Saudi Arabia leads the world in the extraction of energy from the Earth, but what is drawing attention is the Kingdom’s determination to harness a power source in the sky. The Gulf major’s solar business is being driven by favourable government policies, a move toward using renewable energy to meet energy demands, and a decreased reliance on fossil fuels.
The Kingdom hopes to reach a 40-gigawatt solar energy capacity by 2030 as part of its ambitious “National Renewable Energy Programme,” which holds enormous promise for the market in the years to come. As several facilities come online, the Kingdom’s solar market is expected to increase at a compound annual growth rate of 51% between 2024 and 2029, according to market research firm Mordor Intelligence.
Embracing the sun
Saudi Arabia is now at the vanguard of cutting-edge solar technologies meant to maximise energy efficiency and sustainability in the region, according to Christopher Decker, partner in energy and natural resources at Oliver Wyman, covering India, the Middle East, and Africa.
“The Dumat Al-Jandal Concentrated Solar Power plant is a noteworthy innovation that uses solar energy to heat liquid for thermal energy storage, allowing energy availability even in the absence of sunlight,” he said.
“Furthermore, the Sakaka Solar Plant uses bifacial solar panels, which greatly increase solar efficiency by utilising the reflectivity of the nearby sand. Waterless robotic cleaning technologies, which ensure high efficiency and lower operating costs, have been used in projects like the Noor Energy 1 facility in NEOM to maintain optimal performance,” Decker continued.
The Oliver Wyman representative also noted that, by anticipating energy demand and weather patterns, smart grids and artificial intelligence technology can optimise solar energy generation while reducing waste.
The NEOM Green Hydrogen project exemplifies a commitment to sustainable energy solutions by utilising solar energy to produce green hydrogen and, consequently, green ammonia. These innovations collectively position Saudi Arabia as a leader in solar energy advancements, highlighting a significant shift towards a more sustainable energy future, as noted by Decker.
According to Adnan Merhaba, partner and energy and utilities practice lead at Arthur D. Little Middle East, the increasing efficiency of solar cells and economies of scale are driving cost reductions in mature solar technologies, with developers suggesting innovations like bifacial solar cells to further boost yields.
Kingdom-based research institutes are investing in the next generation of solar cells that are more efficient, such as tandem perovskite cells, which can make a significant difference in efficiency improvements.
The King Abdullah University of Science and Technology exemplifies Saudi Arabia’s expanding solar sector. The university is leading research and development in cutting-edge photovoltaic technologies.
Stefaan De Wolf, professor of material science and engineering in the Physical Science and Engineering Division, said, “The combination of silicon and perovskite photovoltaics (PV) is one of the major advancements we are making, as it greatly improves solar power efficiency over conventional technologies. Even in Saudi Arabia’s challenging environment, which includes high temperatures and dust, this hybrid technique has the potential to produce solar cells with ultra-high efficiency.”
“To further increase energy yield, we are also investigating the creation of bifacial solar panels, which can produce electricity from both sides. These developments are intended to assist Saudi Arabia in maximising its solar energy potential and advancing sustainable energy solutions globally,” he continued.
The fact that industry participants are actively looking for cutting-edge thermal management methods to lower the operating temperatures of PV systems installed in the Kingdom was clarified by Qiaoqiang Gan, a professor of material science and engineering at the same division.
Due to the high temperatures in the region, this problem is urgent for Middle Eastern nations.
Qiaoqiang Gan said, “We need more dependable materials and equipment at the microscopic level, along with sophisticated operational temperature management techniques, to address this problem.”
Projects like the Sudair Solar PV, which uses bifacial panels and sun-tracking systems to optimise efficiency, are prime examples of Saudi Arabia’s dedication to cutting-edge technologies, according to Shihab El-Borai, a partner with Strategy & Middle East.
“Saudi Arabia is using cutting-edge solar energy innovations to generate electricity and establish a sustainable model for the entire region,” El-Borai noted.
“With multipurpose solar panels that capture dispersed sunlight and offer adjustable shading, businesses like Mirai Solar are also making progress. These developments show how Saudi Arabia can use cutting-edge technology to lower its carbon footprint and establish itself as a global leader in solar energy,” he continued.
Contribution of solar industry
The solar sector is aligned with the “Vision 2030” objectives and is essential to the country’s economic diversification. Saudi Arabia is stimulating the development of new industries, attracting foreign investments, and nurturing an innovative culture by improving its solar power infrastructure.
Decker of Oliver Wyman, said, “The Kingdom is now positioned as a regional leader in renewable energy thanks to this growth, which not only supports local manufacturing and supply chains but also creates job opportunities and improves human capital development.”
“Solar energy contributes to a robust and diversified energy mix in terms of energy security. Saudi Arabia can improve the adaptability and reliability of its electrical infrastructure by integrating smart grids, energy storage, and cutting-edge solar technologies,” he continued.
The Oliver Wyman partner emphasised that solar-powered projects, such as the manufacturing of green hydrogen, ensure the Kingdom adds another energy export source, opening up new revenue streams and promoting environmental sustainability.
The Kingdom’s demand for electricity is steadily rising, largely due to the country’s giga-scale expansions, as well as demographic and economic growth. Widespread solar project deployment can also support related industries, including green hydrogen production, smart grid technologies, and battery storage.
Stefaan De Wolf, speaking on behalf of KAUST, explained that the Kingdom is lowering its reliance on fossil fuels and creating a more robust and sustainable economy by investing in renewable energy, particularly solar power.
According to Qiaoqiang Gan, Saudi Arabia has a clear advantage in terms of the amount of sunlight that can be used as an energy source due to its geographic location, which allows it to produce more solar energy than many wealthy nations.
High temperatures, however, pose a significant challenge since they can cause semiconductor solar cells to overheat. Developing customised solutions that consider the specific local weather and environmental conditions is crucial for the successful installation of PV systems in Saudi Arabia.
Qiaoqiang Gan stated that such solutions must minimise the negative effects on PV performance while optimising the use of abundant solar energy.
He added that further research and development will be needed to create these specialised solutions, which will present both opportunities and challenges in achieving energy security objectives.
In order to reduce its reliance on imports and establish itself as a hub for clean energy technologies, Saudi Arabia is focusing on generating renewable energy components locally. With solar energy driving the electrolysis process, the Kingdom hopes to produce 1.2 million tonnes of green hydrogen annually by 2030.
Challenges facing Kingdom’s solar sector
The challenges primarily relate to localising the value chain and addressing environmental issues such as dust and extreme heat. Infrastructure constraints and regulatory difficulties are among the many obstacles.
To overcome these, the Kingdom is investing in updating its grid infrastructure with energy storage and smart grid technology, which will improve the management of intermittent solar output. Efforts are also underway to streamline regulatory procedures and introduce incentive schemes, such as public-private partnerships and favourable tariffs, to encourage private sector investment.
Concerns have also been raised about disruptions to international trade, the localisation and human resources required to ensure the growth of a strong and competitive solar value chain industry in the Kingdom, and the availability of enough engineers and technicians to meet the industry’s expanding demand. However, the nation is well-positioned to successfully address these challenges thanks to its robust policies and strategies, which include national industrial and localisation plans, as well as other efforts.
Under “Vision 2030,” Saudi Arabia aims to generate about 58.7 GW of renewable energy by 2030, with 40 GW coming from solar energy.
To achieve this, policies must be made to encourage private sector participation. For example, power purchase agreements should be established to guarantee investors long-term profits. Tariffs and subsidies should be put in place to make renewable energy more competitive, and licensing procedures should be streamlined to make solar projects easier to manage. The Saudi government is also aggressively supporting foreign direct investment and public-private partnerships to propel the expansion of solar power projects.
Christopher Decker, partner in energy and natural resources at Oliver Wyman, said, “One important initiative that aims to secure $30–50 billion in investments for renewable energy projects is the National Renewable Energy Programme, introduced under Vision 2030.”
Saudi Arabia, however, remains committed to maximising its oil and gas production through efficiency gains and technological developments to ensure the industry remains profitable, while research and development activities continue in the renewable sector.
According to Adnan Merhaba, partner and energy and utilities practice lead at Arthur D. Little Middle East, the Kingdom has undergone a significant transformation in its energy and economic landscape in recent years. It has accelerated solar deployment and ushered in the age of renewable energy.
In addition to accelerating the development of national champions throughout the solar value chain, the extremely ambitious goal of achieving 50% renewable adoption by 2030—currently under consideration for an upward revision—has resulted in the construction of massive solar projects at historically low prices.
De Wolf, a KAUST representative, reaffirmed that Vision 2030 has facilitated an environment conducive to investment and growth, with the Kingdom’s energy mix being shaped by ambitious renewable energy goals.
Similarly, Qiaoqiang Gan emphasised that Vision 2030 has created favourable conditions for the growth of solar energy through laws that encourage public-private partnerships and significant investments in renewable energy infrastructure.
El-Borai clarified that the National Renewable Energy Programme is essential to this, from PwC’s perspective.
“With the help of large financial commitments, including the proposed $266 billion investment in cleaner energy sources, including solar, Saudi Arabia aims to achieve Net Zero status by 2060,” he remarked.
To reach its goal of 100 GW to 130 GW of clean energy by 2030, the Kingdom is aggressively developing projects with an annual capacity of 20 GW. With initiatives like the Public Investment Fund’s partnership with Chinese solar manufacturers to develop 30 GW of solar PV production capacity, this strategic framework also emphasises localising the manufacturing of renewable energy. In addition to producing renewable energy, the NREP aims to secure the Kingdom’s energy future and reduce its reliance on fossil fuels, according to the PwC partner.
What lies ahead
The report titled “Saudi Arabia Onshore Floating Solar Market, By Region, Competition, Forecast & Opportunities, 2019-2029F,” found the Kingdom’s Onshore Floating Solar Market valued at $17.9 million in 2023 and projected to grow robustly, with a CAGR of 27.5% through 2029.
“The Saudi Arabia Onshore Floating Solar Market is experiencing a notable upswing as the Kingdom strategically endeavours to diversify its energy portfolio. In a concerted effort to reduce dependence on conventional fossil fuels and mitigate environmental impact, the government has increasingly turned its attention to renewable energy sources. The unique geography of Saudi Arabia, characterised by expansive desert landscapes and abundant sunlight, makes onshore floating solar installations particularly attractive,” the report stated.
Saudi Arabia’s approach to deploying solar energy is not only capitalising on the vast available land but also addressing the country’s water scarcity challenges. With an ambitious commitment to sustainable energy goals, the onshore floating solar market is poised to witness heightened investment, technological advancements, and growing collaboration between public and private sectors, positioning the Kingdom at the forefront of the global shift toward clean and renewable energy solutions.
As the technology matures and gains wider acceptance, small pilot projects will scale to larger and more ambitious initiatives. Utility-scale projects will offer economies of scale, enabling more efficient use of resources and driving down the overall cost of solar energy production.
“This trend reflects the industry’s confidence in the scalability and long-term viability of onshore floating solar as a key contributor to the Kingdom’s renewable energy portfolio,” the report noted.
Manufacturers and developers are investing in research and development to enhance the efficiency, durability, and adaptability of floating solar structures. This includes the development of modular and customisable floating platforms tailored to specific water bodies, optimising the deployment of solar panels.
“Additionally, improvements in materials and design contribute to the resilience of floating platforms in challenging environmental conditions. The emphasis on technological advancements reflects the industry’s commitment to overcoming technical challenges and ensuring the long-term success of onshore floating solar projects in Saudi Arabia,” the study observed.
Collaboration and partnerships among government entities, private companies, and international players will play a key role in determining the future direction of the Saudi Arabia Onshore Floating Solar Market. Recognising the complexity and scale of renewable energy projects, stakeholders are joining forces to leverage collective expertise, resources, and funding.
“Public-private partnerships facilitate the sharing of risks and responsibilities, creating a conducive environment for investment and project development. International collaborations bring in global best practices and technological know-how, further accelerating the growth of the onshore floating solar market. This trend reflects a holistic approach to sustainable development, aligning with Saudi Arabia’s commitment to fostering a collaborative ecosystem for the successful implementation of renewable energy initiatives,” the report revealed.
Saudi Arabia’s solar energy sector is poised for significant growth, driven by innovative technologies and ambitious goals. The Kingdom is making substantial progress toward diversifying its energy mix with a focus on renewable sources, particularly solar power, as part of its Vision 2030. Cutting-edge projects, like the Dumat Al-Jandal and Sakaka solar plants, along with advanced research at institutions such as KAUST, reflect the nation’s commitment to sustainable energy solutions. With strategic investments and a favourable regulatory environment, Saudi Arabia is positioning itself as a regional leader in clean energy. As the solar industry continues to evolve, it will play a crucial role in reducing reliance on fossil fuels, driving economic diversification, and contributing to the Kingdom’s long-term energy security and environmental sustainability goals.