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Legal Update

Saudi Arabia Announces RFQ for Renewable Energy Projects

28 February 2017
Mayer Brown Legal Update

On February 20, 2017, the Saudi Ministry of Energy, Industry and Mineral Resources announced the launch of Round 1 of a 9.5 gigawatt national renewable energy program (NREP) by opening a request for qualifications (RFQ) for two renewable energy projects through the Renewable Energy Projects Development Office (REPDO). The RFQ is for the construction of a 300 MWac greenfield solar PV project and a 400 MW greenfield wind project. Applicants must submit a Statement of Qualifications no later than March 20, 2017, at 3:00 p.m. KSA. According to REPDO, pre-qualified bidders will be announced by April 10, 2017. The related request for proposals (RFP) is expected to be released to bidders that have pre-qualified through the RFQ on April 17, 2017, with bids due on July 20, 2017. The NREP reflects a strategic initiative of the kingdom to substantially increase renewable energy generation.

Project Details

  • R1 Sakaka: A greenfield solar PV plant near the city of Sakaka, in northern Saudi Arabia, with expected total capacity output at interconnection not exceeding 300 MWac of electricity generation. The project involves the development, design, permitting, engineering, financing, procurement, construction, commissioning, testing, completion, ownership, insurance, operation and maintenance of the greenfield project.
  • R1 Midyan Wind: A greenfield wind power plant on the eastern coast of the Gulf of Aqaba, northwest Saudi Arabia, with expected total capacity output at interconnection not exceeding 400 MW of electricity generation. The project involves the development, design, permitting, engineering, financing, procurement, construction, commissioning, testing, completion, ownership, insurance, operation and maintenance of the greenfield project.

R1 Sakaka and R1 Midyan Wind are each proposed to be developed under special purpose companies (each, a Project Company) on a build, own and operate (BOO) basis, to be 100 percent owned by the successful bidder. The projects are being tendered on an independent power producer (IPP) basis: no government entity shall invest in any of the Project Companies and the projects are proposed to be financed through limited or non-recourse debt facilities, in addition to funding from Project Company shareholders. The RFQs for each Project are accessible at www.powersaudiarabia.com.sa.

Government Support and PPA Requirements

At this time, there is limited official information on the R1 Sakaka and the R1 Midyan Wind projects. Based on our experience in Saudi Arabia, and as indicated by an official white paper published in 2013 by the King Abdullah City for Atomic and Renewable Energy (KA CARE), government authorities intend to provide institutional support, including local content facilitation and certification, assistance with on-site identification and control of related issues, and cooperation on company formation, as well as serving as a regulatory and zoning ombudsman. Local content requirements are not detailed in the RFQ but are anticipated to be set out in the RFP.

Please note that KA CARE is the only management member of REPDO with official publications on the competitive procurement process for renewable energy programs in the kingdom. According to the KA CARE white paper guidelines, a standard form power purchase agreement (PPA) will be issued as part of the NREP. This form PPA would include guidelines on expectations regarding training, job localization and research and development and would be governed by Saudi law.

We are continuing to track this process and will provide an update with any subsequent material developments that might apply to these projects (including issuance of the RFP or other information on the PPA form and any local content or other requirements).

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