Saudi Arabia plans the world’s cheapest power with solar and wind

Saudi Arabia will award its first tender to build 700 megawatts of solar and wind energy in September, with the cost of power forecast to be the lowest in the world, Energy Minister Khalid Al-Falih said.

OPEC’s biggest oil producer plans to build 300 megawatts of solar plants in the al-Jouf area in northern Saudi Arabia and 400 megawatts of wind projects in nearby Tabuk, he said. Requests to qualify for bidding will be issued Feb. 20 and bids will be on April 17.

“The terms on renewable contracts will be motivating so that the cost of generating power from these renewable sources will be the lowest in the world,” Al-Falih said Wednesday at a press conference in Riyadh.

The kingdom plans to produce 9.5 gigawatts of power from renewable energy sources by 2023, Al-Falih said. Building more solar plants and developing a nuclear-power industry is part of a broader government plan to diversify away from crude sales as the main source of income. Saudi Arabia is the world’s largest crude exporter and pumps the most oil among the Organization of Petroleum Exporting Countries.

“These projects have a significant size,” Al-Falih said. “They will be the largest in the region size-wise and they are the first Saudi project that will be tendered through private-public partnership.”

The projects will be financed and operated by private investors, and international financial institutions are expected to participate, he said. In all, Saudi Arabia is planning $30 billion to $50 billion of renewables. The energy ministry has created a division to handle the tenders, Al-Falih said.

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