The Current Status Of Saudi Arabia's Solar Energy Market

Saudi Arabia's "Vision 2030"

As the core of energy transformation, Saudi Arabia plans to achieve 50% of its energy structure from renewable energy (including 40GW of photovoltaics and 2.7GW of solar thermal energy) by 2030, with the remaining 50% relying on natural gas. This goal aims to reduce dependence on the oil economy and promote green economic growth.

Policy tools

National Renewable Energy Program (NREP): attract investment through competitive bidding mechanisms (such as the fourth phase of bidding for 3.3GW), including 1.5GW photovoltaic projects.

Localized production goals: require 75% of the components of renewable energy projects to be manufactured locally by 2030, and accelerate the localization of the industrial chain through joint ventures with Chinese companies (such as JinkoSolar and TCL Zhonghuan).

Tax incentives and subsidies: provide land lease incentives and tariff reductions for solar projects, and guarantee income through long-term power purchase agreements (PPAs).

Installation capacity expands rapidly

In 2021, Saudi Arabia's solar installed capacity is only 439MW (photovoltaic accounts for 88%), but it plans to reach 40GW by 2030, with a compound annual growth rate of over 30%.

In 2024, Saudi Arabia imported 1.3GW/month of Chinese photovoltaic modules, accounting for 6.1% of the global market share, and it is expected that the new installed capacity will exceed 5.5GW in 2025.

Investment heat

In 2022, Saudi Power Procurement Company (SPPC) signed multiple GW-level projects, such as Al Hanakiyeh 1.1GW photovoltaic power station (investment of US$4.5 billion), Tabarjar 400MW project, etc.

In 2024, Chinese companies invested more than US$3 billion in Saudi Arabia, covering silicon wafers, batteries, modules and energy storage. JinkoSolar plans to build a 10GW battery and module factory, and TCL Zhonghuan has a 20GW silicon wafer production capacity.

Large-scale photovoltaic power stations

Al Hanakiyeh 1.1GW project: to be launched in 2022, expected to be connected to the grid in 2025, using tracking bracket technology to increase power generation.

Red Sea project: Huawei Digital Energy completed a 1.3GWh energy storage system to help grid stability.

Localized technical cooperation

Trina Solar built a 3GW tracking bracket factory in Jeddah (commissioned in 2025) to cope with extreme environments such as high temperatures and strong winds.

Hybrid power generation system pilot: such as the photovoltaic storage and diesel complementary project near Mecca to ensure power supply in remote areas.

China-Saudi cooperation leads

Chinese companies occupy more than 70% of the Saudi photovoltaic market, and JinkoSolar, Longi, Trina Solar and others are deeply involved through joint ventures and technology exports.

The Saudi Sovereign Fund (PIF) has established a joint venture with Chinese companies to promote the localization of the entire photovoltaic industry chain, including silicon materials, silicon wafers, batteries and components.

Participation of global enterprises

International energy companies such as France's ENGIE and Italy's Enel participate in Saudi projects through the PPP model, while local companies such as ACWA Power and Alfanar Group dominate power procurement and operations.

Although investing in Saudi Arabia's solar energy market has broad prospects, we need to be wary of the following risks and challenges:

1) Infrastructure shortcomings

Insufficient infrastructure

Saudi industrial parks generally lack mature "eight connections and one leveling" facilities (such as stable electricity, water supply, roads, etc.). Photovoltaic companies need to invest in improving infrastructure on their own, resulting in a longer plant construction period (projects that can be put into production in half a year in China require 1-2 years in Saudi Arabia) and a significant increase in initial costs.

Weak grid stability

Saudi Arabia's power grid has limited carrying capacity, and some areas need to build new transmission lines. In addition, the application of energy storage technology is insufficient, which may affect the grid connection efficiency of photovoltaic power stations.

2) Policy and localization pressure

Policy uncertainty

Although Saudi Arabia has strongly promoted energy transformation through the "Vision 2030", the details of policy implementation (such as land leasing and tax incentives) may be adjusted due to government changes or fluctuations in international oil prices, affecting the long-term benefits of the project.

Localization rate mandatory requirements

Saudi Arabia requires that 40% of the value of solar projects must be produced locally (for example, Chinese companies such as JinkoSolar and Trina Solar need to build factories in joint ventures with local companies). In the short term, insufficient localization of the supply chain may lead to rising costs.

3) Technology and supply chain challenges

Technology dependence and innovation pressure

Key equipment (such as inverters and energy storage systems) still rely on imports, and Saudi Arabia's extreme environment such as high temperature and strong winds puts higher requirements on component reliability, requiring customized technology (such as Trina Solar's tracking bracket needs to deal with wind and sand).

Supply chain management is difficult

The local industrial chain is weak, and everything from silicon materials, silicon wafers to component production needs to be laid out from scratch. For example, JinkoSolar's 10GW battery component factory in Saudi Arabia needs to integrate global resources, and the coordination difficulty is far greater than that in China.

4) Geopolitical and regional risks

Regional situation fluctuations

Middle East geopolitical conflicts (such as the situation in Yemen and Iran relations) may affect project progress and even lead to asset security risks.

Intensified international competition

European and American companies (such as France's ENGIE and Italy's Enel) participate in Saudi projects through the PPP model, forming direct competition with Chinese companies and lowering the winning bid price.

5) Business and cultural differences

Long negotiation cycle

Saudi business negotiations combine personal relationships with strict rules. Key decisions often rely on senior officials of the royal family or sovereign funds. The effectiveness of contracts may be affected by informal agreements (such as the implicit promise of "royal family dinners").

Compliance and labor issues

International EPC projects must follow European and American standards (such as environmental protection and labor rights). The lack of experience of domestic companies may lead to legal disputes. For example, Saudi Arabia has strict requirements for labor visas and union management, which require additional costs to deal with.

6) Economic and cost pressures

High financing costs

Overseas financing interest rates are significantly higher than domestic ones (IRR must reach 15%-20% to be feasible), and the factory construction cycle is 2-3 times longer than that in China, which puts great pressure on capital turnover.

Fierce market competition

The price of photovoltaic electricity has dropped to $0.04 per kWh, and with the expected decline in policy subsidies, corporate profit margins have been compressed.

The Saudi solar market is a strategic location with "high returns and high risks". Photovoltaic companies need to reduce risks through technology output, localized cooperation (such as joint ventures with PIF) and full industry chain layout, while strengthening policy research and judgment, compliance management and cross-cultural communication capabilities. For companies that lack international experience, they need to carefully evaluate their own strengths and avoid blindly following the trend.