Harnessing the Saudi Arabian solar powerhouse

opportunity

Webinar
Yusuf Macun, Partner
May 10, 2017
Markets in MENA with highest PV cumulative installation
through 2021 are UAE, Egypt, Algeria and Saudi Arabia.
MENA PV market, by country, 2016 and 2021 [annual MW, cumulative GW]

Morocco Jordan

291 196 1.7 GW

48 262
1.3 GW

2016 2021 2016 2021

Egypt UAE
662
656
42 2.7 GW 219
3.6 GW
Algeria 2016 2021
1,193 2016 2021
80 2.6 GW
All others Saudi Arabia
2016 2021 1,189
1,403
224 5.7 GW 4 2.4 GW
x = Cumulative installations in 2021 2016 2021
2016 2021

Source: Apricum PV Market Model Q2/2017 center scenario

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Saudi Arabia expected to strongly increase PV installation
starting in 2019 to over 1 GW in 2021.
Annual new PV installations forecast for KSA [GWp]

Market sustainability
High case Large population, growing energy demand
1.3
Well-developed IPP framework
First 300 MW PV tender ongoing and second
Low case 1.0 tender (620 MW PV) announced
Goal to diversify from oil and gas
0.8
Roadmap for renewable energy targets
(Vision 2030)
0.6

0.4 Potential risks

0.4
Delays in implementation, however, this has
been mitigated by greater organization and
<5 <5 the new tender authority (REPDO) for
<5
ongoing tender round, which started in
2016 2017 2018 2019 2020 2021 Q1/2017

Source: Apricum PV Market Model Q2/2017

3
Saudi Arabia provides many suitable sites for solar and
wind power generation.
Detailed Saudi regional suitability for solar and onshore wind power generation1
Resources
Solar radiation (GHI) very high across
Arar Examples for areas
KSA; concentrating technologies (e.g.,
with wind speed
CSP) more viable in western regions
above 6 m/s and
Tabuk up to 89 m/s Minimum wind speed of 5 m/s at 80 m
Hail
height needed for wind to be competitive
with oil-fired electricity generation2
Buraydah Dammam
Several sites fulfill these requirements:
Initial wind simulation model by Vestas
and K.A.CARE shows very attractive
Al-madhinah Riyadh
wind resources in KSA up to 89 m/s,
offering LCOE of below 0.10 USD/kWh
Grid connectivity
Jeddah
For utility-scale generation, adequate
grid access necessary, i.e., proximity to
large cities
However, off-grid sites still suitable for
Khamis
moshait
distributed utility-scale generation,
e.g., to power desalination plants
Large cities
Suitable for solar energy; GHI in kWh/m2: 2,200-2,400 2,400-2,600 2,600-2,800
Source: K.A.CARE renewable resource atlas and Apricum analysis 1) Wind speeds measured at 80m height 2) Assumed at 50 USD/barrel

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Saudi Arabias Vision 2030 includes ambitious targets and a
program for clean energy that has already been kicked off.
Saudi Arabias Vision 2030 Key objectives of Saudi government

Introduced in May of 2016 by 1 Meet the growing demand for electricity

Deputy Crown Prince
Mohammad bin Salman Al Saud
Reduce fossil fuel consumption in electricity
2 generation
Goal is to develop a more diverse and sustainable
economy through improved education and privatization of 3 Contribute to peak load demand
government services
Key energy implications include:
Renewable energy target of 9.5 GW by 2023 and a 4 Reduce air pollution and improve public health
3.45 GW intermediate target by 2020
Six tender rounds envisaged with first round of Maximize local content to spur local
5 employment
700 MW already launched and two more rounds
planned (1,020 MW and 1,730 MW)
Fuel market liberalization: fossil fuel subsidies to be 6 Fair and transparent bidding process
reduced, increasing PV and winds competitiveness
Localized manufacturing incentives to spur renewed Attract foreign and local private investment
7 and participation in Saudi Arabia
interest from Saudi private sector

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27 bidders have qualified as technical or managing member
for the solar RfP.
Each bidder requires a managing and a technical member. A number of other parties are
also rumoured to be interested in joining.

Managing and technical member Managing member Technical member

ACCIONA Energia Global S.L.
ACWA Power
Belectric (RWE Group)
EDF Energies Nouvelles
First Solar International Middle East
FZ-LLC
Enel Green Power S.p.A.
International Power SA, Dubai Branch
(ENGIE)
Marubeni Corporation
Abu Dhabi Future Energy Company, Canadian Solar
PJSC-Masdar
Enerparc Projects GmbH
Cobra Instalaciones y servicios S.A.
Fotowatio Renewable Ventures (FRV)
JGC Corporation
GCL New Energy
Nebras Power
Hanwha Qcells Co.
Korean Electric Power Corporation
(KEPCO) Iberdrola Renovables Energia S.A.U.
SNC-Lavalin Arabia LLC
Trina Solar Limited
Sojitz Corporation
TSK Electronica Y Electricidad
Tenaga Nasional Berhad

Mitsui & Co

Total Energies Nouvelles Activities

USA
Source: REPDO, Apricum

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Financing
Financing requirements and project documentation are reported to be broadly in line with
the SEC 100MW PV IPP tender, thus providing continuity.

Timeline to bid more generous/realistic than initially ancitipated

Relatively modest size of transaction probably means no major liquidity issue
Strong interest from international and local commercial banks. ECA involvement unlikely
SAR vs USD financing dynamics
Strong preference by banks in Middle East IPP financings to use mini-perms: Evaluation
by authority / refinancing risk
Pre-bid costs vs deliverability: Rumour has it that the latter is the priority
Strong bidder equity interest notwithstanding

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