Saudi Arabia is passing the bill on to developers by offering full ownership of upcoming renewables projects totalling 3.45 gigawatts, but few companies will meet the criteria required.
The kingdom kicked off its first round of its national renewable energy programme (NREP) by issuing a request for qualifications (RFQ) on Monday. Companies are now preparing documents to submit in order to qualify for the 700 megawatts of solar and wind energy projects, according to the energy ministry’s Renewable Energy Project Development Office.
Selected companies will move on to further elimination rounds with the project awarded expected on October 20. The RFQ said that the plant, under a 25 year agreement, will be fully owned by the successful bidder, which will be a first for the kingdom. The energy generated at the sites will be sold to a "limited liability company, guaranteed by the Saudi Electricity Company (SEC)" - or a newly created division that falls under the utility.
"It is our goal to make the national renewable energy programme among the most attractive, competitive and well-executed government renewable energy investment programmes in the world, and we have all the necessary infrastructure in place to ensure that is the case," Saudi energy minister Khalid Al Falih said on Monday.
Saudi Arabia is embarking on a diversification strategy with a 9.5 gigawatt renewables target by 2023, but this RFQ is an indicator of what will come in future rounds, including eight locations totaling 1,020MW in round two and up to 12 locations totaling 1,730MW in round three.
The managing company will hold at least a 30 per cent interest and have a minimum of 1,000MW of renewable energy independent power producer (IPP) projects in operation globally, with a tenth of that figure constructed outside of the applicant’s home market. The technical partner for solar, holding at least a 20 per cent stake, will have developed a minimum of 200MW of solar PV and one plant still in operation totaling at least 50MW.
These restrictions are similar to the UAE’s template for solar power projects with only a handful of companies able to go in alone, as seen in Abu Dhabi’s Sweihan (EDF, Enel, Engie and First Solar). Others will need to rely on partnerships to meet the stringent criteria.
The government is committed to shifting to an independent power producer system versus its previous model which limited private ownership. This means Saudi Arabia doesn’t have to spend any money up front to get these projects underway, which is slightly different than in the UAE where ownership for such projects is still 60 per cent owned by the government.
Marc Norman, Dubai-based associate at law firm Chadbourne & Parke, said that this fell in line with two previous project tenders from SEC, giving private companies a 100 per cent ownership. "To a certain extent, these increased equity requirements will determine which players can bid for these projects, also because project sizes are considerable – however, they may also result in more bidding partnerships," he said.
"But this policy shift goes a step further because, in the context of this new model, the government is avoiding any requirement for it to make equity contributions."

Source: The National