The unexpected revival of KA-Care

21 July 2016

Saudi Arabia now has a second attempt at its ambitious renewables programme

With the King Abdullah City for Atomic & Renewable Energy’s (KA-Care’s) obituary effectively written in March 2015, the news that the renewables body had started work on a 3.5GW scheme of solar, wind and waste-to-energy projects was unexpected.

Consultants invited to bid were initially surprised by the revival of a client that had been inactive for several years and had never procured a scheme.

KA-Care was thought to be sidelined after King Salman bin Abdulaziz al-Saud ascended to the throne, in favour of Saudi Electricity Company (SEC). Now, SEC’s 50MW solar independent power projects (IPPs) look like a pilot project for KA-Care’s large-scale renewables scheme.

However, many of the same issues highlighted when commenting on KA-Care’s lack of progress in 2015 are still valid.

KA-Care is an untested institution, and its procurement and decision-making capabilities are nascent. It is unclear how it will interact with SEC, which is the offtaker and equity investor in previous Saudi IPPs, and other government bodies, to push ahead with its projects.

The first step is to appoint advisers to clarify the structure and procurement methods of KA-Care’s new programme. The client may be able to outsource most of the expertise to its consultants, at least for early schemes.

A capacity of 3.5GW is also a much more achievable goal for KA-Care than 54GW, while the cost of renewable energy has fallen dramatically since the initiative was launched in 2013. The intense focus on the 2020 National Transformation Plan, which includes a 3.5GW renewables target, also bodes well.

After several years of disappointments, Saudi Arabia is once again the most exciting market in the Middle East for renewable energy.

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