The electricity market in the Gulf Cooperation Council (GCC) countries—Saudi Arabia, UAE, Kuwait, Qatar, Oman, and Bahrain—has undergone significant development over the past decades. These nations primarily rely on oil and natural gas for electricity generation. This reliance on hydrocarbons has driven the GCC countries to seek alternative sources of electricity, such as solar, wind, hydro, and nuclear energy, to diversify their energy mix.
Despite the high level of electrification, electricity consumption in the GCC continues to rise, driven by economic growth, infrastructure expansion, and modernization. This article focuses on the current state of Saudi Arabia’s electricity market.
Saudi Arabia’s Energy Landscape in 2024
As of 2024, the Kingdom of Saudi Arabia continues to rely almost entirely on gas and oil for electricity production. As a major exporter of crude oil and gas, Saudi Arabia’s economy remains oil-dependent. In 2023, the oil sector experienced a 9% decrease in GDP, yet oil still accounted for 38% of the nation’s total GDP. Meanwhile, the share of electricity, water supply, construction, and gas supply was about 8%, highlighting an energy imbalance.
Despite the dominance of oil in the energy sector, Saudi Arabia is striving to increase the share of non-oil fuels in electricity production to meet growing demand and diversify its energy mix. The country is open to international partnerships, collaborating with foreign companies to achieve these goals.
Energy Structure of the Country
Saudi Arabia is developing distributed energy systems, including renewable energy sources such as solar, wind, and nuclear power. These sources are essential to reducing the country’s dependence on oil and gas and fostering market growth. Under Saudi Vision 2030, the country aims to achieve 27.3 gigawatts (GW) of renewable energy capacity by 2023 and 58.7 GW by 2030. The program also includes plans for nuclear energy development, overseen by Crown Prince Mohammed bin Salman, which could help address issues like desalinated water shortages. Key energy consumers include the residential, commercial, and industrial sectors.
Generation and Renewable Goals
Saudi Arabia employs a dual-voltage power distribution system: 127 volts (V) for residential and small commercial buildings, and 220 V for larger commercial and industrial facilities. By the end of 2023, the country’s total installed capacity across all electricity sources reached approximately 94 GW, with an annual growth rate expected to exceed 3% through 2035. However, despite various initiatives, the G20 Global Energy Review for 2021 indicated that wind and solar power’s contribution to Saudi Arabia’s GDP remained below 0.05%.
Although the country intends to generate 50% of its electricity from renewable sources by 2030—planning for up to 40 GW of solar photovoltaic systems, 16 GW of wind, and 2.7 GW of other renewable technologies such as concentrated solar power (CSP)—Saudi Arabia has not yet constructed any nuclear power plants. It currently lacks the infrastructure to produce the necessary technologies and fuel for nuclear energy.
Nuclear Energy Development
Saudi Arabia’s peaceful nuclear program is considered the second most advanced in the Arab world, following the UAE. The King Abdullah City for Atomic and Renewable Energy (K.A.CARE), established in 2010, oversees the nuclear program. It also represents Saudi Arabia on nuclear issues at the IAEA and is responsible for developing the Saudi National Atomic Energy Program, which aligns with Vision 2030. Memoranda of understanding have been signed with South Korea (2015) and the China National Nuclear Corporation (2017) to explore uranium deposits. Despite these agreements, progress toward constructing nuclear power plants or small modular reactors, such as the SMART system, has been slow.
Transmission and Distribution: System Operators in Saudi Arabia
Electricity generation through 45 power plants, as well as electricity distribution, is managed by the Saudi Electricity Company (SEC). SEC ensures that 100% of Saudi residents have access to electricity. In 2022, the average electricity consumption per capita was 87,707 kWh. The Ministry of Energy oversees the energy sector, while the Saline Water Conversion Corporation (SWCC), which also manages desalination plants, is the second-largest electricity supplier.
Electricity distribution is uneven due to Saudi Arabia’s vast desert areas and remote settlements. Expanding the general electricity grid is often not cost-effective in these regions, leading to reliance on independent power sources. Electricity demand fluctuates significantly, with summer demand about 40% higher due to air conditioning needs, and variations between daytime and nighttime loads.
Renewable Energy Projects and Regional Interconnections
In November 2019, ACWA Power completed Saudi Arabia’s first utility-scale solar power plant, the IPP Sakaka PV, with a capacity of 300 MW. Saudi Arabia has four electricity interconnections with neighboring GCC countries—Kuwait, Bahrain, Qatar, and the UAE. As of 2020, the transmission network included about 89,100 kilometers of lines and 1,150 substations, operating at voltages between 110 and 380 kV. Approximately half of the network comprises lines operating at 110–132 kV, and SEC manages 80,900 kilometers of fiber-optic lines and around 702,100 kilometers of distribution lines. The country aims to strengthen its regional connections and expand high-capacity transmission lines.
Leading Companies in the Saudi Electricity Market
The electricity market in Saudi Arabia is segmented into electricity generation, transmission, and distribution, with further division into thermal and renewable energy. The market is expected to grow to 110.03 GW by 2028, with an average annual growth rate of 5.8% from 2023 to 2028.
Key energy players include Saudi Electricity Company (SEC), MARAFIQ Power and Water Utility Company for Jubail and Yanbu (Marafiq), ACWA Power, and Nour Energy (ASTRA Group). These companies, all registered in Saudi Arabia, are partially owned by state institutions.
- Saudi Electricity Company (SEC) holds a near-monopoly in the sector, with 81.2% ownership by the government. It is the largest integrated electricity company in the country, with a direct share of 65% of Saudi Arabia’s generation capacity.
- ACWA Power is a major developer and operator of electricity generation and desalinated water facilities, with investments from the Public Investment Fund. The company operates both domestically and in regions across the Middle East, Africa, and Southeast Asia.
- Marafiq serves as the primary utility provider in the industrial cities of Jubail and Yanbu, with the Royal Commission for Jubail and Yanbu (RCJY) as a significant shareholder.
- Nour Energy, part of the ASTRA Group, engages in construction and contracting services and operates in multiple Middle Eastern countries, including Jordan, the UAE, and Morocco.
Foreign Participation and Market Challenges
Saudi Arabia’s market includes contributions from foreign companies, especially in solar energy projects. While foreign entities like GCL Technology Holdings Ltd, SoftBank, and LONGi Solar Technology Co., Ltd. have supported solar power development, no major foreign company has a leading position due to SEC’s dominance.
Russian involvement includes Rosatom’s 2018 bid to build the first nuclear power plant in Saudi Arabia. Saudi Arabia and Russia have maintained dialogue on nuclear energy since their 2015 intergovernmental agreement on peaceful nuclear energy cooperation.
Challenges Facing the Saudi Market
Despite its rich energy resources, Saudi Arabia’s electricity market faces challenges, including governance transparency, a shortage of skilled personnel, bureaucratic hurdles, and a reliance on desalinated water. Logistics can be complex for projects in remote areas, and potential political changes could impact the market’s direction. Additionally, Saudi Arabia ranks low in global measures of business openness and international trade.
Conclusion: A Path Toward Diversification
Saudi Arabia’s electricity market is at a turning point, balancing its reliance on hydrocarbons with ambitious renewable energy goals. Meeting the targets set by Vision 2030 will require overcoming technological, logistical, and regulatory challenges. International partnerships will play a vital role as Saudi Arabia strives to build a more diversified and sustainable energy future.
Special thanks to the team at Assettracing.com for their valuable input in research capacities, advice, and support with resources in preparing these articles.
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