Industry preparing for unprecedented Saudi renewable program

The scale of the program - unprecedented not only in the Middle East region, but globally - makes it a bright opportunity for the beleaguered renewable-energy industry, which is currently suffering from overcapacity and plummeting component prices.

For the first time, details of the long-anticipated program emerge in the white paper released by government organization K.A.CARE. The total targeted renewable capacity will be more than 54,000 megawatts cumulatively by 2032. According to the white paper, a government body will purchase electricity generated from solar (photovoltaic and solar-thermal), but also wind, geothermal and waste-to-energy plants.

Developers will be invited to bid on power purchase contracts. Three tendering rounds with a total capacity of up to 7,000 MW are planned until 2015, with the start of the first introductory round in the first half of 2013. Saudi Arabia puts a clear focus on large utility-scale renewable power plants, but the country also plans to promote small off-grid plants. Local production of components as well as training of Saudi employees will be important criteria for the selection of bidders.

The Saudi renewable energy procurement program announced today is targeted at both local as well as international bidders. Local heavyweights, many of them from the booming Saudi construction industry, will now be hard-pressed to finalize their strategy and to prepare their renewable-energy market entry. Moreover, the program offers excellent opportunities to European, Asian and American manufacturers and project developers, in particular given that the entire industry is suffering from a slump in demand in historically strong European markets. "This is the breakthrough for the Saudi renewables market - the key to success will be the collaboration of local conglomerates and experienced international partners. Saudi companies are eager to bid, but need the track record and expertise from abroad," says Nikolai Dobrott, Managing Partner of Germany-based Cleantech strategy consulting firm Apricum.