Boost For Saudi Renewables After Aramco Transfers Shares To PIF

When Saudi Arabia’s Crown Prince Mohammed bin Salman announced transfer of Saudi Aramco’s 4% shares to state-owned Public Investment (PIF), it certainly gave a boost to the Kingdom’s renewable energy sector.

The reason is that PIF is among biggest investors in Saudi renewables sector and the government, which has revised its renewable target several times, wants to develop 70% of the targeted renewable energy though the PIF, Aramco and ACWA Power partnership and the remaining 30% through competitive tenders launched by the Ministry of Energy.

Saudi Arabia wants to push ahead with more solar and wind projects to reduce crude burn in power generation and free up the oil for export.

PIF, which has 44% stake in ACWA Power ( Saudi water and electricity company), plans to take part in about $30 billion worth of renewable projects with partners Saudi Aramco and ACWA Power.

First Solar Project

ACWA, Aramco and the PIF have already partnered in their first project to develop 70% of Saudi target of 58.7 GW by 2030.

The Saudi Aramco Power Company, a unit of the parent company Saudi Aramco, has joined ACWA and PIF-owned Badeel (the Water & Electricity Holding Co), by acquiring a 30% stake in the special purpose vehicle Sudair One Renewable Energy Co.

ACWA Power and PIF will each hold a 35% stake in the 1.5 GW power project, which is Aramco’s first investment in a renewable project. PIF is also developing the $500 billion futuristic Neom Project.

Vision 2030

The PIF’s power projects and developments in solar and wind are part of the 13 sectors the fund has chosen for development as part of the Kingdom’s Vision 2030 strategy intended to diversify the economy from oil.

The PIF continues to achieve its strategy by maximizing the value of its assets, launching new sectors, forming strategic partnerships, and localizing knowledge and technologies,” Saudi Arabia’s Crown Prince Mohammed bin Salman said in a statement to the Saudi Press Agency.

Furthermore, Saudi Aramco and the PIF are closely linked as Aramco’s Chairman Yasir Al Rumayyan also serves as the governor of the fund. “Following the transfer, the state remains Saudi Aramco’s largest shareholder, retaining more than 94% shareholding,” Aramco said in a statement to the local bourse Tadawul.

The transfer of shares was “private” between the state and the PIF and Aramco was not a party to the transfer nor did it enter into any agreements regarding payments or receive proceeds from the transfer, the statement added.

Renewables Share

Renewables projects could provide 7% of the Kingdom’s total electricity output by 2030, US-Saudi Arabian Business Council said.

The development of Saudi Arabia’s renewable energy sector could lead to the creation of up to 750,000 jobs over the next decade, as the country aims to derive 7% of its total electricity output from renewables by 2030, according to a study.

Solar power is set to account for 77% of all renewables added to the grid by 2030, with clean energy capacity poised to increase to 5.3 GW over the same period, the US-Saudi Arabian Business Council added.