Renewable Energy in Saudi Arabia: In-Depth Market Insights

Renewable energy refers to energy derived from continuously replenished natural sources, primarily solar energy, wind energy, hydropower, geothermal energy, and biomass. In the Saudi context, the concept of renewable energy has gained increasing importance, becoming a cornerstone in national economic policies and a key topic in financial market analyses. This transformation is part of Vision 2030, which aims to diversify national income sources and reduce reliance on oil by supporting clean energy projects and encouraging local and foreign investments in this field. In the Saudi financial market (Tadawul), the renewable energy sector is often categorized under 'utilities' or 'energy,' including companies involved in the production, generation, and distribution of electricity from renewable sources, as well as industrial companies increasingly relying on clean energy in their operations. Notably, major companies like ACWA Power, specializing in solar and wind energy projects, have been listed, reflecting the new model of long-term investment linked to sustainable returns and positive environmental impact. With national transformation programs, such as the National Renewable Energy Program, this sector has become a focal point for investors, expected to witness high growth rates supported by government initiatives, new project auctions, and increasing global trends toward clean energy. In addition to the environmental impact, investments in renewable energy contribute to creating new job opportunities, developing local technologies, and enhancing the competitive position of the Saudi market globally, with the continuous listing of new companies and monitoring their financial impact through quarterly reports and analyst evaluations.

The sources of renewable energy in the Kingdom are primarily distributed between solar and wind, with experimental projects for hydropower and geothermal energy. Solar energy leads the way, given Saudi Arabia's desert location, which provides high solar radiation rates throughout the year. This has contributed to the establishment of massive solar farms, such as the Riyadh Solar Project (700 MW) and Noor Solar Energy projects in Medina, which utilize photovoltaic (PV) and concentrated solar power (CSP) technologies. Wind energy projects are concentrated in the northern and northwestern regions, where winds are strong and stable, as seen in the Dumat Al-Jandal project (400 MW) and wind farms in Tabuk and Al-Jouf. These projects rely on modern wind turbines with high capacities and increasing efficiency. In contrast, hydropower projects remain limited due to scarce flowing water resources, restricted to small applications in some dams. Geothermal energy is in the preliminary study phase, with increasing interest in harnessing geothermal heat in areas like Harrah Al-Raha. Additionally, some companies have begun experimenting with biomass energy using agricultural or animal waste to generate electricity in small projects. Continuous development of new technologies and local production, such as manufacturing solar panels and turbines locally, enhances independence and reduces long-term costs. This diversity in sources allows Saudi Arabia flexibility in meeting the increasing demand for electricity while reducing carbon emissions.

The Kingdom of Saudi Arabia has set ambitious goals within Vision 2030 to transform the energy sector towards sustainability, focusing on raising the share of renewable energy in electricity production to 50% or more by 2030. These policies are based on several strategic pillars: first, enhancing investments in solar and wind projects; second, enacting regulatory legislation that facilitates the entry of private and foreign sectors; and third, developing smart infrastructure for transmission and distribution networks. The government aims to hold periodic auctions for new projects while providing investment incentives and financing facilities for local and global companies. Important initiatives also include the Quality of Life Program and the National Renewable Energy Program, which establish clear frameworks to stimulate innovation, training, and technology localization. The state supports industries related to renewable energy, such as solar panel manufacturing and turbine assembly, to make the Kingdom a regional hub for supply chains. Government policies encourage public-private partnerships (PPP) and offer long-term power purchase contracts at competitive prices. This strategy aims to reduce reliance on fossil fuels, lower emissions, and fulfill the Kingdom's commitments under international climate agreements. With all these policies, regulatory bodies are continuously updating legislation to ensure market stability and attract investors, making Saudi Arabia one of the fastest-growing markets in the region for renewable energy.

Recent data indicates a rapid growth of the renewable energy sector in Saudi Arabia during 2024 and 2025, driven by several factors, most notably mega-projects and foreign and local investments. According to government announcements, the Kingdom aims to produce more than 50% of its electricity needs from renewable sources by 2030. By mid-2024, the operational capacity of solar and wind power plants reached several thousand megawatts; for example, the Dumat Al-Jandal wind project (400 MW) was completed in 2022, while solar projects with capacities exceeding 2.5 GW are under construction (such as Hota Bani Tamim-2 and Wadi Al-Dawasir). In 2025, the Ministry of Energy announced tenders for solar projects with a total capacity exceeding an additional 3 GW. On the other hand, 2024 saw agreements signed with global companies to build solar power plants to serve heavy industries, as in the agreement with Engie for cement factories, reflecting investments worth billions of dollars. Among the major projects are Riyadh Solar (700 MW), Rabigh Bay Solar (1450 MW), and the expansion of the Dumat Al-Jandal station. Financial indicators showed that companies like ACWA Power experienced revenue growth and moderate profit multiples compared to traditional energy companies. These figures reflect the sector's dynamism and its continued ability to attract capital, with expectations of increasing reliance on clean energy year after year, amid significant progress in the national transformation plan and the signing of new project agreements annually.

ACWA Power is the most prominent example of renewable energy companies listed in the Saudi financial market. The company was listed in late 2023 and continued to achieve strong growth during 2024, benefiting from its mega-projects in solar and wind energy. ACWA Power's revenues focus on long-term power purchase contracts for projects like Noor Energy and Riyadh Solar, which has reflected in rising revenues and net profits during 2024, with renewable energy accounting for a significant share of the company's portfolio. On the other hand, Hail Cement Company (symbol 3001) can be seen as an example of industrial companies that are affected by and benefit from the renewable energy wave. Although Hail Cement is not a direct producer of renewable energy, it has begun to introduce solar energy technologies to reduce fuel consumption in its factories, similar to other cement companies like Northern Cement. In 2024, Hail Cement's stock price ranged between 55 and 70 Saudi Riyals, with a market capitalization reaching 1.5–1.7 billion Riyals, and it achieved stable cash distributions representing about 4% of the nominal stock price. Profit multiples ranged between 10 and 15, reflecting balanced financial performance. This example illustrates how industrial companies, despite not specializing in renewable energy, have become part of the clean energy ecosystem by adapting to environmental requirements and reducing costs, a trend likely to expand in the future as national transformation policies continue.

The renewable energy sector constitutes a growing part of the energy and utilities sector in the Saudi financial market, characterized by several features that enhance its attractiveness and rapid growth. First, the sector relies on massive capital investments (Capex) in building solar and wind power plants, but benefits from low operational costs (Opex) since the fuel (sun and wind) is free. Second, the sector is marked by a diversity of production sources, with solar projects spread across regions like Mecca and the central region, while wind projects are concentrated in Al-Jouf and Tabuk. Third, Saudi projects apply modern technologies such as high-efficiency photovoltaic cells and advanced wind turbines, alongside investments in smart networks for efficient energy transmission. In terms of competition, ACWA Power stands out locally as a specialized renewable energy company, alongside traditional utility companies like Saudi Electricity Company, which has begun investing in clean energy. Internationally, global companies like Engie, Siemens, and Vestas compete for contracts to build and operate projects in Saudi Arabia. Local companies face challenges such as fluctuations in renewable energy production due to weather, the need for investments in energy storage, and cost pressures with the entry of global competitors. Additionally, the renewable energy sector competes with the traditional energy sector, which still holds a significant market share in Saudi Arabia. With continued government support and financing facilitation, competition is expected to remain a driver for improving efficiency, localizing technologies, and innovating new solutions in the Saudi market.

The renewable energy sector in Saudi Arabia has witnessed massive investment flows during 2024 and 2025, reflecting supportive government policies and increasing interest from local and international investors. Funding sources vary between direct government investments (such as the Public Investment Fund), bank financing, public-private partnerships (PPP), foreign investments, as well as green bond and sukuk issuances. The government offers significant investment incentives, such as providing land at nominal prices, long-term power purchase contracts at fixed prices, and sovereign guarantees for major projects. This attractive environment has helped attract global companies like Engie, Siemens, and Vestas, alongside local companies like ACWA Power. Investment funds and exchange-traded funds (ETFs) specialized in renewable energy have also expanded the base of individual and institutional investors. These inflows are reflected in the rising market values of listed companies in the sector and the growth of their financial valuations. Data shows that financing for major projects is often distributed between equity and long-term bank loans, with expectations of achieving stable returns over decades. At the same time, the government encourages the private sector to lead project development through periodic tenders, technical partnerships, and localizing supply chains, enhancing growth opportunities for the sector and supporting the goals of Vision 2030 in transitioning to clean energy.

Renewable energy in Saudi Arabia contributes to achieving several strategic economic objectives, foremost among them enhancing economic diversification and reducing reliance on oil. As the share of renewable energy in electricity production increases, the need for domestic consumption of oil and gas decreases, allowing for larger exports and increased national revenues. Additionally, renewable energy projects create new job opportunities in design, construction, operation, and maintenance, alongside developing related industries such as solar panel manufacturing and wind turbine assembly. The sector supports innovation and technology transfer, as the Kingdom has already begun building specialized research and training centers, alongside encouraging partnerships with universities and global companies. Furthermore, renewable energy helps reduce costs for heavy industries (such as cement and petrochemicals) by lowering electricity prices and carbon emissions, enhancing the competitiveness of Saudi products in global markets. Moreover, massive investments in this sector increase the attractiveness of the local market for foreign capital and support the Kingdom's classification as a regional hub for future energy. Ultimately, the transition to renewable energy is a fundamental pillar of Vision 2030 in building a renewed and sustainable economy capable of adapting to global changes in energy markets.

Renewable energy plays a pivotal role in protecting the environment and reducing carbon emissions in Saudi Arabia. As electricity production from clean sources rises, reliance on fossil fuels (oil and gas) decreases, leading to reductions in carbon dioxide emissions and other pollutants associated with traditional power plants. Reports from the Ministry of Energy estimate that the transition to solar and wind energy will contribute to reducing millions of tons of emissions annually by 2030. Renewable energy also positively impacts air quality and public health, especially in major industrial areas. On the other hand, renewable energy projects support the conservation of natural resources, as they do not require significant water or raw material consumption, unlike some traditional energy technologies. The Kingdom is committed under the Paris Climate Agreement to reduce emissions and achieve carbon neutrality in the long term, making the transition to clean energy a priority in all environmental policies. At the same time, the government encourages circular economy initiatives, waste recycling, and the development of advanced energy storage technologies to ensure the sustainability of the ecosystem. These efforts are reflected in improving Saudi Arabia's ranking in global sustainability indicators and enhancing its image as a major source of clean energy in the region.

The renewable energy sector in Saudi Arabia has witnessed a series of notable developments during 2024 and early 2025, enhancing the Kingdom's position as a regional hub for clean energy. Among the most significant news is the signing by Engie in November 2024 of an agreement to build a 22 MW solar plant for a Saudi cement factory, as part of a long-term power purchase contract aimed at reducing carbon emissions in the cement sector. Additionally, the government announced the acceleration of tenders for new solar and wind fields in the west and north of the country, aiming to increase net renewable energy by approximately 5 GW by the end of 2025. During this period, ACWA Power was listed on the Saudi stock market, boosting trading volumes in the sector. Saudi Arabia also established international partnerships with Japan and Norway to develop solar energy projects and local production centers for solar panels and turbine parts, as part of a strategy to localize supply chains. On the technical front, national electricity companies began studying massive energy storage projects using batteries, while the national electricity grid witnessed an expansion in smart connectivity and improved efficiency in distributing renewable energy. The government launched the National Clean Energy Strategy with funding exceeding 20 billion Riyals for projects until 2025. The Kingdom participated in international conferences showcasing its progress and announced the opening of new solar plants costing over 3 billion Riyals, set to be operational before the end of 2025. These developments reflect the accelerating pace of the transition to renewable energy and the growing investment opportunities in the sector.

Despite significant progress and government support, the renewable energy sector in Saudi Arabia faces several technical, economic, and regulatory challenges. Among the most prominent technical challenges is the need to develop effective energy storage solutions due to the variability of solar and wind production depending on weather conditions, which requires substantial investments in battery technologies and smart grids. Economic challenges also arise, such as the necessity to achieve competitive returns amid declining oil prices domestically and ensuring the long-term viability of projects amid fluctuations in interest rates and financing costs. From a regulatory standpoint, there is a need to expedite administrative procedures, obtain environmental approvals, and continuously update legislation to keep pace with technological advancements. Additionally, the sector requires building qualified human resources in advanced fields such as design, analysis, and maintenance. Local companies face strong competition from global companies with advanced technologies, putting pressure on profit margins and necessitating investment in innovation and technology localization. The stability of government policies and the continuity of investment incentives are critical factors for the ongoing growth of the sector. Despite these challenges, the state is working to overcome obstacles through financial and technical support, infrastructure development, and encouraging education and training, enhancing the ability to face risks and achieve national transformation goals.

Indicators suggest a promising future for the renewable energy sector in Saudi Arabia, driven by Vision 2030, technological advancements, and increasing local and global demand for clean energy. The pace of mega-projects is expected to accelerate, supported by increased reliance on foreign investments and international partnerships, alongside the development of local industries such as solar panel manufacturing and turbine assembly. The coming years are also expected to witness expansion in storage technologies, artificial intelligence in network management, and linking renewable energy projects with green hydrogen projects, positioning the Kingdom as a regional hub for future energy. On the policy front, continued government support and legislative updates are anticipated to attract more investments, focusing on expanding the base of local competencies through specialized education and training programs. In the financial market, an increase in the listing of companies specialized in renewable energy and the development of new investment products such as green ETFs and sustainable bonds are expected. Challenges will remain, but the global trend toward reducing emissions and achieving sustainability provides Saudi Arabia with an opportunity to enhance its role in the global energy market. Ultimately, the renewable energy sector is likely to remain one of the pillars of the national economy in the coming decades, contributing to the desired economic and environmental transformation.