Riyadh – Mubasher: Saudi Arabia's renewable energy market is designed to grow, backed by rich solar resources, land availability, adding to the A-rated sovereign credit and strong economic and strategic logic, Moody's Investors Service (Moody's) said.
"The government of Saudi Arabia's plans are motivated by a desire to diversify the energy mix and take advantage of the compelling economics of renewables, especially solar, in the country,” Moody's vice president Christopher Bredholt commented.
The report showed that the demand is increasing on electricity due to economic and demographic growth, and highly energy-intensive industrialisation programmes.
Saudi Arabia is seeking to cut the subsidies for oil consumption and encourage clean generation technologies amid the pressures laid on the government in the low oil price environment, Moody’s added.
KSA renewable plans will help decrease the share of the public sector in the economy and benefit from project finance opportunities for lenders, through sukuk and non-sukuk facilities.
However, credit challenges include a relatively untested regulatory framework for renewables, the report noted.
In February 2017, the government opened an auction to produce 700 megawatts (MW) of renewable energy capacity; a first step towards meeting its strategic targets of generating 9.5 gigawatts (GW) by 2030.
Renewable energy activity in Saudi Arabia to date has been fairly limited and the market is likely to develop only gradually as market participants get acquainted with new procurement procedures, and the supply chain adjusts its expectations, Moody’s reported.
