23 FEB 2013

SAUDI ARABIA OUTLINES ITS 20 YEAR “ENERGY- MIX” PLANS. “King Abdullah City” for Atomic and Renewable Energy (KA-CARE) has unveiled a white paper detailing a new energy-mix plan which relies heavily on Concentrated Solar Power (CSP) plants, solar PV (Photo-Voltaic cell), wind farms, geothermal facilities, and waste-to-energy plants.  The plans are a part of Saudi Arabia’s program to generate 54,000 Mw of new renewable energy capacity by 2032, which could make Saudi Arabia one of the largest green-energy producers in the world BY 2032.  According to KA-CARE, Saudi Arabia will for now, continue to generate the majority of its power from oil and Nat gas, with a further 17,600 Mw of nuclear energy.  KA-CARE seeks an energy mix such that existing Nuclear Power Plants (NPPs), geothermal, and waste-to-energy plants to to provide a “base-load night-time supply of power”, while solar (with energy storage) will contribute heavily to the daytime – supplemented by gas and oil.

SAUDI  SOLAR AND WIND AVAILABILITY ARE HIGHLY RATED. According to Ernst & Young’s Renewable Energy “Country Attractiveness Indices (CAI)”, Saudi Arabia has good wind energy potential, with some 4.9 hours of full-load wind per day on average – one of the highest in the Middle-East and North-Africa (MENA) region. The strikingly high solar radiation of around 2,550 kWh/m2/year promises very high energy yields for both CSP Plants and PV-cell farms.  PLUS the availability of large stretches of empty desert to locate solar arrays.  Saudi Arabia’s government announcement of its ambitious $109 billion plan, will likely be attractive to venture capital, energy merchants, and solar technology providers.


  1. 35,000 Mw of CSP with energy storage capability.
  2. 16,000 Mw of PV Solar-cell
  3. 9,000  Mw from Wind Power (turbines)
  4. 3,000 Mw “Waste-to-energy” thermal
  5. 1,000 Mw Geo-thermal power

REQUEST FOR PROPOSALS (RFPs) WILL BE ISSUED SOON.  The initial round of contract solicitations will be issued in the first half of 2013, focusing on CSP Plant technologies.  Such technology will get the “lion-share” of contracts monies to generate 35,000 Mw from CSP Plants.  The first three (3) rounds of contracts are now expected to be awarded before 2015, with a view to creating more than 7,000 Mw of new capacity, the majority of which will come from solar power.  The three (3) contracts awards for solar alone, could account for more than $10 billion (£6.5 billion) of investment  Under the new plans, the vast majority of new green-energy capacity will be solar.

ENERGY MERCHANTS WILL BID TO SELL THE ENERGY.  Energy Developers will be invited to bid on “power purchase contracts” and the “Saudi government’s Sustainable Energy Procurement Company (SEPC)” will buy the electricity generated.  Bidders will be invited from around the world; but the contract award process will aim to encourage the creation of local production and jobs. The spokesman said the first awards will offer a bonus to bidders with local sourcing arrangements, while rounds after 2015 will include a requirement for local production and employment.

RENEWABLE-ENERGY PURCHASE BY COMPETITIVE BIDDING IS PLANNED. Energy (KA-Care), the Government’s alternative energy arm, announced its plans to launch a major renewable energy auction.



SAUDI ARABIA WANTS TO IMPOSE THE “GOLDEN-RULE”.  To many, the “Golden Rule” means: “He who has the gold, makes the rules” – While we are happy to see Saudi Arabia reveal such an ambitious plan for the procurement of renewable, green-energy (The three (3) contracts awards for solar alone, could account for more than $10 billion (£6.5 billion), the 20 year plan leaves little doubt Saudi Arabia wants full control of the operations; however, the devil is in the details.

PROBLEM IS: MERCHANT ENERGY PURVEYORS DO NOT WANT ANYONE TELLING THEM “HOW TO DO IT” After all, it is their venture capital, and what most view as “proprietary technology”; Then, there is the matter of follow-on procurement of “spare Parts and logistical support”.  In most such transactions, the Buyer (Saudi Arabia) has no control, unless there has been a substantial infusion of funds by the buyer in the design and technology development.  That can be a risky business for Saudi Arabia, because many contractors may bleed research and development (R&D) money, and never deliver as planned.  Remember the “Solyndra” Chip maker bankruptcy in the USA – c.2010 ? The USA lost its guaranteed loan of about $580m without legal recourse.  Attaching contractual obligations on RFPs to Energy Merchants such as:  “you must use indigenous workforce”, or “You must manufacture part of the equipment from Saudi sources”, will in many cases result in “NO-BID”, and No Joy! Saudi Procurement agencies have been through all this in military procurements, and Nuclear Power Plant (NPP) Development.  This is not very different, and will need to be negotiated as such.  Solar industry/power purveyors will want to know: Do you want to buy energy at competitive prices? , or do you wish to pay for solar technology R &D, and own all rights to the engineering data? A lot of mutual trust is involved in such negotiations. “Time and Materials” contract language should be avoided like the plague.  They constitute a blank check.

NEXT DOOR TO SAUDI ARABIA, IN THE UAE, THERE IS SHAM-1, 100 Mw HYBRID CSP PLANT.  See  for a good example of new CSP Plant development ideally suited to desert environment (with all its advantages and disadvantages). For comparative purposes, SHAM -1 required a 1.5 sq. Km site. Go figure the magnitude of this ambitious plan! …It plans 41,000 MW of solar energy -the equivalent of 410 SHAM 1’s. Please, do not misunderstand me, I would love to see these plans succeed, and wish Saudi Arabia the best!

Edward Oliver Gonzalez (gonzedo)

P.S.  I was employed for many years at a USA Air Force Logistic Center which procured $4B/year using competitive procurement (my area of competence).

February 23, 2013 at 9:11 PM Comments (13)