Saudi Arabia presses ahead with power sector reforms

As part of its ambitious Vision 2030, Saudi Arabia has been pressing ahead with its plans to reform and privatize the power sector. One of the most significant steps adopted by the Saudi government is to disintegrate the Saudi Electricity Company (SEC) into four power-generating companies, one transmission company and one distribution firm.

“The plan will centre on allocating SEC’s power-generating assets to four companies, with the likelihood that these companies will be offered to local and international investors. These companies will also likely be offered on the Saudi Stock Exchange,” said Mustafa Ansari, Senior Economist at Arab Petroleum Investments Corporation (APICORP).

“This will make the power-generating element of the sector more competitive and could eliminate some of the inefficiencies prevailing in the current bundled single-buyer model where the state owns most power-generating capacities,” Ansari added.

Keeping in-line with the Kingdom’s power reform drive, Saudi-based ACWA Power has been at the forefront of supporting the country’s ongoing efforts of restructuring its energy production mix for the long-term. The company owns and operates several power and water desalination assets with different models and requirements in the Kingdom – each playing an important role in meeting Saudi Arabia’s growing needs.

“Our selection for the 300 megawatt Sakaka Independent Power Producer (IPP), the first ever utility scale renewable energy plant in the Kingdom, is a testament of our commitment towards reforms,” Paddy Padmanathan, President and CEO of ACWA Power.

“Our technology neutral and fuel agnostic approach has allowed us to have a significant impact on the Saudi Arabian power sector, with a number of key projects including one of the most highly efficient plants in the Kingdom, Rabigh-2 IPP, as well as the Sakaka PV plant that was awarded to us this year,” he noted.

Statistics show that in order to meet rising demand, Saudi Arabia will need to invest around $21 billion in the next five years to increase production capacity to 92 gigawatts.

Demand for power in the Kingdom will continue to be fuelled by Riyadh’s industrialization push, coupled with a rising population, according to Ansari. “As the government continues with its plans to reform the power sector and electricity prices, we could expect a gradual adjustment in demand as people begin to consume electricity more efficiently,” Ansari said.

Write to Paromita Dey at paromita.d@argaamplus.com