened in 2021 as the kingdom witnessed several project financings in the solar sector and launched the National Infrastructure Fund (NIF) to diversify its economy.
When Saudi Arabia first announced its
Vision 2030 economic development plan, there was much discussion about its capacity to harness solar energy to ultimately curb emissions and displace its use of liquid fuel in electricity production — with the aim of exporting it instead, thereby monetizing its crude. In 2019, solar targets for both 2023 and 2030 were revised substantially upwards, with a targeted share of 20 Gigawatts (GW) and 40 GW, respectively for solar photovoltaics (PV) [
Figure 1].
Having started modestly with 0.35 Megawatts (MW) at the turn of the century, installed solar capacity grew to 2.35 MW by 2010. By 2018, it rose substantially to 84 MW, of which 50 MW was concentrating solar power. Expansion of solar capacity continued to accelerate in 2019, reaching 394 MW on the back of the 300-MW Sakaka PV plant, which connected to the grid that November with a commercial operation date the following year in Q2 2020.
As the kingdom
inaugurated Sakaka, its first-ever utility-scale renewable energy project under the National Renewable Energy Program in April 2021, seven independent power producer schemes for approximately 3 GW (2,970 MW) of PV projects
were announced to have signed power purchase agreements (PPAs). Of these, Sudair, Jeddah, and Rabigh had reached financial close by mid-2021, together accounting for 2.1 GW; both Jeddah and Rabigh are scheduled to come online in 2022, and the first phase of Sudair is expected to begin producing electricity during the second half of 2022 [
Figure 2]. This will bring total installed solar capacity to approximately 2.5 GW, or 12.5% of the revised 2023 target.
Sudair, the largest project at 1.5 GW, will require an investment of just over $905 million, with a levelized cost of electricity of 1.239 cents per Kilowatt-hour, and will receive $600 million in project financing (equal to 66% debt) from a consortium of local and international financial institutions. Rabigh, at 300 MW, became one of the first renewables projects to draw on financing from an export credit agency; Japan’s Bank of International Cooperation provided a soft mini-perm structure amounting to approximately $78 million, which has been combined with an Islamic facility tranche. All projects tendered by the Ministry of Energy are backed by 25-year PPAs with the Saudi Power Procurement Company as offtaker.
Saudi Arabia
plans to generate 50% of its electricity from clean sources by 2030. This is to be implemented by complementary tracks pursued by both the Ministry of Energy and the Ministry of Industry and Mineral Resources, tendered by the Renewable Energy Project Development Office, which will oversee the procurement of 30% of this target via a competitive process; the kingdom’s Public Investment Fund (PIF) is set to deliver the remaining 70% through direct negotiations with investors in an effort to develop Giga-scale projects. However, according to BP’s
Statistical Review of World Energy 2021, only 0.3% of its electricity supply came from renewable energy in 2020 — its latest available figures — thereby necessitating more investment if Saudi Arabia wants to meet its ambitious goals for renewables.
Nonetheless, October witnessed strong momentum for climate action from the kingdom as it
announced a net-zero target for 2060 ahead of the COP26 U.N. Climate Change Conference and updated its Nationally Determined Contributions under the Paris Agreement. With the UAE, it pledged $340 billion in net-zero investments to be allocated to renewable energy, storage, and hydrogen, including carbon capture, utilization, and storage projects — the latter of which will help drive Saudi Arabia’s
"Carbon Circular Economy" approach to achieve its goals.
In parallel, it also announced the establishment of an NIF, enlisting U.S. asset manager BlackRock to help advise on it. This Fund — backed by Saudi Arabia’s National Development Fund, which was set up in 2017 — has an investment target of $53 billion spanning various sectors, including power and water, and is likely to further propel investment in renewables. It is set to participate through debt and equity, and offer credit guarantees to mobilize domestic and foreign capital.
Targeted funds are not a new development, especially for economies that are both resource-rich and -dependent, and ring-fenced vehicles have previously been set up by several countries to play active roles in facilitating financing in strategic sectors. Examples include the
Nigeria Infrastructure Fund, established by the Nigeria Sovereign Investment Authority (NSIA) in 2013, and allocated $600 million. Its investment mandate focuses on actively developing greenfield projects in five core sectors, such as health care, motorways, and power, to stimulate growth and diversification, as well as attract foreign investment. Noteworthy is a key performance indicator of additionality: the financing of projects that otherwise would not have happened without its involvement. More recently, NSIA partnered with the Central Bank of Nigeria and Africa Finance Corporation to
establish the Infrastructure Corporation of Nigeria Ltd (InfraCorp), an infrastructure special purpose vehicle that will complement the existing Fund. Nigeria has assigned four asset managers to manage the $37 billion InfraCorp, similar to Saudi Arabia’s approach. Another example is the Ghana Infrastructure Investment Fund, which started operations in 2015 with a $325 million equity injection. It currently has $275 million committed across a diverse infrastructure portfolio, with 75% composed of debt instruments, and 20% and 5% from equity and mezzanine financing, respectively.
Saudi Arabia’s NIF will no doubt contribute to de-risking infrastructure projects and promote innovative financing solutions, thereby deepening the country’s capital markets. What remains to be seen, however, is the mechanics and impact of such an endeavor on an economy that has identified infrastructure as one of its key pillars in Vision 2030.
Lama Kiyasseh is an energy economist and infrastructure development professional with extensive international experience in emerging markets. She is currently at the International Finance Corporation (IFC), the World Bank’s development finance institution, with a portfolio that covers investments in climate finance. She is also a non-resident scholar with MEI’s Economics and Energy Program. The views expressed in this piece are her own.
Photo by FAYEZ NURELDINE/AFP via Getty Images
Saudi Arabia’s strategy to push through its portfolio of clean and renewables assets was further strengthened in 2021 as the kingdom witnessed several project financings in the solar sector and launched the National Infrastructure Fund (NIF) to diversify its economy.
www.mei.edu
Saudi Arabia plans to generate over 15,000GW/h from renewables by 2024
Updated 30 December 2021
ARAB NEWS
December 30, 2021 10:05
RIYADH: Saudi Arabia plans to generate 15109 gigawatt hours of electricity from renewable sources by 2024, supplying 692,557 houses with energy, the Kingdom's Gastat said on its website.
The projects, to be implemented under the National Renewable Energy Program, aim to provide 7,870 job opportunities by the end of 2024, it said.
As the amount of fossil fuel consumed shall be reduced, these projects would contribute to decreasing carbon dioxide emissions by 9,828,156 ton per year by 2024.
The number of projects to be implemented under the Program has reached 13 with a total capacity of 4,870 megawatts.
Solar energy projects will account for the majority of energy produced, making up 91.8 percent.
In particular, the Sedar Solar PV Plant Project will have a capacity of 1,500 MW which corresponds to a share of 30.8 percent of the 13 projects’ total capacity.
This project will also be solely responsible for the energy supply of 185,000 houses, as well as provide 970 jobs.
Rass Solar is another project with a large capacity, estimated at 700 MW, and is set to furnish over 103,000 houses with energy and deliver 980 jobs.
The sole wind energy project, the Dumat Al-Jandal Wind Power Project, will only account for 8.2 percent of the capacity.
In 2020, the total global horizontal irradiance, also known as GHI, in Saudi Arabia was valued at 27,615 watts an hour per meter square per day, or Wh/m2/day.
This indicator is a measure of the total amount of short solar irradiance falling on horizontal solar panels, which is used to produce electrical energy in solar panel cells.
The Southern Region accounted for 21.6 percent of the Kingdom’s total GHI.
RIYADH: Saudi Arabia plans to generate 15109 gigawatt hours of electricity from renewable sources by 2024, supplying 692,557 houses with energy, the Kingdom's Gastat said on its website. The projects, to be implemented under the National Renewable Energy Program, aim to provide 7,870 job...
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