White paper unveils details of Saudi's 54 GW renewable energy plans22. February 2013 | Applications & Installations, Global PV markets, Industry & Suppliers, Investor news, Markets & Trends | By: Becky Beetz
A white paper has been released detailing the proposed competitive procurement process (CPP) of Saudi Arabia’s K.A.Care program, which aims to install 41 GW of solar in the region by 2032. The first tendering round is scheduled to be held in the first half of this year. Local content will play a significant role.
Overall, the K.A.Care program intends to install 54 GW of renewable energy – including solar, wind, geothermal and waste-to-energy – by 2032 in Saudi Arabia. The aim is to reach around 5.1 GW by 2018, and 23.9 GW by 2020.
Under the plans, project developers will be invited to bid on power purchase contracts. Over the next two to three years, three tendering rounds – introductory, and first and second procurement rounds – will be held, for 7 GW worth of projects. The first is scheduled to be held in the first half of 2013. Subsequent rounds are then expected to be announced.
"To ensure that sufficient timely renewables capacity is brought online consistent with targets, and to assure a critical mass of early projects, initial procurements will be sized larger than the announced annual targets to allow for some upside margin," explained the white paper authors.
K.A.Care wrote to prospective program participants on February 20 to inform them that the K.A.Care Renewable Competitive Procurement Portal had been officially launched. The portal will include an interactive bidding platform for those interested in participating in the Renewable Energy Program of the Kingdom of Saudi Arabia (KSA).
"Initially," wrote K.A.Care, "the CPP will consist of an Introductory Round with pre-packaged sites identified by K.A.Care, followed by additional procurement rounds scheduled sequentially thereafter. These initial rounds are the focus of this officially released White Paper titled, 'Proposed Competitive Procurement Process for the Renewable Energy Program'."
White paper details
The white paper, which invites public feedback by April 5, lays out the proposed competitive procurement process (CPP) for the renewable energy program. The two objectives of the CPP are: "(i) to kick-start the Kingdom’s renewable energy sector and (ii) to validate the existing globally benchmarked prices across multiple technologies while applying these prices to the local market context."
Overall, projects are expected to be evaluated on such factors as their financial strength, project development status and degree of local content. "Proponents that integrate local content into their projects will benefit from strong incentives through the rated criteria evaluation for utilizing labor and equipment that provide a positive net benefit to the local economy," stated the authors. "While K.A.Care is aggressively pursuing the development of the local value chain, projects will be expected to escalate their local content inclusion accordingly."
PPAs are expected to be paid for a period of 20 years and eligible projects will be at least 5 MW in size. To be eligible, however, the power plant must come online within two years of the execution of a PPA.
The table below, provides an overview of the CPP’s key features:
Solar thermal, solar PV, wind, geothermal, and waste to energy; hybrid and other technologies will be included in future rounds
Eligible project size
Min: 5 MW capacity per procurement round; Max: based on single proponent cap of 30% of capacity per procurement round
Initial procurement targets
Introductory Round: 500-800 MW; 1st Round: 2,000 to 3,000 MW; 2nd Round: 3,000 to 4,000 MW capacity
Based on energy mix portions; flexible; add desalination, remote areas, others
Frequency and duration of procurements
After Introductory Round, anticipated 12-18 months between 1st and 2nd rounds; duration: 8-10 months
Energy-only power purchase agreement
20 years for all technologies
Application fees and security
[SR 37,500]/MW capacity cap of [SR 3,750,000]) security
Bid evaluation framework
Price and non-price factors (financial capability, development status, experience, local content etc.)
Local Content Requirement (LCR) definition and structure
Escalating in nature, initially incentivized only and subsequently a minimum threshold requirement to be met
Participation of state owned entities
Structured to ensure level playing field
Adapted from "Proposed Competitive Procurement Process for the Renewable Energy Program"
In the introductory bidding round, K.A.Care is targeting between 500 to 800 MW worth of renewable energy projects. The white paper explains that it will consist of five to seven projects of "varying technologies at pre-packaged sites offered to bidders at locations that can be easily connected to the grid."
A further two rounds will target two to three GW, and three to four GW, respectively. Their timing will be determined on the length of the preceding rounds. However, it is expected that a single round will last between six and 10 months. "After the nine to twelve month process culminating in the selection of the winners of the Introductory Round, the first full scale procurement round shall be initiated," states the paper.
Regarding photovoltaics, 1.1 GW and 1.3 GW are expected to be installed under the first and second procurement rounds. Overall, the program is targeting 16 GW of photovoltaics and 25 GW of solar thermal by 2032.
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