Draft white paper sets out the proposed procurement process for the initial phases of ambitious 54,000MW programme
KSA renewables analyst note
Saudi Arabia has set out a roadmap for delivering the first phase of its ambitious renewables programme, which is set to produce 23,900MW of renewable energy by 2020 and 54,000 MW by 2032.
The King Abdullah City for Atomic and Renewable Energy (KA-Care), the body set up by the government in 2010 to oversee the kingdom’s renewables and nuclear programme, has released a draft white paper, which details the competitive procurement process (CPP) the body will use to tender and award contracts for the renewables schemes. KA-Care has set a deadline of 5 April for the public to submit comments on the proposals.
Under the plans proposed in the white paper, developers will be invited to bid on 20-year power purchase contracts, and the programme will be split into three tendering rounds. The initial three rounds will procure a total capacity of 7,000MW.
The first introductory round is planned to include the procurement of 500-800MW of varying renewables technologies schemes at five to seven pre-packaged sites, with a minimum 5MW capacity for each contract. The selected sites will be chosen at locations easily connected to the national grid. The technologies that will be utilised for the initial phases are: thermal solar, photovoltaic (PV) solar, wind, geothermal and waste to energy. Hybird and other renewables technologies are expected be included in future procurement rounds.
The white paper sets out a target time frame of six to 10 months for a single procurement round. After the successful companies are selected for the introductory round, the first full scale procurement round will be initiated. The first full-scale procurement round will tender 2,000-3,000MW of projects, while the second round will create an additional 3,000-4,000MW of capacity.
|Saudi renewables targets|
|Technology||Round 1 (MW)||Round 2 (MW)|
|PV=Photovoltaic. Source: KA-Care|
A key feature of the draft white paper is the setting of strict guidelines for localisation targets. Under the plans, developers appointed will be required to submit a job localisation plan, which will then be annually updated. The plan will include data on Saudi and foreign employees, including wages paid to both. When developers use contractors, they will have to provide them with the same information. This is planned so developers ensure local laws and minimum thresholds for job localisation are met.
In addition to having to comply with local laws, Ka-Care has stipulated that job localisation threshold requirements will be set for developers to compare performance with developers in same technology class. If developers fall in the bottom 20 per cent of their technology class for job localisation, they will be fined SR40,000 per non-Saudi employee over their peer average. Developers falling in the bottom 10 per cent in any year will not be permitted to compete in competitive tenders for further contracts in the subsequent year.
Riyadh is turning to alternative energy to meet the expected sharp rise in energy demand over the next 20 years. According to the latest forecast issued by Ecra, peak demand will climb to 75,000MW in 2020 and to 123,000MW by 2032 based on an average growth rate of 4.5-5 per cent a year.
With new gas feedstock allocations in short supply and the kingdom already burning 800,000 barrels a day (b/d) of liquids in its power plants, the government is turning to alternative energy to meet future demand. In addition to the ambitious renewables programme, Ka-Care is currently working on initial plans to provide 21,000MW of power by nuclear generationby 2032.
KA-Care is not the only body in the kingdom pressing ahead with renewable schemes. In January 2012, Mecca Municpality received bids from two developers to build a 100MW solar facility. The lowest bid was submitted by Acwa Power, with the UK’s EDF Energy and the local Al-Gihaz submitting the other bid.
Click here to view KA-Care’s white paper on the kingdom’s renewable energy competitive procurement process