Skip to content Skip to Search
Skip navigation

Saudi to build Gulf’s largest solar power plant near Mecca

Saudi solar Reuters
Saudi Arabi'a PIF and ACWA Power are building the Middle East’s largest solar power plant
  • Kingdom prioritises solar energy to diversify revenue sources
  • Analysts say renewables target depends on reforms to woo investors

Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), and ACWA Power will build the Middle East’s largest solar power plant in Mecca province, the duo announced on Wednesday, as the kingdom accelerates efforts to expand its renewables capacity. 

Slated to begin commercial operations in late 2025, the 2,060-megawatt (mw) solar photovoltaic Al Shuaibah 2 facility will generate enough electricity to power 350,000 homes. 

PIF subsidiary Badeel and ACWA each hold a 50 percent stake in the newly established Shuaibah Two Electrical Energy Company, which will build, own and operate the plant. 

State-owned Saudi Power Procurement Company (SPPC) has signed an agreement to buy the facility’s electricity. 

“Utilities and renewables is one of PIF’s priority sectors as part of its domestic strategy, which focuses on unlocking the capabilities of promising sectors to enhance Saudi Arabia’s efforts in diversifying revenue sources,” Yazeed A. Al-Humied, PIF’s deputy governor and head of Mena investments, said in a statement. 

Al Shuaibah 2 – ACWA Power’s sixth solar plant in Saudi Arabia – will be slightly larger than Abu Dhabi’s 2,000mw Al Dhafra Solar PV, which is due to be completed in 2022. 

Saudi Arabia aims to generate half its electricity from renewables by 2030, although, as of 2021, just 0.2 percent of the kingdom’s electricity came from non-hydrocarbon sources, according to the BP Statistical Review of World Energy 2022.

Solar generated 0.8 terawatt hours (twh), with gas providing 215.9twh and oil 139.9twh. 

Consultants GlobalData forecast renewables will provide 6.8 percent of Saudi electricity in 2030; Fitch Solutions cites a lower figure – less than 3 percent – although its analysts believe this could be substantially higher were the kingdom to make market-friendly reforms to woo foreign investors and developers. 

Saudi’s slow progress comes despite the Gulf possessing vast renewables potential. Regional solar power plants can produce double the amount of electricity of a similar facility in Germany thanks to a far higher solar intensity, a 2022 report by Strategy& stated noting that the Gulf is home to high wind speeds too. 

Also, the cost of solar- or wind-powered electricity is one-third of the global average, Strategy& estimates.

Saudi Arabia and the UAE have set world record low tariffs for new solar projects in recent years and experts believe prices could fall further. 

The statement announcing the launch of Al Shuaibah 2 did not state the price SPPC has agreed to pay for the plant’s electricity. 

Latest articles

Adnoc sought advice from investment banks on buying a significant stake in BP, a media report said

UAE’s Adnoc explored acquiring BP

Abu Dhabi National Oil Company (Adnoc) explored the possibility of acquiring British oil major BP but abandoned the plan as it did not fit into its strategic growth objectives, a media report said.  The talks did not advance beyond the initial stages, Reuters reported, citing informed sources.  The UAE state oil company also sought advice […]

Nature, Undersea cables account for as much as 90 percent of Europe-Asia telecommunications, Water

Iraq and Kuwait team up for European telecom corridor

Iraq’s Informatics and Telecommunication Public Company, a division of the Ministry of Communications, has signed an agreement with Kuwait’s Zajil Telecom to create a telecommunications corridor from the Gulf region to Europe, transiting through Iraq and Turkey. The new route will pass through Iraqi sea and land ports. Iraq’s minister of communications Hayam Al-Yasiri said […]

Turkish crude steel output rose 25% year on year to 3.2 million tonnes in January

Turkish steel in the black but EU rules rankle

Turkey’s steel industry has rebounded strongly from a weak 2023, despite facing new emissions standards and competition for important markets.  Crude steel output rose 25 percent year on year to 3.2 million tonnes in January, with domestic consumption of finished steel reaching 3.5 million tonnes, a 20 percent increase.  Exports were also up, increasing 23 […]

Passengers at Beijing Capital International Airport. Air China will fly from the airport to Riyadh three times a week.

Third Chinese airline to launch flights to Saudi Arabia

Air China is set to begin flights to Riyadh in May, becoming the third Chinese airline to establish a route to Saudi Arabia. It joins China Southern and Eastern Airlines in connecting China with the kingdom.  Air China’s Airbus A330-300 will serve the Beijing-Riyadh route three times a week. The expansion in capacity between the […]