Saudi Electricity Company: Comprehensive Analysis of Financial and Operational

The Saudi Electricity Company was established in 2000 as a result of the merger of four state-owned regional electricity companies, aiming to unify efforts and improve the efficiency of energy services in the Kingdom. This decision came as part of a national strategy to develop the energy sector and modernize the electrical infrastructure, under the supervision of the Ministry of Energy and government regulatory bodies such as the Electricity Regulatory Authority and the Saudi Anti-Corruption Authority. Since its inception, the company has taken on the responsibility of generating, transmitting, and distributing electricity through a vast national network covering all regions of the Kingdom, making it the backbone of electricity supply for homes and industrial and commercial establishments. The company plays a pivotal role in supporting the national economy, as the stability of electricity supplies contributes to the growth of industrial sectors and the development of new economic zones such as NEOM and the Red Sea. The company is also actively involved in implementing the goals of Vision 2030 by expanding renewable energy projects, modernizing networks, and improving operational efficiency. Its success relies on a mix of substantial government investments, modern technologies, and collaboration with local and global partners in renewable energy and smart grid projects. Its operations are subject to strict oversight by regulatory bodies to ensure supply sustainability and service quality, with a clear commitment to transitioning to clean energy sources and reducing losses in the grid.

The Saudi Electricity Company has an ownership structure dominated by the government sector, with the Public Investment Fund owning the majority of shares, ranging from 70–75%, while the remaining ownership is distributed among other government entities and individual and institutional investors through the stock market. This structure allows for strong regulatory control by the state, ensuring that operational policies align with national directives, particularly regarding energy pricing, consumer support categories, and the development of renewable energy projects. The company is managed by a board of directors that includes representatives from government entities and individuals with extensive experience in the energy, finance, and management sectors, and the board is subject to periodic reviews by the Capital Market Authority and the Electricity Regulatory Authority. The company also adheres to governance and transparency standards required of listed companies on Tadawul, providing quarterly and annual financial reports that reflect its financial and operational performance. Several committees oversee the company's operations, such as the Audit Committee, Risk Committee, and Sustainability and Renewable Energy Committee, to ensure continuous improvement and adherence to best regulatory practices. The strict government regulation aims to achieve a balance between providing reliable and sustainable electricity service, maintaining financial viability, and achieving national goals in diversifying energy sources and developing Saudi competencies in the sector.

The Saudi Electricity Company manages the largest integrated electricity network in the region, with its infrastructure encompassing three main axes: generation, transmission, and distribution. Generation relies on a mix of gas, steam, and some renewable sources (solar and wind), with an annual installed capacity of approximately 70,000 megawatts according to 2024 forecasts. Power plants are spread throughout the Kingdom, with a particular focus on industrial areas and major cities. In the transmission phase, the company manages high and medium voltage networks extending thousands of kilometers of lines and towers, enabling the transfer of electricity from generation stations to consumption areas. The Saudi network features advanced technologies in control, monitoring, and interconnection between regions to secure supply and reduce outages. For distribution, the company relies on a massive network of transformers and low-voltage lines, with local distribution companies responsible for delivering service to end customers. The company has recently invested in smart meters and digital networks to improve distribution efficiency, aiming to reduce technical and administrative losses to less than 3.5% in 2024, with plans to reach below 3% in the coming years. These efforts are part of the state's policy to develop the energy sector and enhance infrastructure efficiency to meet the increasing demand amid population and industrial growth.

The Saudi Electricity Company has witnessed notable stability in its financial performance during 2024–2025, supported by growing demand and improved operational efficiency. Quarterly report data indicates that the company achieved revenues nearing 70 billion riyals in 2024, a slight increase compared to the previous year despite challenges related to fuel price volatility. Net profit ranged between 7–8 billion riyals for the same year, with the company continuing to distribute stable cash dividends to shareholders. These figures reflect the robustness of the company's business model and its ability to achieve sustainable growth amid increasing electricity demand, successfully compensating for rising operational costs through improved tariffs for large consumers and investing in renewable energy projects. Semi-annual data for 2024 showed an increase in produced energy by approximately 10%, with new projects coming online and continued expansion of smart meters, enhancing billing efficiency and reducing losses. The company continues to inject substantial investments into infrastructure, with new investment value exceeding 10 billion riyals in 2024, allocating a significant portion to improve transmission and distribution networks in major cities. Thus, the Saudi Electricity Company stands out as a stable financial and operational player in the Saudi market, with a clear ability to keep pace with growth and achieve balanced returns for shareholders.

Shares of the Saudi Electricity Company are traded daily in the financial market, and key financial indicators show relative stability in performance. The stock price during 2024–2025 ranged between 26 and 30 riyals, reflecting investor confidence in the sustainability of the company's profits and its conservative operational policies. The market value reached approximately 140 billion riyals, making it one of the largest companies listed in the utilities sector. The price-to-earnings (P/E) ratio was within the sector's normal range, between 10 and 15 times, indicating a reasonable valuation compared to the company's profit growth and dividends. The Saudi Electricity Company is characterized by a stable cash dividend policy, with an annual yield on dividends of about 4–5%, and cash distributions ranging between 1.2 and 1.5 riyals per share. This policy reflects a preference for financial sustainability and maintaining a strong shareholder base, with limited flexibility in increasing distributions due to significant investment commitments. These indicators allow investors to easily track the company's performance through platforms like Tadawul or brokerage applications, with a need to follow quarterly reports for the latest financial updates.

The electricity sector in the Kingdom of Saudi Arabia is one of the most vital and sensitive sectors, given its role in supporting economic and social development. The Saudi Electricity Company controls almost all stages of electricity supply, from generation to distribution, with some independent players in the generation sector (IPP/IWPP) supplying the company with electricity under long-term purchase contracts. The company faces challenges related to diversifying energy sources, improving operational efficiency, and reducing reliance on fossil fuels, in line with the Vision 2030 directives. While direct competition in the distribution sector remains limited, the market is witnessing the entry of specialized companies in solar and wind energy production, enhancing diversification opportunities and affecting sector dynamics in the long term. The company benefits from government support and favorable regulatory policies, but it is required to keep pace with technological developments, improve efficiency, and reduce losses to ensure revenue sustainability and achieve national clean energy goals. The company's ability to adapt to regulatory and technological changes is a critical factor in maintaining its leading position in the Saudi utilities sector.

The Saudi Electricity Company places increasing importance on renewable energy projects within its future strategy, aiming to reduce reliance on fossil fuels and achieve environmental sustainability. In 2024, major solar energy projects were launched, such as the Sudair project in Medina with a capacity of 1.5 gigawatts, along with other projects in the Mecca and Hail regions, raising the total renewable energy produced to approximately 2,000 megawatts. The company participates in implementing smart meter and digital network programs, which help improve distribution efficiency, regulate consumption, and provide accurate data on actual customer consumption. The company also aims to reduce network losses to below 3% in the coming years through targeted investments to improve infrastructure, modernize stations, and expand transmission lines. The government's shift towards clean energy supports stable investment plans for the company, with expectations of increasing the share of renewable energy within the national generation mix and achieving the Vision 2030 goals of diversifying energy sources and protecting the environment.

The Saudi Electricity Company is subject to a strict regulatory framework by the Ministry of Energy and the Electricity Regulatory Authority, which directly impacts its operational and pricing policies. Government policies include setting electricity tariffs, distributing subsidies among consumer categories, and directing investments towards renewable energy projects and smart infrastructure. In 2024, an updated version of the national electricity policy was issued, which included restructuring the electricity sector and enhancing the role of the private sector in some generation and distribution stages. Plans were also announced to separate the roles of the buyer and distributor and reassess the fuel subsidies, which could lead to substantial changes in the sector's structure in the future. The company is committed to applying governance and transparency standards, regularly updating its financial and operational reports to ensure compliance with regulatory requirements and enhance investor confidence. Interaction with government policies is a key factor in the company's ability to achieve sustainable growth and keep pace with rapid transformations in the energy sector both locally and globally.

In 2024, the Saudi Electricity Company witnessed several notable developments, ranging from the launch of major solar energy projects to the modernization of smart networks and expansion of digital meters. Among the most important projects is the Sudair solar project with a capacity of 1.5 gigawatts, which is a significant step towards achieving clean energy goals within Vision 2030. The company also launched the first phase of the smart grid project in Riyadh, where smart meters were installed in over 100,000 homes, contributing to improved billing efficiency and consumption regulation. The company's investments in infrastructure projects rose to over 10 billion riyals in 2024, with expectations of increasing investments in the coming years to meet the accelerating demand. The company announced relatively high cash dividends, benefiting from increased tariffs for some categories and improved operational revenues. The company continues to collaborate with local and international partners in interconnection projects and the development of new stations, enhancing its ability to meet future needs and ensure supply stability.

The Saudi Electricity Company faces a range of operational and regulatory challenges that require effective risk management. Among the most prominent challenges are fuel price volatility, as any sudden increase in gas or coal prices affects production costs and profit margins. Regulatory changes, such as sector restructuring or adjustments to tariff and subsidy policies, may impose significant investment commitments and impact profit stability. Rapid demand growth is another challenge, requiring substantial investments in generation plants and transmission and distribution networks to avoid bottlenecks and outages. In the field of technology, the transition to renewable energy and the adoption of smart grids pose challenges in change management and human capital development. The company is working to address these challenges by diversifying energy sources, improving operational efficiency, and investing in innovation, while benefiting from government support and stable regulatory policies. Rapid adaptation to technological and regulatory transformations remains a critical factor in maintaining the company's competitiveness and sustainability.

When comparing the Saudi Electricity Company with regional and global utilities companies, its superiority in terms of size and operational integration becomes evident. Regionally, the company is the largest electricity provider in the Gulf, surpassing companies such as DEWA in the UAE or electricity distribution companies in Qatar and Kuwait. The company is characterized by near-complete control over the value chain (generation, transmission, distribution), giving it a higher ability to control efficiency, quality, and responsiveness to demand. Globally, it can be compared to major companies such as TNB in Malaysia or EDF in France, which manage extensive networks and invest heavily in renewable energy and smart grids. All these companies face common challenges related to rising demand, the shift to clean energy, and regulatory changes, but government support and national policies in Saudi Arabia provide the Electricity Company with a relatively stable investment environment. The company continues to collaborate with international partners in technology and innovation projects, enhancing its ability to adopt best global practices in utilities and energy management.

The stock price of the Saudi Electricity Company can be easily tracked through the Saudi financial market platforms (Tadawul), where a dedicated page for each listed company displays the current price, market value, P/E ratio, and number of outstanding shares. Similar to the page of Hail Cement Co (symbol 3001) listed on Tadawul, the Electricity Company's page can be accessed via its specific symbol, allowing for daily stock movement tracking, official announcements, and quarterly report results. Financial news websites such as Argaam, Al-Eqtisadiah, and Bloomberg provide periodic reports on the company's performance and sector developments. The company itself offers detailed financial reports on its official website, including quarterly and annual financial results, distribution policies, and news about new projects. For immediate updates, smartphone applications for trading or financial brokerage can be used, with alerts activated to receive the latest updates on stock price and significant developments. It is recommended to refer to official sources for accurate and up-to-date data before making any investment decisions.

The Saudi Electricity Company adopts a stable cash dividend policy aimed at balancing shareholder rewards and maintaining the company's investment capacity. The annual yield on dividends was approximately 4–5% in 2024, with cash distributions ranging between 1.2 and 1.5 riyals per share. This policy reflects the company's commitment to sharing a portion of profits with shareholders while maintaining sufficient financial reserves to support expansion plans and investments in renewable energy and smart infrastructure projects. The company determines distribution ratios based on annual profitability results, liquidity requirements, and the board's vision for future investment opportunities. The dividend policy is also affected by regulatory and economic changes, such as tariff adjustments or increased capital expenditures, which may lead to temporary adjustments in distribution ratios. Shareholders benefit from stable distributions, enhancing the stock's attractiveness in the financial market and reflecting the company's conservative approach to managing profits and risks.

The electricity sector represents one of the core pillars of Vision 2030, which aims to diversify energy sources, enhance efficiency, and transition to renewable energy. The Saudi Electricity Company plays a pivotal role in implementing this vision by investing in solar and wind energy projects, modernizing infrastructure, and developing smart networks. The sector is expected to undergo significant changes in the coming years, with the private sector being invited to invest in generation and distribution stages and adopting new policies to rationalize consumption and improve efficiency. Regional interconnection projects and network expansion will also contribute to enhancing supply stability and supporting economic and industrial growth. The government continues to support the company through regulatory policies and capital investments, providing a conducive environment for sustainable growth. The company's success in rapidly adapting to technological and regulatory changes and investing in human competencies remains a critical factor in achieving national energy goals and environmental sustainability.