PV Analysis of the Belt and Road Initiative

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PV Demand Analysis of the Belt and Road Initiative: Saudi Arabia of Western Asia

Basic Information of Saudi Arabia

Saudi Arabia has a total population of 33 million. The nation’s economy is highly dependent on oil exports. Since 2018, the Saudi Arabian government has started pushing for investments and internal reforms. That year’s optimistic outlook for oil output had also boosted the market confidence. In 2018, the nation’s foreign direct investment (FDI) stood at USD 3.5 billion, 2.5 times higher than that in 2017. Fitch Ratings, a global credit rating agency, assigned Saudi Arabia a credit rating of A+, indicating a stable future outlook.

Saudi Arabia has a desert climate. The temperature in summer can reach as high as 50°C between April and October, while the lowest temperature in winter is about 5°C between November and March. Since summer lasts for seven months, the average daily radiation is around 2,200-2,400kWh/m2.

Saudi Arabia’s Renewable Energy Development

By the end of 2017, Saudi Arabia has sourced 47%, 27%, and 26% of electricity from steam power, combined cycle power plants, and gas, respectively. Diesel, on the other hand, represented only a small proportion. As the government only started developing and pushing for policies toward renewables in 2017, renewable energy  was not included at that time.

Saudi Arabia Generation ratio

Saudi Arabia’s PV policy and development

Saudi Arabia initiated the Vision 2030 in 2017 with an aim to deploy 20GW and 40GW of PV capacity by late 2022 and 2030, respectively.

Saudi Arabia Cumulative installation

Saudi Arabia mainly promotes Solar energy through PPA auctions. In February 2018, a 300MW project was put out to tender. ACWA, a local developer, secured the contract with SAR 0.08872/kWh (USD 0.0236/kWh).

According to the government’s plans, solar projects with a total capacity of 2.225GW are expected to be tendered in 2019. 1.51GW, part of the 2.225GW PV project, has been announced at the end of January. The largest project is located in Alfaisalia with  600MW of bid capacity. The rest are four 300MW projects located in Rabigh, Jeddah, Saad, and Alras, respectively.

Project location and bid capacity of 2019 are as follows:

Saudi Arabia Plan

If all the above projects completed auction process before the end of 2019, an average PV capacity of over 1.1GW would be deployed annually between 2020 and 2021. However, as the installation capacity is still far from the 20GW goal set by 2023, the Saudi Arabian government is likely to come up with new PV policies or hold more auctions between 2019 and 2022 to stimulate demand.

Saudi Arabia-China trade: module imports and exports

According to PV InfoLink’s Chinese customs database, China’s total module exports to Saudi Arabia touched 76.66MW in 2018, nearly three times higher than that in 2017. The majority of the modules shipped to Saudi Arabia in 2018 were to supply the 300MW auction projects held that year.

Driven by the remaining demand from the 300MW auction projects of 2018 and the government’s plan to complete issuing tenders for the 2.225GW project by 2019, China’s module exports to Saudi Arabia are expected to increase further in 2019. If all solar projects were tendered smoothly, constructions will begin in the second half of 2019.

Under the scenario that no further policy is available in 2020, Saudi Arabia will focus on fulfilling demand from auction projects of 2019.

Saudi Arabia Module Shipment

Conclusion

Saudi Arabia started to push for renewable energy development in 2017. The  Kingdom’s Vision 2030 targets 40GW of PV installation by 2030, which boosts an annual demand of 3.3GW PV capacity between 2018 and 2029. Currently, the Kingdom mainly stimulates PV demand through PPA auctions, and plans to put 2.225GW project out to tender by the end of 2019. 1.551GW from this project is set to be tendered in the first half of 2019.

So far, the combined PV capacity from confirmed auction projects is still far from the target of 40GW. To achieve the goal, the government will continue launching new policies and auctions in the future.

*PV InfoLink will hold a seminar titled “2H19 PV Market Trends and Outlook” in Shanghai on June 3. Welcome to join us for more market insights and technology trends.

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