Saudi Arabia Power Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Saudi Arabia Power Market Trends and Insights

Vision 2030 Renewable-Mix Mandate

The National Renewable Energy Program has awarded 21 projects totaling 19 GW, and seven of these plants, equal to 4.1 GW, were operating by late 2024.^{(2)Renewable Energy Project Development Office, “NREP Round 6 Tender Documents,” repdo.gov.sa} Grid-connected renewables climbed to 6.5 GW in 2024 and are scheduled to double to 12.7 GW in 2025. Single-buyer concentration inside the Public Investment Fund simplifies permitting, which enabled Sakaka Solar to close at 2.32 cents /kWh and Dumat Al Jandal Wind at 2.13 cents /kWh, among the world’s lowest tariffs. Resource-mapping campaigns covering 850,000 km² have confirmed annual solar irradiation above 2,200 kWh/m² in the Eastern Province and class-II wind speeds across Northern Border and Tabuk, guiding developers to the most bankable sites. Renewables already displace 50,000 barrels per day of crude burn, and each added gigawatt increases that benefit in direct proportion to its capacity factor.

Electricity-Tariff Reforms Spur Efficiency Spending

The 2018 rate restructuring moved residential prices to a 5–32 halala/kWh tier and industrial tariffs to 18 halala/kWh, removing long-standing subsidies and linking quarterly adjustments to Brent and Henry Hub benchmarks. Large factories in Jubail and Yanbu have since signed behind-the-meter solar power-purchase agreements over 100 MW each, achieving delivered costs below two cents /kWh. Energy-service companies now retrofit commercial towers with variable-speed drives and smart controls that cut cooling consumption by 20%, and those savings provide payback periods under four years at the new tariff regimes. The same price signals lifted commercial and industrial demand for software-based load management that flattens peak curves and reduces demand penalties on utility bills. C&I demand is therefore rising faster than population growth because electrification of process heat and data-center loads more than offset incremental efficiency.

Rapid Population & Cooling-Load Growth

The population is on track to jump from 32.2 million in 2022 to 39 million by 2030, adding eight million residents in one decade. Cooling already accounts for 70% of summer peaks, and in Riyadh, that percentage exceeds 80% when outside temperatures top 45 °C. Peak demand hit 82 GW in 2023 and is expanding 3–4% yearly, faster than the national average. Saudi Electricity Company will deploy 3 GW of battery storage by 2030 to shift excess solar output into evening ramps where air conditioning remains heavy. District cooling now under construction at NEOM and Diriyah Gate couples absorption chillers with thermal storage that removes 30% of electrical load compared with standalone split-units.

Power-Sector Privatization & IPP Pipeline

Saudi Electricity Company has begun separating generation, transmission, and distribution, and will finish in 2025, creating ring-fenced businesses that can benchmark performance against global utilities. More than 60 IPP projects worth over USD 80 billion have moved into feasibility or construction, covering renewables, combined-cycle gas, and cogeneration plants paired with desalination. Streamlined licensing now clears sub-500 MW projects in six months, stimulating mid-scale solar and wind farms in secondary cities. ACWA Power’s 1.5 GW Sudair Solar, commissioned in 2024, demonstrated that standardized contracts and pre-qualified vendor lists shorten execution to 24 months from notice to proceed. Foreign equity is capped at 49% for generation assets but unrestricted for construction and O&M, a structure that preserves domestic ownership yet channels international expertise where local supply chains remain thin.

Grid Bottlenecks and Limited Inter-Regional Redundancy

The 90,000 km transmission grid rests on a 380 kV backbone that can transfer only 15 GW across major regions, leaving renewable clusters in Tabuk and Northern Border exposed to curtailment until new HVDC corridors enter service after 2027. A 2024 transformer failure in the Eastern Province cut 2 GW of industrial load for six hours and highlighted vulnerability to single-point outages, especially during high-temperature periods when cooling demand is highest. Smart-meter rollout covering 10 million customers by 2026 will enable demand response, yet adoption in rural districts lags and still relies on manual billing.

Hydrocarbon Lock-In & Stranded-Asset Risk

Installed thermal plants represent over USD 100 billion of sunk capital and still account for 93.2% of capacity, so bringing renewables to 50% by 2030 will leave 40–50 GW of gas and oil capacity under-utilized. Private IPPs that financed those plants on 25-year power-purchase agreements could face write-downs because there is no formal compensation mechanism for stranded assets. Gas turbines keep some value as a flexible reserve, but oil-fired steam plants around coastal desalination sites risk outright retirement unless hydrogen or carbon-capture retrofits become commercial. Saudi Electricity Company can absorb losses through its balance sheet, yet smaller sponsors may renegotiate tariffs, slowing financial closes on upcoming projects.

Segment Analysis

By Power Source: Renewables Surge From a Small Base

Renewables held 6.5 GW, or 6.8%, of installed capacity in 2024 but are forecast to add 12.7 GW by 2025 and exceed 40 GW by 2030, lifting their share of the Saudi Arabia power market size to more than one-quarter within the outlook period. Solar photovoltaic dominates the pipeline, benefiting from annual irradiation above 2,200 kWh/m² across the Eastern Province and Northern Border, while wind growth centers on Dumat Al Jandal and upcoming projects in Yanbu and Al Ghat, where hub-height speeds average seven meters per second. Hydro, geothermal, and biomass remain negligible due to geography and scarce feedstock, limiting diversification beyond solar and wind.

Natural gas anchors 60 % of thermal generation and will stay essential for grid stability even as renewables climb. The Ras Al Khair LNG terminal, which opened in 2024, lifted gas availability for western plants and can expand to supply hydrogen-ready turbines in Madinah and Makkah.^{(3)Saudi Aramco, “Master Gas System Expansion Update,” aramco.com} The Liquid Fuel Displacement Programme seeks to cut oil-fired capacity below 10% by 2030, yet remote desalination plants will need transitional diesel until pipelines or storage arrive. Nuclear power, scheduled for a 2.8 GW first phase by 2030, offers a long-term option for firm zero-carbon capacity once site selection and vendor agreements are finalized.

Note: Segment shares of all individual segments available upon report purchase

By End User: Commercial & Industrial Growth Outpaces Utilities

Utilities commanded 59.5% of the Saudi Arabian power market share in 2024, thanks to the Saudi Electricity Company’s monopoly on residential and small-commercial supply, but the segment will shrink as tariff reforms encourage self-generation among large consumers. Commercial and industrial demand is rising at an 11.5% CAGR, faster than the overall market, because petrochemicals, data centers, and logistics hubs contract directly for solar-plus-storage or cogeneration that lowers delivered costs.

Data-center operators linked to NEOM and Riyadh’s smart-city plans have signed 24/7 renewable supply deals that combine on-site storage with grid-tied PPAs, a structure already common in Europe but still new to the Gulf. Residential consumption grows more slowly in per-capita terms as new building codes enforce higher insulation standards and appliance labeling steers buyers toward efficient air-conditioning and LED lighting. Net-metering rules that take effect in 2025 will allow homes and small businesses to export rooftop solar surplus at 75% of retail tariffs, unlocking one gigawatt of distributed generation by 2028.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

The Eastern Province accounts for about 35% of national electricity demand because petrochemical complexes in Jubail and Ras Tanura operate energy-intensive processes and desalination units near the coast. Direct access to the Master Gas System lets combined-cycle turbines in the province run at high load factors, reinforcing its role as the anchor for baseload generation. The Central Province, centered on Riyadh, consumes 30% of national electricity and registers summer peaks above 25 GW driven by cooling inside a metropolitan population that now exceeds 7.5 million.

The Western Province, including Jeddah, Makkah, and Madinah, represents 25% of demand and sees temporary increases of 3–4 GW during Hajj and Umrah seasons that require fast-start capacity.^{(4)Ministry of Hajj and Umrah, “Pilgrimage Services Report 2024,” hajj.gov.sa} Northern Border and Tabuk host most greenfield renewable projects because solar irradiation and wind resources rank among the best nationwide, yet their weak transmission connection to Riyadh and Jeddah increases curtailment until HVDC corridors come online after 2027. The Southern Province holds 10% of demand across mountainous terrain that challenges grid reliability; mini-grids powered by solar-plus-storage are being trialed to cut outages.

NEOM covers 26,500 km² in the northwest and will run on 100% renewable power, including 4 GW dedicated to green hydrogen for export, making the project a test bed for islanded high-penetration grids. Cross-border interconnections remain limited to a 1.8 GW Gulf Cooperation Council link that is rarely used because neighboring states also peak in summer, though a 3 GW line with Egypt under study could enable daytime solar exports and evening hydro imports once commercial terms are settled. Liberalized rules for distributed generation up to 2 MW now allow factories in Riyadh and Jeddah to install rooftops without lengthy grid-impact studies, accelerating adoption in urban load pockets.