Header graphic for print
Al-Mirsal Insights and commentary on legal developments in the Middle East

K.A.CARE Sheds Light on Renewable Energy Program

Posted in Project Development and Finance, Renewables

The King Abdullah City for Atomic and Renewable Energy (K.A.CARE) has recently published its consultation white paper for the “Proposed Competitive Procurement Process for the Renewable Energy Program.” The paper outlines the Competitive Procurement Process (the CPP) contemplated by K.A.CARE for solar, wind, geothermal and waste to energy projects in the Saudi Arabia. The publication of the white paper (which is noted to be under development) is an important step in the much anticipated development of renewable energy in the Kingdom where increasing domestic hydro-carbon consumption is competing with the export value benefits of hydrocarbons. K.A.CARE is expecting to receive feedback from interested parties on the white paper.

K.A.CARE is establishing a government-backed entity, the Sustainable Energy Procurement Company (SEPC) which shall be responsible for administering the procurement rounds and managing the Power Purchase Agreements (PPA) awarded under the CPP.  The form of the proposed PPA will be published by K.A.CARE for comment by interested parties shortly – but is expected to provide for a term of 20 years and will be entered into with SECP (with government guarantor endorsement – the details of which are to be clarified).  K.A.CARE will be requesting public feedback on the form of the PPA.

The CPP will consist of an introductory round (5-7 projects of various technologies) for identified sites followed by additional rounds over a two to three year window that will target 7000 MW of capacity (with each project being no less than 5 MW).  K.A.CARE has announced a renewable energy target of 54GW of renewable energy (wind, solar, geothermal and waste to energy projects) by 2032. 

Proposals will be assessed on price and non-price factors with a discount applying to the PPA price proposal by up to 30 percent for non-price factors.  The non-price factors are aligned with K.A.CARE’s broader objectives of developing an indigenous renewables industry in Saudi Arabia and are focused on domestic training, job localisation and research and development.  Proposals will be evaluated over four stages (namely completeness, mandatory criteria (5MW or more, commercial operation within two years, bid concentration limits, resource assessment and financial strength), rated criteria (financial capability, experience, development status and local content) and price evaluation/selection).

The white paper contemplates the establishment of  the SETF – Sustainable Energy Training Fund (which will be funded by a 1 percent of gross revenues surcharge). The SETF training fund will provide support for training programs, the training of Saudi nationals on specific projects and provide grants to educational institutions for the development of renewable energy skills.  In addition to the training surcharge there will be a 1% surcharge for a Sustainable Energy Research Fund which may be accessed for in Kingdom research and development, with a focus on commercialisation.

Photo: Dreamstime Stock Photography