Saudi renewables: Building on last year's record growth

Substantive progress

Last year, Saudi Arabia made substantive progress towards achieving its 2030 goal of generating power through a balance between gas and renewables – eliminating the need to burn oil for domestic use. There is still some way to go, but 2024 was a decisive year for the Kingdom and 2025 looks set to be another year of significant progress.

Saudi Arabia's commitment to renewables is predicated on decarbonising the power sector and freeing up valuable hydrocarbons for export. The concept of energy security has been high on global agendas since Russia's invasion of Ukraine, resulting in a two-pronged push to both hasten the energy transition and ensure a reliable, affordable and accessible supply of energy in the meantime.

The Kingdom's approach to renewables straddles both policy objectives. By increasing renewables output, Saudi Arabia can provide low-carbon power at home and also cater to the growing global demand for hydrocarbons and shifting supply dynamics because of geopolitical events. In the longer term, Saudi Arabia also plans to export renewables and renewables technology.

The Kingdom aims to source a minimum of 50% of its power from renewable energy by 2030, expanding its capacity to 130 gigawatts (GW). Of this, 58.7 GW is slated to come from solar and 40 GW from wind. This is the most ambitious target of its kind among members of the Gulf Cooperation Council (GCC).

The current installed capacity, as of end-2024, is 6.5GW when brought fully online. Four new solar PV plants added 3.7GW of grid-connected capacity last year, including the 300-MW Saad solar PV plant and the 700-MW Ar Rass and 600-MW Shuaibah 1 facilities. In 2024, the Shuaibah 2 solar PV plant overtook the Sudair PV plant to become the Kingdom's biggest renewable facility at 2.06GW.

Seven renewable projects

In 2025, seven renewables projects are scheduled to come online, including Acwa Power's three solar PV plants—Saad 2, Ar Rass 2 and Al Kahfah—which alone will bring an additional 4.55GW of capacity.

According to MEES and based on Ministry of Energy statements, Saudi Arabia will nearly double its installed capacity by the end of 2025, and this will push Saudi Arabia ahead of all its neighbours, excluding Israel. Growth is set to continue, with capacity set to nearly double once again – to 23 GW – by the end of 2027. If this is achieved, then installed capacity will have grown from 0.3 GW in 2020 to 23GW in the space of seven years.

The Ministry of Energy aims to tender 20 GW annually in pursuit of its overall objective and capacity, which could reach 83 GW by 2030. While this is still some way off the 100–130 GW target set for 2030, the pace of project delivery has picked up in recent years and could accelerate further.

The key to KSA's successful installation of capacity is the speed through which projects are passing from financial close to operation.  This is in large part due to the mega-project model adopted by the Kingdom, which benefits from economies of scale and government backing of finance and development. 

In addition, favourable finance terms for renewable projects, vast and cheap land and a high borrowing capacity for renewable project developers have also supported the deployment of utility-scale installed renewable energy capacity. For example, Acwa Power reached a financial close on Rass 2, Al Kahfah and Saad 2 in November 2023, and they will come online later this year.

Another significant step forward on the journey to decarbonise the power sector is the start of production at the Jafurah gas plant, expected in 2025. The Jafurah project fits within the Kingdom's plan to expand gas production by over 50% in the next eight years and, by doing so, free up more than 1 million barrels of oil per day from domestic use.

Alongside serving to meet local demand, the project will also provide feedstock to produce both hydrogen and ammonia. In fact, the Kingdom and Italy signed a five-year memorandum of understanding this week to boost energy cooperation, including the possible supply to Europe of Saudi-produced hydrogen.

Saudi Arabia's pursuit of renewables serves both short- and long-term objectives and is now core to its energy policy. Riyadh is committed to and is progressing quickly in growing its renewable energy capacity, irrespective of US policy.