WFES 2017: Saudi Arabia announces new energy master plan

The new program is set to commence in a few weeks’ time, when Saudi Arabia’s government will launch the first round of bidding for a new renewable energy tender, Al-Falih announced at the World Future Energy Summit 2017 (WFES) in Abu Dhabi. The energy minister did not, however, provide any details regarding the capacity that will be auctioned in the tender.

Solar and wind power will be the preferred technologies in the auctions, but geothermal and waste projects will also be considered, just with a smaller role to play.

Saudi Arabia, OPEC’s biggest oil producer, is aiming for renewable energy installations, primarily of solar and wind, of 9.5 GW by 2023, but this is just the starting point, the country’s energy minister told the ADSW.

By 2030, the country will generate 70 percent of its electricity from natural gas and 30 percent from renewables and other sources, promised Al-Falih.

“Other resources” include nuclear power plants, of which plans for two nuclear reactors totaling 2.8 GW are currently in the early stages of consideration and planning.

Nevertheless, the new program that Al-Falih referred to yesterday, stems from last year’s Vision 2030 strategy, which is aimed at preparing the country for a post-oil economy.

The IMF recently cut its growth forecast for Saudi Arabia, with new estimates expecting that its GDP will only rise by 0.4% this year, down from 4% GDP growth that was predicted in October.

New regulatory framework: when?

Speaking today in front of a panel at the WFES, being held this week in Abu Dhabi as part of the city’s sustainability week, Osama Khawandanah, senior vice president of energy trading and ventures at the Saudi Electricity Company (SEC) said that the future renewable and conventional power plants will be based on independent power purchase (IPP) contracts and that this is a huge opportunity for the private sector to get involved.

Khawandanah was not able to answer whether the new program will include a feed-in tariff for renewable energy plants, after a member of the audience aimed the question at him. However, he said that SEC will commit to buying all generated electricity from the new renewable energy plants.

So, is there any means for optimism over the potential renewable energy sector on the horizon?

Thamer Al-Sharhan, managing director of ACWA, the country’s leading renewable energy developer, told the WFES that he has heard a number of promising plans over the last six years that didn’t materialize, but this time he has genuine optimism.

He told the panel that for the new plan to succeed, the country needs a clear, fair and transparent regulatory framework that promotes competition among private stakeholders. The private sector always allocates and measures the market risks and eventually comes up with practical solutions. But if the policy framework is not fair, it is very hard for an investor to find a solution. Al-Sharman urged the government to regulate a framework that allows the energy market to evolve from its current monopolistic character.

Other panelists chose to stress the renewable energy development opportunities in Saudi Arabia, and elsewhere in the Middle East, by highlighting projects located in water desalination plants. This idea has been mentioned a number of times at the summit in Abu Dhabi.

PV power for peak times

“Saudi Arabia has made its highest level commitment to renewables with its Vision 2030 strategy,” First Solar's vice president of business development for the Middle East, Raed Bkayrat, told pv magazine. “We already see developments in the market, with the ongoing tender to procure 100 MW of solar.”

Speaking more specifically, Bkayrat added that there is definitely “potential for Saudi Arabia to tap into solar energy more extensively in order to address its Peak Load requirements.”