The King Abdullah City for Atomic and Renewable Energy ("K.A.CARE") was established via a Saudi Royal Order in April 2010 with the mandate principally to transition the fuel mix that powers Saudi Arabian energy generation toward a far greater use of renewable resources.
K.A.CARE set a goal of generating a total of 54 gigawatts ("GW") of energy from renewable resources by 2032, almost 80 percent of which is designated to come from solar power, with the remainder coming from a mix of wind, geothermal, and waste-to-energy resources. The aim is to reach around 5.1 GW by 2018 and 23.9 GW by 2020.
This program not only portends what will be one of the world's largest and most comprehensive alternative energy undertakings, but its ambitious scope also offers the promise of developing another major industrial sector for the economy of the Kingdom of Saudi Arabia.
In February, K.A.CARE released a white paper detailing the establishment
of a competitive procurement program to attract to Saudi Arabia the
best renewable energy methods and designs. Officially called the
"Competitive Procurement Process," CPP was designed to
reflect the K.A.CARE charter in the pursuit of a "sustainable
energy mix that emphasizes education, research, global
collaboration, local integration, commercialization and social
benefit." The white paper invited public comment from
prospective bidders into the CPP until April 5. The two stated
objectives of the CPP are: "(i) to kick-start the
Kingdom's renewable energy sector and (ii) to validate the
existing globally benchmarked prices across multiple technologies
while applying these prices to the local market
context."
According to the white paper, the initial phase of the CPP will be
conducted over the next two to three years and will consist of an
introductory round, as well as first and second procurement rounds.
The three rounds are designed to target up to seven GW of project
capacity. In the introductory round, K.A.Care is targeting
procurement of 500 to 800 megawatts ("MW") of renewable
energy capacity. The white paper explains that this round will
consist of five to seven projects of "varying technologies at
pre-packaged sites offered to bidders at locations that can be
easily connected to the grid."
The white paper also provides that the subsequent two rounds
projected for the next two to three years will seek to procure two
to three GW of capacity, and three to four GW of capacity,
respectively. Although their timing will be determined based upon
the length of the preceding rounds, it is expected that a single
round will last between six and 10 months. According to the white
paper, "[a]fter the nine to twelve month process culminating
in the selection of the winners of the Introductory Round, the
first full-scale procurement round shall be initiated." The
timing of subsequent rounds is expected to be announced as the CPP
program proceeds.
The white paper specifies that each round will follow a similar
pattern, consisting of a Request for Qualifications
("RFQ") from prospective bidders followed by a Request
for Proposal ("RFP") that will go out to qualified
bidders. Before issuing the initial RFQ under the CPP, K.A.CARE
anticipates distributing a draft RFP and draft power purchase
agreement ("PPA") to bidders who have registered for the
CPP on the K.A.CARE web site. In addition, K.A.CARE proposes having
a series of technical workshops for bidders in order to hear
comments on the draft RFP and draft PPA prior to issuing the first
RFQ (which will be combined with an Expression of Interest and
Statement of Qualifications from bidders).
Overall, projects are expected to be evaluated on such factors as
their financial strength, project development status, and degree of
local content. Tellingly, the white paper provides that
"[p]roponents that integrate local content into their projects
will benefit from strong incentives through the rated criteria
evaluation for utilizing labor and equipment that provide a
positive net benefit to the local economy." An integral part
of Saudi Arabia's solar plans, detailed in the white paper, is
to establish a solar technology hub in the country and ensure local
companies play a major role in the country's burgeoning solar
industry.
K.A.CARE expects to have 1.1 GW and 1.3 GW of photovoltaic solar
power systems installed under the first and second procurement
rounds. Overall, the CPP program is targeting 16 GW of photovoltaic
and 25 GW of solar thermal by 2032, although it is possible that
mix will change. Solar thermal systems that are bid into the
introductory round must include at least four hours of storage
capability.
On balance, the K.A.CARE program and the CPP appear to present
excellent opportunities to international solar companies across all
parts of the solar power value chain to partner with local Saudi
solar developers, both to realize an incredible plan for the
expansion of solar power and to help the Kingdom of Saudi Arabia
build an industrial economic base to complement its oil and gas
industry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.