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Saudi Arabia set to double renewables tenders as Middle East growth may pick up

Saudi Arabia is set to double the capacity amount in renewables tenders this year and in 2023, setting the stage for faster growth in mostly solar and wind projects in the Middle East after lagging other regions in recent years.

Saudi Arabia’s current online renewable energy capacity as tendered by the renewable energy program is 700 MW, the energy ministry told S&P Global Commodity Insights. The online capacity figure is expected to increase “sharply” over the next few years as projects with a total capacity of 7.1 GW have been tendered to the market and are currently in various stages of completion, it said. An additional 15 GW is expected to be tendered in 2022 and 2023, it said.

The Middle East has up until now mostly lagged the rest of the world with total renewable energy capacity last year rising 5.4% to 23.962 GW, led by Iran at 11.929 GW, Israel at 2.615 GW and the UAE at 2.579 GW, according to International Renewable Energy Agency data released in a July report on its website. The vast majority of Iran’s capacity is renewable hydropower, with solar at 3.8% of the total, according to the data.

Global capacity climbed 9.25% last year, with all regions except Africa, Central America/Caribbean and Eurasia showing faster growth than the Middle East, according to IRENA. Saudi Arabia’s total last year jumped almost fourfold to 443 MW from 113 in 2020 after no growth in 2020 but was still well behind Iraq and Jordan.

Efforts to get Saudi Arabia and other crude producers to boost oil production for exports given steps to find an alternative to Russian fuels may be the incentive to get Saudi Arabia to accelerate even more its renewables installations, said Miguel Brito, low carbon electricity analyst at Platts Analytics.

“For some GCC countries such as Saudi Arabia, the situation may renew focus on displacing oil in the power mix with natural gas and solar energy to free capacity for more valuable exports as well as positioning them as key partners for European markets in the energy transition through green hydrogen” he said. “This could spur action on deploying the levels of solar capacity needed to achieve the nation’s aggressive target of 50% renewable energy generation by 2030.”

The Middle East’s renewables capacity lags all parts of the world except for Central America/Caribbean, which was at 17.352 GW last year, according to the IRENA data. Some countries in the Middle East region may still see lower growth. Dubai’s only utility DEWA imposed lower limits on distributed solar project sizes based on consumer connected load, with an overall cap of 1 MW, which could hamper the sector’s growth in the emirate, particularly commercial and industrial solar projects, Brito said. The UAE’s solar capacity jumped 25% in 2021 to 2.578 GW, displacing Israel as the Middle East’s largest, according to IRENA.
Source: Platts

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