Saudi Arabia Renewable Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Saudi Arabia Renewable Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Saudi Arabia renewable energy market is expected to grow approximately at a CAGR of over 24.2% during the forecast period. The yearly increase in the electricity demand is cutting the country’s oil export volume and export earnings, and in order to reduce the consumption of oil in the power generation, Saudi Arabia is in the process of restructuring the power sector, hence driving the renewable energy market. Moreover, Saudi Arabia had set a new renewable target of developing and installing 58.7 GW of clean power sources over the next decade, which is expected to increase the demand during the forecast period. However, sizable subsidies that the government offers to their citizens takes away the profit margin for renewables developers, making it essentially economically unviable to develop alternative energy sources for consumer use in the nation, in turn hindering the growth of the renewable energy market in Saudi Arabia.

Key Highlights

• Solar power as a renewable energy is expected to be the largest segment in 2019, owing to revised targets of Saudi Arabia government for increasing the renewables share in its energy mix by installing 40 GW of solar PV by 2030.
• Saudi Arabia does not have a domestic power generation company with expertise in the renewable energy sector, while having very large potential for solar power generation. The privatization of the power industry has allowed the foreign companies, particularly from China and Europe, who have substantial experience with solar energy to develop the solar power plants, hence creating ample opportunities for the market players.
• The country’s plan to diminish the reliance on oil for power generation, and to diversify the revenue streams is further expected to drive the market during the forecast period.

Key Market TrendsSolar Energy to Dominate the Market

• Saudi Arabia government plans to decrease the heavy reliance of oil in power generation and produce one-third of the nation’s electricity from solar. This is expected to drive the demand for solar energy and in turn for renewable in the country, hence amounting for the highest share in 2019 amongst other renewable energy types.
• In January 2019, Saudi Arabia had set a new renewable target of developing and installing 58.7 GW of clean power sources over the next decade. The 2030 target will involve the development of 40 GW of photovoltaic (PV) solar capacity and 2.7 GW of concentrated solar power (CSP) capacity.
• As of early 2020, Saudi Arabia launched the third round of its renewable energy programme, which is to add a total of 1.2 gigawatt of solar photovoltaic power capacity to the grid, and open bidding for six solar energy projects with a combined capacity of 1.2 GW.
• Hence, with increased investment and upcoming projects for solar PV in Saudi Arabia, the renewable energy market is expected to increase during the forecast period.

Decreased Reliance on Oil to Drive the Market Demand

• Electricity generation in Saudi Arabia is dominated by fossil fuels; oil accounting for around 40%. The country is planning to diversify fuels used for power generation to free up oil for export, which witnessed a decline in 2017. The power industry is witnessing a transformation with the inclusion of solar, wind and nuclear power in the power sector, along with increasing natural gas share in the energy mix.
• The electricity generation from renewable sources in 2016 and the past was negligible but is expected to play a significant role to meet the growing demand and diversification of electricity generation. The government is planning to increase electricity generation from renewable sources to 3.45 GW by 2020 and 9.5 GW by 2023.
• Saudi Arabia’s power demand is also growing at a substantial rate. In order to increase the share of renewables, reduce the consumption of oil and meet the growing power demands simultaneously, the power industry in Saudi Arabia is expected to attract significant reforms and in turn large investments. However, crude oil production in Saudi Arabia has been on an increase
• Hence, to reduce the over-dependence on hydrocarbons for power production, the aim is for renewables, supported by nuclear energy, to meet the future demand for power, which is further expected to promulgate the renewable energy market in Saudi Arabia.

Competitive Landscape

The Saudi Arabia renewable energy market is moderately fragmented.Some of the key players are ACWA Power, Alfanar Group, Abu Dhabi Future Energy Company (Masdar), Electricite de France S.A, and Engie SA.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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