Saudi Arabia: Solar PV Opportunity (2025 focus)

Saudi Arabia: Solar PV Opportunity (2025 focus)

This is a focused, investor- and developer-oriented briefing on the Saudi solar PV opportunity — current state, pipeline, commercial & technical considerations, risks, and a prioritized go-to-market playbook you can use immediately.

1) Executive snapshot

            •          Ambition & scale: Saudi Arabia has set one of the most aggressive renewable targets in the region — aiming for roughly 100–130 GW of renewables by 2030 (roughly half of its electricity mix), with solar representing the majority of that build-out. This makes KSA the single largest utility-scale market in the GCC over the rest of the decade. 

            •          Recent traction: The Saudi Power Procurement Company (SPPC) signed PPAs for ~5.5 GW of solar projects in 2024, and government/ PIF-led consortia continue to accelerate rounds and bilateral deals. Major developers (ACWA Power, Aramco Power, PIF-owned Badeel) are active sponsors. 

            •          Flagship projects: Sudair 1.5 GW (ACWA Power) is operational; NEOM green-hydrogen and associated solar parks are well advanced; multiple regional PV projects (Aseer, Mecca, Medina, Riyadh provinces) were announced under multi-billion dollar deals in 2025. 

2) Market structure & procurement landscape

            •          Central buyer model (SPPC): SPPC consolidates large IPP procurements and signs long-term PPAs (25+ years). This repeatable procurement model reduces offtaker credit risk for well-structured projects. 

            •          PIF & state-backed sponsors: The Public Investment Fund (PIF), state entities (Aramco Power, Water & Electricity Holding Company / Badeel) and major domestic developers (ACWA) are co-investing heavily — often taking anchor equity in projects to accelerate FID and improve bankability. 

            •          Annual tender cadence: Sources indicate plans to tender ~20 GW annually in large tranches (2024 onward) creating a steady pipeline but also high competition and compressing margins. 

3) Key projects & pipeline (selected)

            •          Sudair PV (1,500 MW) — ACWA Power lead; fully operational and a visible example of large-scale delivery and bankability in the Kingdom. Tariff and PPA structure from Sudair are now a market reference. 

            •          NEOM / Green Hydrogen cluster — multi-GW solar + wind feeding electrolyzers; construction reportedly ~80% across components (as of early-2025) — a strategic anchor for large, long-duration renewable demand. 

            •          SPPC 2024 PPAs (Haden, Muwayh, Al Khushaybi) — three projects totaling ~5.5 GW (ACWA, Aramco Power, Badeel consortium), demonstrating scale and new regional siting across northern/western provinces. 

            •          New 2025 deals ($8.3bn) — a recent wave of agreements to build ~15 GW (mix of solar & wind) announced in 2025 led by ACWA and Aramco Power shows continuing policy momentum and accelerated capital allocation. 

4) Commercial & financing environment

            •          Of­ftaker credit & bankability: SPPC PPAs and involvement by PIF / Aramco Power materially improve bankability, enabling long tenors and international financing at competitive rates. Expect international commercial banks, export credit agencies and institutional debt to be active. 

            •          Tariff environment: Competitive auctions and scale have driven very low tariffs in the region. Bidders should model tight tariff assumptions and stress test for lower-than-expected realized revenues and curtailment risk. (Saudi projects have achieved global-class pricing.) 

            •          Local content & JV expectations: Saudi localization policy and industrialization goals encourage / require local partners, local content plans, and in some cases local capex or job creation commitments. Expect qualification scoring to penalize bidders without clear localization strategies. 

5) Technical & grid integration considerations

            •          Resource quality & siting: Excellent solar irradiation across large tracts; many projects sited inland where yields and land availability are strong. Evaluate high-albedo opportunities for bifacial where soil albedo is favorable. 

            •          Temperature & soiling: Desert climate creates performance degradation drivers (high ambient temps and frequent soiling). Plant design must prioritize high-temperature tolerated modules, inverter selection, optimized DC/AC ratio, and cost-efficient cleaning strategies (robotic or water-efficient cleaning). Include realistic soiling degradation and cleaning OPEX in financial models. 

            •          Transmission & stacking: Large solar clusters (e.g., NEOM) require dedicated transmission build-out. Coordinate early with SPPC/Government on grid connection studies and ensure evacuation cost and timing are well understood. Battery storage is increasingly scoped into tenders to provide grid-friendly bids and optionality. 

6) Hydrogen & industrial demand linkage

            •          Green hydrogen as anchor demand: NEOM and other hydrogen projects will absorb multi-GW of renewables. Securing land, water (or seawater-to-freshwater options) and assured grid / direct connection to electrolyzers creates a differentiated commercial route (offtake vs merchant electricity sales). 

            •          Offtake structuring options: Consider direct long-term PPAs with electrolyzer consortia, captive PPAs with industrial zones, or hybrid structures combining SPPC PPA for grid supply and merchant/firming contracts for hydrogen plants. Detailed contractual design will be required to align intermittent PV with electrolyzer operations. 

7) Key risks (and mitigations)

            •          Policy changes / target volatility: While targets are ambitious, procurement pace and target bands can adjust. Mitigation: bid to bankable frameworks, structure downside protection (availability payments, government guarantees where possible). 

            •          Grid curtailment & system integration: Large, concentrated PV leads to midday oversupply. Mitigation: include storage in bids, offer flexibility services, and pursue location diversification across provinces. 

            •          Local content / permitting delays: Heavy emphasis on localization may slow foreign-led consortia unfamiliar with local requirements. Mitigation: partner early with Saudi industrial players, create clear localization roadmaps, and secure local legal/PR counsel. 

            •          Environmental & water constraints: For projects with cleaning needs or hydrogen-linked electrolysis, water sourcing and environmental permitting can be material. Mitigation: integrate water-efficient cleaning, desalination coupling (if H2 use case), and early environmental baseline studies.

8) Actionable go-to-market (GTM) playbook — prioritized steps

Immediate (within 0–3 months)

            1.         Tender intelligence & shortlist: Subscribe to SPPC and Ministry procurement feeds, and track PIF / ACWA announcements. Prioritize tenders where PIF/Aramco participation provides balance-sheet support. 

            2.         Local partner identification: Lock in 1–2 Saudi strategic partners (construction, utilities, or industrial holding) to satisfy localization and expedite permitting. Start LOI/term-sheet talks. 

            3.         Technical baseline & site visits: Commission high-resolution resource & soiling studies for targeted sites and preliminary grid impact assessments. Engage local consultants for permitting roadmap.

Short term (3–9 months)

            4.         Bid readiness & financial stack: Prepare bankable financial model with conservative LCOE, cleaning OPEX, and curtailment scenarios. Pre-arrange debt interest indications from export credit agencies and regional lenders. 

            5.         Localization plan & supply chain: Submit credible local content plans (manufacturing/assembly targets, Saudization hiring plans) and identify EPC partners with GCC execution record. 

            6.         Storage & hydrogen optionality: Model hybrid bids (PV + battery) to increase bid competitiveness and optional hydrogen offtake tie-ins where projects are adjacent to planned electrolysis hubs.

Medium term (9–24 months)

            7.         Consortium & equity close: Secure anchor equity (PIF co-investor, strategic offtaker equity) to accelerate FID and secure better financing terms. 

            8.         O&M & performance guarantees: Tender long-term O&M with performance-linked SLAs and advanced soiling mitigation plans (robotics/anti-soiling coatings) to protect yield. 

9) Tender & bid best practices —  checklist

            •          Lead with local equity / sponsor and demonstrate project alignment to Saudi industrialization goals. 

            •          Offer flexible PPA/firming solutions (storage/dispatchability) instead of pure energy-only bids. 

            •          Include robust environmental and water management plans — these are scoring considerations for large projects and hydrogen clusters.

            •          Price competitively but model stress tests (lower irradiation, higher O&M, delayed COD) to ensure covenant compliance.

            •          Prepare an exit / secondary market plan for equity investors (e.g., selling minority stakes to strategic sovereign/infra funds post-COD).

10) High-level financial & timeline expectations

            •          Typical PPA tenor: 20–25 years for SPPC IPPs; expect large sponsors to pursue long tenors to attract low-cost debt. 

            •          Timeline to COD: Large utility PV projects commonly target 24–36 months from financial close to COD (depending on grid works / transmission build). NEOM/hydrogen complexes may be longer due to integrated systems. 

            •          Tariff sensitivity: Auctions have driven very low tariffs across the region — models should be conservative and treat ultra-low winning bids as baseline scenarios, not best-case. 

Omer Muhtaroğlu

MBA Renewables

CEO, Depar Group

06/09/2025 İstanbul