Category: Facts & Forecasts

As businesses across Saudi Arabia look to reduce operating costs and embrace sustainable energy solutions, solar power has emerged as a compelling option. With solar panel prices continuing to decrease and technology becoming more efficient, the key question isn’t whether to adopt solar energy—it’s how to finance and implement it. The two primary approaches are Engineering, Procurement, and Construction (EPC) contracts and Power Purchase Agreements (PPAs). Let’s explore both options in detail to help you make an informed decision for your business.

EPC vs. PPA: Everything You Need to Know

Understanding EPC Contracts

What is an EPC Contract?

An EPC contract is a comprehensive agreement where your business purchases a solar system outright. The solar provider handles all aspects of the project:

• Engineering: Detailed system design and planning
• Procurement: Sourcing all necessary equipment and materials
• Construction: Complete installation and commissioning

Key Benefits of EPC

1. Complete Ownership: Your business owns the solar system outright, giving you full control over the asset
2. Maximum Long-term Savings: Once the initial investment is recovered, you enjoy free electricity for the system’s remaining lifetime
3. Tax Benefits: Potential tax advantages and depreciation benefits
4. Property Value: The solar installation adds value to your property
5. Quick ROI: With Saudi Arabia’s abundant sunshine, many businesses see returns within 3-9 years

Considerations for EPC

• Requires significant upfront capital investment
• Responsibility for system maintenance (though maintenance contracts are available)
• Need to manage warranty claims if issues arise
• System performance risk lies with the owner

Understanding Power Purchase Agreements (PPAs)

What is a PPA?

A PPA is a financial agreement where a solar provider installs, owns, and maintains the solar system on your property, and you purchase the generated electricity at a predetermined rate.

Key Benefits of PPA

1. Zero Upfront Cost: No capital expenditure is required
2. Immediate Savings: Start saving on electricity bills from day one
3. Predictable Costs: Fixed or predefined escalating rates protect against rising energy costs
4. Reduced Risk: Provider handles all maintenance and repairs
5. Performance Guarantee: Most PPAs include guaranteed production levels

Considerations for PPA

• Typically longer contract terms (15-25 years)
• Less financial benefit compared to direct ownership
• Limited control over the system
• Property lien or encumbrance during the contract period

Making the Right Choice for Your Business

Financial Considerations

EPC Might Be Better If:

• You have available capital or access to favorable financing
• Your business can utilize tax benefits
• You want to maximize long-term savings
• You prefer asset ownership
• Your energy costs are low (small industrial / agricultural / healthcare tariffs)

PPA Might Be Better If:

• You want to preserve capital for core business operations
• You prefer predictable monthly expenses
• You want to avoid responsibility for maintenance, cleaning etc  
• You’re operating across many locations
• Your energy costs are high (commercial tariff / off-grid / large industrial facilities)

Operational Considerations

Business Type and Energy Usage:

• Manufacturing facilities with high, consistent energy consumption often benefit from EPC
• Companies with predictable consumption patterns and stable loads might find PPAs more attractive due to optimal system sizing

Property Ownership:

• Building owners typically prefer EPC for the property value enhancement
• Tenants often find PPAs more suitable due to their temporary nature

The Saudi Arabian Context

Market Dynamics

Saudi Arabia’s Vision 2030 strongly supports renewable energy adoption, with major projects like Al Shuaibah 2 leading the way. This creates a favorable environment for both EPC and PPA models.

Local Considerations

• High solar irradiance levels ensure excellent system performance
• Rising diesel costs make both options increasingly attractive
• Government support through financing programs and initiatives
• Growing local expertise in solar installation and maintenance

How Haala Energy Can Help

Whether you choose EPC or PPA, Haala Energy offers comprehensive solutions tailored to your business needs:

For EPC Projects:

• Detailed site assessment and feasibility studies
• Custom system design and engineering
• High-quality component procurement
• Professional installation and commissioning
• Optional maintenance contracts
• Performance monitoring systems

For PPA Projects:

• Zero upfront cost solutions
• Energy generation guarantee
• Routine Maintenance
• Real-time monitoring and reporting
• Flexible contract terms
• Predictable electricity rates

Making Your Decision

Consider these key questions when choosing between EPC and PPA:

1. What is your available capital budget?
2. How long do you plan to occupy your current facility?
3. What are your current electricity costs and consumption patterns?
4. How important is system ownership to your business?
5. What is your risk tolerance regarding system performance?

Next Steps

Both EPC and PPA models offer viable paths to solar energy adoption, with each providing distinct advantages based on your business circumstances. The key is choosing the option that best aligns with your financial goals, operational needs, and long-term strategy.

Ready to explore your solar energy options? Contact Haala Energy for a comprehensive site assessment and detailed proposal for both EPC and PPA solutions. Our team of experts will help you analyze your energy needs, evaluate financial options, and choose the best path forward for your business.

As Saudi Arabia continues its journey toward renewable energy leadership, businesses have an unprecedented opportunity to benefit from solar power. Whether through EPC or PPA, the time to act is now, as electricity costs continue to rise and solar technology becomes increasingly efficient and affordable.

In recent years, Saudi Arabia has emerged as a pioneer in renewable energy adoption, marking a significant shift from its traditional reliance on fossil fuels. For business owners across the Kingdom, this transformation presents unprecedented opportunities to reduce operational costs while contributing to the nation’s sustainable future.

Understanding Saudi Arabia’s Renewable Energy Landscape

Current State of Renewable Energy

Saudi Arabia’s renewable energy sector is experiencing rapid growth, driven by Vision 2030’s ambitious goal of generating 50% of electricity from renewable sources by 2030. The Kingdom’s strategic location and climate make it an ideal candidate for renewable energy projects, particularly solar power.

Notable developments include:

• The Sakaka Solar Power Plant (405 MW capacity)
• The upcoming Al Shuaibah 2 Solar Plant (2.6 GW capacity, completion expected in 2025)
• Multiple commercial and industrial solar installations across major cities

Why Renewable Energy Matters for Saudi Businesses

1. Cost Reduction
   • Decreasing solar panel prices globally and in Saudi Arabia
   • Lower operational costs through reduced electricity bills
   • Protection against future energy price increases
   • Potential revenue through excess energy production
2. Government Support
   • Alignment with Vision 2030 initiatives
   • Access to government incentives and financing programs
   • Support from the Saudi Industrial Development Fund for commercial projects
3. Environmental Impact
   • Reduced carbon footprint
   • Enhanced corporate social responsibility
   • Improved brand image and stakeholder relations

Solar Energy: The Primary Renewable Solution for Businesses

Why Solar Power?

Saudi Arabia receives an average of 2,200 kWh of solar radiation per square meter annually, making it one of the world’s most suitable locations for solar energy generation. For businesses, this translates to:

• Consistent energy production throughout the year
• High system efficiency due to abundant sunlight
• Reliable power generation during peak business hours
• Minimal maintenance requirements

Commercial Solar Solutions

Rooftop Solar Systems

• Ideal for businesses with available roof space
• Quick installation and minimal disruption
• Direct reduction in electricity bills
• Scalable based on energy needs

Solar-Diesel Hybrid Systems

• Perfect for remote locations or areas with unstable grid connection
• Reduced fuel consumption and maintenance costs
• Increased system reliability
• Lower overall operational costs

Implementation Process for Businesses

1. Assessment Phase

• Site evaluation for solar potential
• Energy consumption analysis
• Space availability assessment
• Initial cost-benefit analysis

2. Planning and Design

• System sizing and configuration
• Technical specifications
• Integration with existing systems
• Regulatory compliance review

3. Financial Planning

Several financing options are available:

• Upfront CAPEX Investment
  • Complete ownership of the system
  • Maximum long-term savings
  • Typical ROI period of 3-9 years
• Power Purchase Agreements (PPAs)
  • No upfront capital required
  • Fixed electricity rates
  • Reduced operational risk
  • Professional maintenance included
• Government-Backed Financing
  • Special rates through SIDF
  • Extended repayment terms
  • Support for commercial projects

4. Implementation and Operation

• Professional installation by certified technicians
• System commissioning and testing
• Staff training and handover
• Ongoing monitoring and maintenance

Making the Transition: Steps for Business Owners

1. Evaluate Your Energy Needs
   • Review current electricity consumption
   • Analyze peak usage patterns
   • Identify potential energy efficiency improvements
2. Consult with Experts
   • Professional site assessment
   • Custom system design
   • Financial modeling and ROI analysis
3. Choose the Right Partner
   • Look for experienced providers
   • Check track record and references
   • Ensure comprehensive service offerings
   • Verify maintenance capabilities

Future Outlook

Saudi Arabia’s renewable energy sector is poised for significant growth, with several factors driving this expansion:

• Continued government support and investment
• Decreasing technology costs
• Improving efficiency of solar systems
• Growing environmental awareness
• Rising electricity demand

Conclusion

The transition to renewable energy, particularly solar power, represents a strategic opportunity for Saudi Arabian businesses to reduce costs, improve sustainability, and contribute to national goals. With decreasing installation costs, government support, and proven technology, now is the ideal time for businesses to explore renewable energy solutions.

For businesses ready to take the next step, Haala Energy offers comprehensive turnkey solar solutions, including detailed feasibility studies, custom system design, professional installation, and ongoing maintenance support. Our team of experts can help you navigate the transition to renewable energy, ensuring maximum return on investment while supporting your business’s sustainable growth.

Saudi Arabia is making big moves to become a global leader in renewable energy, especially with solar power. The country’s sunny deserts provide the perfect conditions to tap into solar energy. While Saudi Arabia doesn’t currently have the largest solar plant in the world, it’s on track to build one that will soon be the biggest. This article covers the largest solar plant operating now and the future project set to take the top spot, showing how important these plants are for Saudi Arabia’s renewable energy goals.

Sakaka Solar Power Plant – The Current Biggest in KSA

The Sakaka Solar Power Plant, located in the Al Jouf province, is the biggest operational solar plant in Saudi Arabia today. It opened in 2021 and marks a major milestone in the country’s efforts to shift from relying on oil to using more renewable energy sources like solar power.

Key Facts about Sakaka Solar Plant

Capacity: 405 MW

Solar Panels: Over 1.2 million panels covering 6 square kilometres

Built by: ACWA Power

This plant shows Saudi Arabia’s serious focus on reducing carbon emissions and moving towards cleaner energy, which supports the nation’s Vision 2030 plan.

Recommended: Solar panel price trends in Jeddah

Al Shuaibah 2 Solar Power Plant – The Future World’s Largest Solar Plant

While Sakaka leads, for now, Saudi Arabia is set to build the world’s largest single-site solar power plant, the Al Shuaibah 2, in Mecca province. Once completed in 2025, this massive plant will have a capacity of 2.6 GW, far surpassing Sakaka.

Key Facts about Al Shuaibah 2 Solar Plant

Capacity: 2.6 GW (over 6 times bigger than Sakaka)

Built by: A joint venture between ACWA Power, Badeel, and Saudi Aramco

Completion: Expected in late 2025

Al Shuaibah 2 will push Saudi Arabia to the forefront of the global solar power industry and help the country reach its renewable energy targets.

Comparing Sakaka and Al Shuaibah 2

Capacity and Scale 

Sakaka, with its 405 MW capacity, is already impressive. But Al Shuaibah 2, with 2.6 GW, is a giant leap forward. This growth shows how fast Saudi Arabia’s solar energy capabilities are expanding.

Technology and Innovation

Al Shuaibah 2 will use the latest solar panel technology and energy systems, making it more efficient than Sakaka. These advancements will set new standards for solar power generation.

Economic and Environmental

Impact Both plants are important for Saudi Arabia’s economy and environment. Sakaka has already created jobs and reduced carbon emissions. Al Shuaibah 2 is expected to have an even bigger impact, boosting the economy and further supporting the country’s sustainability goals.

Solar Power and Vision 2030

Saudi Arabia’s Vision 2030 aims to diversify the economy and reduce oil dependency, with a goal to generate 50% of electricity from renewable sources by 2030. Solar plants like Sakaka and the upcoming Al Shuaibah 2 are key to making this vision a reality. Saudi Arabia is taking big steps toward becoming a global leader in solar power. The Sakaka Solar Power Plant is already making a difference, and with the upcoming Al Shuaibah 2, the country is set to make an even bigger impact on the renewable energy world stage. Both plants are crucial for Saudi Arabia’s move towards a cleaner, more sustainable future.

Wrapping Up

As Saudi Arabia advances its solar energy ambitions, local companies like Haala Energy, a leading solar systems company in Jeddah, are playing a crucial role in turning these renewable energy goals into reality. Specializing in industrial and commercial solar photovoltaic (PV) and solar-diesel hybrid projects, Haala Energy offers comprehensive turnkey solutions that help businesses across the MENA region reduce energy costs and mitigate fuel price risks.

With a deep understanding of Saudi Arabia’s solar potential, Haala Energy provides end-to-end services from feasibility studies and site assessments to design, installation, and ongoing maintenance. Their approach mirrors the national vision – leveraging the country’s abundant solar resources to create sustainable, cost-effective energy solutions that support economic diversification and environmental goals.

For businesses looking to participate in Saudi Arabia’s renewable energy transformation, Haala Energy offers a strategic pathway to solar adoption, ensuring each project is tailored to maximize efficiency, reduce carbon footprint, and deliver long-term economic benefits.

In a sun-soaked city like Jeddah, harnessing solar power for your home or business is an appealing prospect. However, many potential consumers are concerned about the costs involved. This guide aims to provide clarity on solar panel pricing trends in Jeddah, equipping you with the information needed to make a well-informed decision.

What Impacts Solar Panel Prices?

Several factors influence the overall cost of a solar panel system in Jeddah:

• System Size: Larger systems cost more but meet greater energy needs.
• Panel Efficiency: More efficient panels are pricier but generate more electricity.
• Installation Costs: These vary based on location and system complexity.

Solar Panel Pricing Trends in Jeddah

Globally, solar panel prices have fallen by around 20% every time the world’s solar capacity doubled, a phenomenon known as the learning rate of solar energy technology. This trend has made solar panels more affordable for both residential and commercial installations in the Gulf, Saudi and Jeddah.

Many contractors in Saudi Arabia source panels directly from China, where increased production has further lowered costs. As a result, solar energy is becoming more accessible for property owners across Jeddah, making it a prime time to invest in this renewable resource.

What About EPC Costs?

Beyond the cost of the panels themselves, the overall expense of a solar energy system is also impacted by Engineering, Procurement, and Construction (EPC) costs. Globally, EPC prices have been on a downward trend due to advances in technology and increased competition in the market.

In Jeddah, these international trends are being mirrored, with local solar companies benefiting from more cost-efficient project management and implementation. This is particularly encouraging for businesses looking to invest in larger solar energy systems, as the cost of setting up and maintaining such systems continues to decrease.

Return on Investment

The long-term savings potential of solar panels in Jeddah is compelling. With abundant sunshine, many system owners can recoup their investment within 3 to 9 years. Factors such as system size, electricity rates, and available government incentives influence the exact payback period, but the financial benefits are significant.

Financing Options

To make solar adoption more accessible, several financing options are available:

• Upfront CAPEX Option: Often results in lower overall costs, as there are no financing fees.
• Governmental  Loans and Financing Programs: The Saudi Industrial Development Fund offers projects owners and developers in commercial and agriculture sectors an incentivized program with loans for solar energy projects
• Power Purchase Agreements (PPAs): Lease the system and pay a fixed rate for electricity, which can be a more flexible option for some property owners that involves no capital investment

Conclusion

Investing in solar systems in Jeddah is not only environmentally responsible but also financially rewarding. Thanks to recent price drops—driven by global trends and cheaper panels from China—and lower EPC costs, solar energy has become more affordable than ever. 

By understanding the factors that influence pricing, exploring financing options, and taking advantage of incentives, you can make an informed decision about adopting solar energy for your property.