Saudi Arabia has set ambitious renewable energy targets under its Vision 2030 and Green Finance Framework, aiming for renewables to comprise 50% of total electricity output approximately 130GW by 2030. Around 60% of new capacity will come from solar power, while wind energy will account for the remaining 40%.
As part of its energy transition strategy, Saudi Arabia plans to phase out inefficient oil-fired power stations and replace them with combined-cycle gas turbines capable of operating at over 60% efficiency. Meanwhile, Abu Dhabi has outlined plans to develop 18GW of solar photovoltaic capacity by 2035.
Currently, both Saudi Arabia and Abu Dhabi follow a project ownership model where 60% of power projects are controlled by government-related entities such as the Public Investment Fund and Abu Dhabi Developmental Holding Company, while the remaining 40% is owned by international energy and construction firms.
That contract risks in Saudi power projects are primarily limited to operational and construction risks under existing power agreements. However, challenges such as untested legal frameworks and restricted step-in rights could limit access to single-asset financing, potentially constraining investment in power projects.
Funding for new energy generation projects is largely backed by corporate-type lending from banking consortia, including regional and international financial institutions, helping to diversify project financing.
Expanding renewable energy contributions to the grid will also require significant infrastructure investments. The Gulf Cooperation Council Interconnection Authority (GCCIA) is overseeing regional electricity transmission and distribution, preventing power outages through balancing mechanisms, enabling power trading—including renewables—and enhancing energy security.
Investments in grid expansion between 2023 and 2028 will reach $1.8 billion. Additionally, Saudi Electricity and other national utility companies are investing in digitalization and battery energy storage systems to support the integration of new renewable generation capacity.
