KHOBAR, Saudi Arabia (Reuters) – Top oil exporter Saudi Arabia has asked companies to qualify to bid for its first utility-scale wind power project at Dumat al-Jandal, the energy ministry said on Sunday, keeping on track to tender the first round of renewable energy projects this year.
Requests to qualify for the 400 megawatt (MW) wind project in the north of the kingdom will close on Aug. 10, and proposals will be received from Aug. 29. Bidding closes in January next year, the ministry’s Renewable Energy Project Development Office (REPDO) said.
The ministry had earlier said the Sakaka 300 MW solar PV plant and a 400 MW wind project in Midyan were part of the first round of projects.
However, Dumat al-Jandal replaced Midyan as pre-development work is still being carried out there, Turki al-Shehri, head of the REPDO told Reuters in an interview.
“What is coming out today, Dumat al-Jandal is basically the replacement of Midyan. Pre-developed work needs to be done on that side, hopefully it (Midyan) will come out soon,” Shehri said.
He added that other companies can take part in the bidding since all the pre-qualified bidders for Midyan will be now automatically qualified for the replacing plant.
In April, Saudi Arabia kicked off the massive renewable program in Riyadh by announcing the beginning of the bidding process for the Sakaka project, which is expected to come online by 2018-2019. Shehri said the Sakaka project is estimated to cost around $300 million.
Winning bidders will build, own and operate the power plants in partnership with the government; the Dumat al-Jandal project will be backed by a 20-year power purchase agreement and Sakaka, by a 25-year agreement.
Shehri said Dumat al-Jandal cost could be $500 million to $700 million adding that estimates he gave for both plants were the developer’s cost, which would depend on how good they were in getting low financing and providing the best technology.
Developing renewable energy is key to displace high value oil it would rather export. It will also help the kingdom boost local manufacturing and create jobs.
Saudi Arabia aims to generate 9.5 gigawatts (GW) of electricity from renewable energy annually by 2023 involving 60 projects. The renewables initiative involves investment estimated between $30 billion and $50 billion. Shehri said he expects solar projects to be dominant in the near future.
The ministry has said the first round will be to generate 700 MW of renewable energy followed by 1.02 GW in the second round which will be split into 620 MW solar and 400 MW wind whose bidding could happen between the fourth quarter of this year and first quarter of 2018.
The 620 MW Shehri said will not be one site. It could be broken down into 2-3 projects.
The ministry has been receiving “outstanding feedback” from companies, Shehri said declining to give the number of companies which had expressed interest in Sakaka to keep the process competitive.
He played down any concerns over financing.
“The interest is there, we are very confident of developers finding funds and low finance opportunities we see that part of the equation is actually the easy part, the rest is just ensuring we get the projects out there.”
Asked about the incentives the Saudi government is offering to developers to invest, Shehri said: “So the biggest incentive we are giving is the land is for free,” in addition to pre-development work including studies.
Editing by Andrew Torchia and David Evans