The award of a $3.2bn contract to South Korea’s Hyundai Heavy Industries (HHI) to build the Jeddah South Power Plant is evidence that Saudi Arabia is still the region’s key market for the world’s power companies.

With a sharp slowdown in power contract awards in the GCC in 2012, contractors are hopeful the award of the Jeddah project will stimulate progress in regards to the kingdom’s other key schemes.

Contractors are currently working on submissions for the 1,700MW Rabigh 2 independent power project (IPP) and the Saudi Electricity Company (SEC) is planning to tender a contract for a 3,000-3,600MW thermal power plant located on the kingdom’s eastern coast in the coming months.

With Saudi Arabia’s population continuing to grow at a rapid rate, Riyadh is planning to fund and build a number of new power plants in the next decade. SEC is hoping to increase the current 50.9GW of capacity online to 131.6GW by 2021, which will be provided by a mixture of steam, combined-cycle and diesel powered plants.

In addition to traditional thermal power plants, companies in the power sector are eagerly awaiting for news of progress in regards to the kingdom’s ambitious nuclear plans.

As with the majority of sectors in Saudi Arabia’s projects market, the value of contracts awarded to date in 2012 has dropped considerably compared with last year. But this is only expected to be a temporary blip. Growing power demand and vast oil revenues should ensure that the market provides considerable opportunities for global power developers for years to come.