Introduction
Under Vision 2030, the outlook for clean technologies in Saudi Arabia has never been brighter, anchored in ambitious policy targets and supported by various thematic initiatives, most notably the National Industrial Development and Logistics Program (NIDLP), the National Renewable Energy Program (NREP), the Integrated Energy Strategy, the Saudi Energy Efficiency Program, and the overarching Saudi Green Initiative.
Separately, Vision 2030 underscores a commitment to engage the private sector in the national development journey to foster economic diversification, increase localization, and alleviate pressure on public finances.
While these developments augur a bullish outlook for private sector players looking to capture the growth of the KSA cleantech market, success requires a comprehensive understanding of the market dynamics at play, and the ability to navigate an increasingly complex stakeholder landscape.
Saudi Arabia’s cleantech ambitions
The Kingdom’s cleantech ambitions span a wide range of sectors, from established industries like solar PV and wind to emerging sectors like green hydrogen and carbon capture. Most of these sectors benefit from well-defined national policy targets, boosting their market momentum.
Policy targets vary by subsector and have evolved over time, but a constant ambition has been to achieve a 50% share of renewable energy by 2030 primarily through solar PV and wind (NREP officially aims to deploy 60 GW of renewables by 2030, though recent developments suggest this target may soon be revised upwards). Battery energy storage systems (BESS), which had been somewhat overlooked, recently emerged as a critical enabler for grid stability and liquid fuels displacement, with over 33 GWh of capacity announced to date across several offtake channels including SPPC, SEC, and NEOM.
On the consumption side, energy efficiency and demand management have become a central policy focus, recognized as vital for conserving energy resources and curbing a rapidly increasing peak load (which exceeded 70 GW for the first time in 2023 driven by the Kingdom’s economic boom). Recent figures from SEEC (Saudi Energy Efficiency Center) indicate that energy savings amounted to over 10% of primary energy consumption in 2022, a record for the program.
When it comes to emerging cleantech sectors, KSA is positioning itself as a global hub for green hydrogen, targeting both local and export markets to help decarbonize hard-to-abate sectors. One of the largest projects of its kind, the NEOM Green Hydrogen Project is set to begin production by end of 2026 and will be capable of producing 1.2 mtpa of green ammonia when it reaches full capacity. Furthermore, the Kingdom plans to develop 44 mtpa of carbon capture capacities by 2035, which it plans to use for enhanced oil recovery and various industrial applications. In the sustainable fuels sector, government and public entities are actively exploring private sector collaboration opportunities with several ongoing early-stage feasibility studies.
Finally, the Kingdom’s cleantech roadmap is gradually expanding into the green mobility segment, with ambitious plans to scale the deployment of EV (electric vehicle) charging infrastructure nationwide to support the expected EV boom. Notable targets include a 30% EV penetration rate in Riyadh by 2030, a sign of the profound transformation soon to follow.
Achieving these targets
While the Kingdom’s transformation is largely driven by the public sector, Vision 2030 aims to increase the private sector’s GDP contribution to 65% by 2030. Consequently, national policies are being designed to foster private sector participation and attract foreign capital towards domestic investment opportunities. Several reforms were recently enacted to that effect, including the Private Sector Participation Law and the Foreign Investment Law, leading to a spike in public-private partnerships across all economic sectors.
The Kingdom leverages its institutional governance frameworks to translate Vision 2030’s guidance into concrete outcomes. The Ministry of Energy, for instance, manages the Renewable Energy Project Development Office, which collaborates with SPPC and National Grid to manage capacity planning and power procurement. Regulatory bodies like SERA (Saudi Energy Regulatory Authority) are introducing reforms to encourage distributed energy generation systems and EV charging activities, while SEEC is leading the effort to deploy energy efficiency standards, license energy service companies, and raise public awareness.
State-owned entities serve as national champions, responsible for delivering Vision 2030 within their operational realms. For example, SEC (Saudi Electricity Company) plays a dominant role in the electricity sector, although ongoing restructuring is opening the door for independent players to participate. Aramco is also highly active across the cleantech spectrum, from renewables development to blue hydrogen production and carbon capture. Initiatives like SEC Solutions Valley and Saudi Aramco Energy Ventures were launched to develop and adapt innovative energy solutions for the local market.
Beyond the immediate energy sector, LCGPA (Local Content and Government Procurement Authority) coordinates local content compliance in public procurement (such as for NREP tenders organized by SPPC) by developing assessment frameworks, setting attainment targets, and performing audits, while SIDF (Saudi Industrial Development Fund) provides funding to support private sector investment in local manufacturing and infrastructure development.
Finally, PIF (Public Investment Fund) serves as the flagship vehicle for funding the Kingdom’s national transformation roadmap and hosts a multi-purpose platform dedicated to private sector enablement (called the PIF Private Sector Hub). Of note, PIF is a key financial backer behind several large-scale projects built on sustainability principles, such as NEOM’s goal to be a fully clean energy-powered city, and Roshn’s plans to develop energy-efficient buildings equipped with EV charging infrastructure. PIF also invests in building and acquiring domestic cleantech ventures such as Tarshid in energy services, CEER and Lucid in EV manufacturing, EVIQ in EV charging infrastructure, TAQA and Badeel in renewables development, and RELC in renewable component localization.
Opportunities for the private sector
Amidst these monumental efforts, private sector opportunities abound.
1. Upstream localization
KSA’s ambition to localize the cleantech value chain offers fertile ground for international industrial players. The recent landmark joint ventures between PIF and manufacturers like Jinko Solar (for PV components) and Envision (for wind components) are a case in point. This trend is observable across other cleantech subsectors including green mobility solutions (with Lucid), green hydrogen projects (with Air Products), and battery chemicals production (with EVM). Collaborations are also emerging between private Saudi companies and foreign counterparts, such as MANAT’s partnership with Hithium for BESS localization. As seen in these examples, the private sector can play a crucial role in developing local supply chains by investing in production facilities for clean technologies and components.
2. Project development
The SPPC market reserves a 30% quota for competitive tenders, opening the door for Independent Power Producers and their supply chain partners to capitalize on the growing green power segment. Experience from earlier tendering rounds suggests a robust appetite from both local developers such as Al Jomaih and Nesma, and international players such as EDF, TotalEnergies and Marubeni, buoyed by streamlined development procedures, advantageous Power Purchase Agreement (PPA) terms, and excellent cost and yield conditions. Private sector participation is also gradually increasing in the distributed and captive generation segment, with KSA conglomerates like ENERCo and FAS Energy entering the market through partnerships with leading developers.
3. Demand management
The demand sector presents ample opportunities for private sector players who can deliver the right product-market fit. For instance, there is significant potential for energy management systems that can support energy efficiency initiatives, and for services and solutions that can facilitate the deployment and operation of EV charging infrastructure. Companies that offer innovative solutions in these fields can unlock lucrative market pathways.
4. Collaborating with public entities
Given the government’s strong presence in the cleantech sector, forming strategic partnerships with public entities can be a significant avenue for growth. By collaborating with organizations like SEC and Aramco, private sector companies can leverage their expertise, gain access to resources, and position themselves within the established frameworks of Saudi Arabia’s energy transition initiatives.
Key success factors
The unique configuration of the KSA ecosystem is marked by the prevalent role played by public entities as market markers. While this situation opens revenue pathways for aspiring market entrants and supports the establishment of local value chains, it also intensifies competition due to the dominance of “single buyer” models, as well as the direct participation of public entities in the supply of products and services.
International players with limited exposure to the KSA market can leverage their technical and innovation track records to overcome entry barriers and explore localization opportunities. In doing so, they must avoid the assumption that their existing business models will seamlessly transfer into the Saudi context. Indeed, understanding the specificities of the Saudi stakeholder landscape, end-user expectations, procurement requirements, prevailing regulatory and tariff conditions, and technical constraints (such as average temperature profiles) are critical for tailoring effective value propositions.
In addition, getting the go-to-market strategy right is equally important, and should involve identifying the right partner(s) and partnership model(s). KSA players possess valuable insights, established sales channels, and robust stakeholder relationships, allowing them to navigate the complex and evolving regulatory landscape and bring new value propositions to life. In addition, partnership strategies can facilitate the compliance of foreign players with Saudi Arabia’s tightening requirements on local content and talent development.
Conclusion
Against the backdrop of a lackluster global economic outlook, the remarkable growth of the Saudi market coupled with its ‘open for business’ approach are establishing it as a prominent destination for foreign investment and attracting renowned players from around the world. This outlook is buoyed by advantageous policies under Vision 2030, including an expanding list of international hosting commitments (most notably World Expo 2030 and FIFA World Cup 2034).
And with its outsized strategic importance, the cleantech sector is poised for exponential growth in the years to come, presenting sizeable value pools for private sector players with the right strategic approach.
Apricum has been following KSA’s cleantech transformation for years, assisting both local and international clients with their strategy and transaction advisory needs. If you are interested in exploring opportunities in Saudi Arabia’s cleantech sector or would like to discuss how our team can support you, please contact Managing Partner Nikolai Dobrott.
With thanks to Saravana Kumar, Alberto Vinci and Marco Rajteri for their support in writing this article.
