Saudi Arabia has recently launched a significant energy project, initiating the prequalification process for an 8GWh battery energy storage project. This is the country's first battery energy storage system (BESS) project under the public-private partnership (PPP) model. This initiative is part of Saudi Arabia's energy transition plan, aiming to achieve 48GWh of energy storage capacity by 2030 to support its goal of having 50% renewable energy in its power mix and ultimately reaching net-zero carbon emissions by 2060.
The Saudi Power Procurement Company (SPPC) announced the "First Group of Battery Energy Storage Service Projects" on November 4, 2024, which includes four BESS projects to be developed under the build-own-operate (BOO) model. Successful bidders will hold 100% equity in the special purpose vehicle (SPV) established for developing and operating the independent storage provider (ISP) projects. The SPV will sign a 15-year storage service agreement (SSA) with SPPC. The total capacity of these four projects is 2,000 megawatts (MW), providing a total of 8,000 megawatt hours (MWh) of energy at full load for 4 hours. Specific projects include the 500MW/4-hour Al-Muwyah BESS ISP and Haden BESS ISP in the Mecca Province, the 500MW/4-hour Al-Khushaybi BESS ISP in the Qassim Province, and the 500MW/4-hour Al-Kahafa BESS ISP in the Hail Province. The implementation of these projects will help enhance the flexibility and reliability of the power grid, especially during the intermittent generation periods of renewable energy sources like solar and wind.
The deadline for submitting qualification statements is 12:00 PM on November 25, 2024. Successful developers will build and operate these facilities through special purpose vehicles (SPVs) and sign a 15-year storage service agreement with SPPC. This procurement adopts the build-own-operate model, with the winning bidders fully owning the project companies.
According to Saudi Energy Minister Prince Abdulaziz bin Abdullah Al Saud's speech in 2021, the Saudi government is expected to invest approximately 293 billion US dollars in power and energy projects by 2030, with most of the investment going towards transmission upgrades and renewable energy, as well as relatively small-scale distribution network investments.
SPPC stated that the newly launched BESS procurement plan will enable Saudi Arabia to achieve its 50% renewable energy target, with the current tender representing the first batch of requests for proposals. Bidders must have experience in independent power production (IPP) or BESS projects. SPPC has identified four locations for the independent storage projects (ISPs), with two in the Mecca Province, one in the Qassim Province, and one in the Hail Province.
Qualified bidders have until 12:00 PM on November 25, 2024, to respond to the request for information (RFI) and request for qualification (RFQ). Bidders must include both a management member and a technical member, although these can be the same entity if qualified. The management member must have project development experience, including financing, or be a significant shareholder in operational IPP or BESS projects. The technical member must also have a track record of delivering projects, including the design, procurement, construction, and operation of conventional or renewable IPP projects or battery energy storage.
Recently, Saudi Arabia has announced large-scale battery energy storage projects, including what is described as the world's largest off-grid BESS, providing a 536MW/600MWh system for a new luxury resort on the Red Sea coast, and a solar-plus-storage off-grid project for another "super tourism" development. Hithium recently announced its intention to establish a joint venture with Saudi engineering company MANAT to build a factory in Saudi Arabia with an annual capacity of 5GWh.
This initiative represents the largest coordinated battery energy storage deployment announced globally to date, showcasing Saudi Arabia's ambition in energy transition and providing new opportunities for the global battery energy storage market. Through these projects, Saudi Arabia will be able to better integrate renewable energy, improve energy efficiency, and promote the sustainable development of its economy.
