RATIONAL

The Renewables manufacturing cluster represents a promising opportunity for the Kingdom to capture additional value of the domestic and regional forecasted demand. The domestic market for Renewables is poised for growth due to the Kingdom’s ambitious objective to reach 50% of its energy needs through Renewable energy by 2030, a contribution 4x bigger than that of Germany, which currently has the biggest share of Renewable energy globally at 13% . KSA is reaching global records in terms of LCOE of Renewable energy Beyond this ambitious utilization of Renewable Energy in the domestic market, there is also a great opportunity to manufacture and export Renewables equipment to address the increasing needs throughout the MENA region.

Value Proposition

• The kingdom’s location is one of the best locations worldwide for solar energy production.
• Saudi Arabia Renewable Energy capacity is expected to reach around 50% of the Energy Mix to produce electricity by 2030.
• The regional solar market is expected to reach USD 18 bn by 2030.

•Solar and Wind are growing globally, however CSP remains small with moderate growth.

Storage helps solar contribute to the electricity supply even when the sun isn’t shining. It can also help smooth out variations in how solar energy flows on the grid. These variations are attributable to changes in the amount of sunlight that shines onto photovoltaic (PV) panels or concentrating solar-thermal power (CSP) systems.

Solar energy production can be affected by season, time of day, clouds, dust, haze, or obstructions like shadows, rain, snow, and dirt. Saudi’s Water and Electricity Regulatory Authority (WERA) has issued a new Regulatory Framework for Renewable Energy Generation for Self-Consumption. The new regulation, which is an improvement on the previous Regulation for Small-Scale Solar PV, enables now renewable energy systems with capacities greater than 2 MW and expands the framework to off-grid systems.

Globally, Electricity supply continues a major shift towards low-carbon sources; share of fossil fuels to fall below 50% in 2040.

This trend of Solar & Wind energy is increasing globally, but more so regionally with favourable conditions and growing demand.

Key insight:

•Regional growing at double digit rate in both Wind and Solar PV.
• Ambitious renewables deployment targets exist in many GCC/MENA countries which would promote local manufacturing.
• CSP technology however not yet cost competitive, Solar PV has reached below grid parity.

Drivers:

• Regional governments are setting clear objectives to address climate change (e.g., KSA to achieve 50% of energy mix by 2030, including Solar and Wind).
• Large scale projects such as NEOM are demand drivers and renewable energy parks are planned to be deployed across KSA.

Key highlights:

• KSA has reached global record low LCOE.
• Regional reference: UAE alone added 1 GWh in 2019; manufacturing hubs with focus in RE can be planned.

Saudi Arabia is in front of a unique opportunity to decrease reliance on oil and become a solar energy market leader.