Saudi Private Sector Investments in Renewable Energy Desalination Projects: Growth Opportunities Under the 2030 Water Security Strategy

As the Kingdom of Saudi Arabia faces challenges of natural water scarcity, with a consumption rate reaching 263 liters per capita daily according to the Ministry of Environment, Water and Agriculture, desalination projects using renewable energy are emerging as a strategic solution that combines water security and environmental sustainability. Estimates indicate that the Saudi private sector is preparing to pump investments exceeding 20 billion Saudi Riyals in this field by 2030, driven by incentive policies and the directions of Vision 2030, which aims to increase the private sector's contribution to the economy to 65%.

What is the 2030 Water Security Strategy and how does it support renewable desalination projects?

The 2030 Water Security Strategy launched by the Kingdom of Saudi Arabia is a comprehensive framework to ensure the sustainability of water resources, aiming to reduce water consumption by 43% and reduce losses in distribution networks to less than 15%. The strategy focuses on converting 100% of desalination plants to use renewable energy by 2030, creating unprecedented investment opportunities for the private sector. This strategy includes close cooperation between the Ministry of Environment, Water and Agriculture, the Saudi Electricity Company, and the Water and Electricity Regulatory Authority to create a supportive regulatory environment.

The strategy is based on four main pillars: increasing water supply through seawater desalination, improving water use efficiency across all sectors, developing non-traditional water sources, and enhancing governance and integrated water resource management. The Saudi government has allocated more than 80 billion Saudi Riyals for implementing water projects until 2030, with a significant portion dedicated to renewable energy desalination projects in which the private sector participates through public-private partnership (PPP) models.

How is the Saudi private sector investing in renewable energy desalination projects?

The Saudi private sector adopts diverse investment models to enter the renewable energy desalination market, most notably Build-Own-Operate (BOO) projects and long-term partnerships with government entities. For example, Saudi company ACWA Power has invested more than 5 billion Saudi Riyals in the solar-powered desalination plant in NEOM city, with a capacity of 500,000 cubic meters daily. Additionally, Almarai company announced an investment of 1.2 billion Saudi Riyals in a solar-powered desalination system to meet its water needs in its agricultural projects.

Investment mechanisms also include establishing specialized investment funds, such as the Public Investment Fund which allocated 10 billion Saudi Riyals for investment in sustainable water projects, with participation from local banks like the Saudi National Bank and Riyad Bank in financing these projects. According to a report issued by the King Abdullah Petroleum Studies and Research Center (KAPSARC), investments in renewable energy desalination will provide an investment return ranging between 8% and 12% annually, attracting more private sector investors.

What technologies are used in renewable energy desalination in Saudi Arabia?

Renewable energy desalination projects in Saudi Arabia rely on advanced technologies that combine desalination systems with clean energy forms. Key technologies include:

• Reverse Osmosis desalination supported by photovoltaic (PV) solar energy, representing 60% of new projects.
• Thermal desalination systems (MED/MSF) integrated with Concentrated Solar Power (CSP), especially in areas with high solar radiation like the Eastern Province.
• Hybrid technologies combining solar and wind energy, as in the desalination project in the coastal city of AlUla.
• Artificial intelligence systems to improve energy consumption efficiency in desalination operations, reducing operational costs by up to 25%.

Saudi companies collaborate with global entities such as Germany's Siemens and Switzerland's ACWA International to localize these technologies. The Saudi Authority for Intellectual Property registered 45 patents in the field of renewable energy desalination over the past two years, reflecting local technological progress.

What investment opportunities are available for the private sector in this sector?

Investment opportunities for the Saudi private sector in renewable energy desalination projects vary across several areas:

1. Developing and financing new desalination plants: The Kingdom plans to establish 9 desalination plants operating entirely on renewable energy by 2030, with total investments reaching 30 billion Saudi Riyals.
2. Upgrading existing plants: Converting 27 traditional desalination plants to operate on renewable energy, with projects valued at up to 15 billion Saudi Riyals.
3. Manufacturing plant components: Local production of membranes, filters, and solar energy systems, supported by the National Industrial Development and Logistics Program (NIDLP).
4. Operation and maintenance services: With expectations of creating 5,000 specialized technical jobs in this field by 2030.
5. Research and development: Particularly in energy storage technologies to ensure continuity of desalination operations during periods of low solar radiation.

World Bank estimates indicate that every billion Saudi Riyals invested in this sector will generate 1,200 direct and indirect jobs, contributing up to 1.8 billion Saudi Riyals to the GDP over 10 years.

What challenges face private sector investments and how are they being overcome?

The Saudi private sector faces several challenges in renewable energy desalination investments, most notably:

• High capital costs: The cost of establishing a renewable energy desalination plant is 20-30% higher than traditional plants.
• Fluctuations in renewable energy production: Which requires