Saudi Arabia to Offer 1 Gigawatt of Renewable Contracts in 2017

(Bloomberg) -- Saudi Arabia will offer as much as 1 gigawatt of contracts to buy renewable electricity by the fourth quarter of this year, a government official said, putting more detail on a program designed to stimulate the kingdom’s wind and solar industry.

The government will auction power-purchase agreements covering 620 megawatts of photovoltaic installations and 400 megawatts for wind farms in its second round of tenders for the technologies, said Turki al-Shehri, head of renewable energy project development at the Ministry of Energy, Industry and Mineral Resources.

The oil exporting nation’s goal is to install 3.45 gigawatts of renewable by 2020 and 9.5 gigawatts by 2030, about 10 percent of its current electricity generation capacity. With a growing population, the kingdom is consuming more of its own oil and natural gas resources to feed its utilities.

“It is truly unprecedented for the kingdom,” Al-Shehri said at the Bloomberg New Energy Finance conference in New York on Monday. “The kingdom has set a truly wonderful vision. The tenders that were recently issued, this is only the beginning of our accomplishment. We are open for business.”

Al-Shehri said there would be local-content requirements in the program designed to encourage manufacturers to build capacity in Saudi Arabia. Those rules will be raised in successive years.

Earlier this month, the ministry said it cleared 27 companies to bid for a 300-megawatt solar plant and 24 firms for a 400-megawatt wind farm. That revived a process that was held up by a suspension of the tender process in March announced by the national utility, Saudi Electricity Co.

Al-Shehri said the long-term power-purchase deals will be guaranteed by the government, since the kingdom also is intending to privatize the utility in the coming years. The government is in the process of offering to investors a stake in its oil company, Saudi Arabian Oil Co., or Aramco.

To contact the reporter on this story: Joe Ryan in New York at jryan173@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Will Wade