How global firsts are defining PIF’s sweeping renewable energy strategy

Economic growth is driven by the availability of reliable, affordable energy. Not only is energy essential for industrialization, it also defines modern life and alleviates poverty.

 

In a fast-changing world, renewables can boost energy supply and lower costs, while reducing environmental impact – supporting the sustainable provision of electricity and water.

 

The International Energy Agency found that clean energy added some $320 billion (10% of GDP growth) to the world economy last year.  

 

Saudi Arabia, a leader in hydrocarbons, is emphasizing clean electricity production from solar and wind, and desalination and green hydrogen powered by clean electricity to diversify and grow its economy, meet environmental goals and improve reliability – a journey aligned with Vision 2030, the nation’s transformation blueprint. 

 

 

PIF, one of the world’s top sovereign wealth funds and a driver of Vision 2030, has made utilities and renewables a strategic sector, a focus that also supports the Saudi Green Initiative and the Ministry of Energy’s National Renewable Energy Program (NREP).

 

PIF’s targets include developing 70% of the nation’s renewable energy capacity, an approach featuring global firsts.

 

Giga-Projects: Ecosystems with Renewable Synergies

PIF is the first SWF to build giga-projects as an investment pool. At sheer scale, they catalyze key-industry growth with synergies for energy, infrastructure and innovation.

 

NEOM, PIF’s future-oriented “laboratory” for human progress on the Red Sea, will host an entirely renewables-based system, leveraging abundant solar radiation and high wind speeds. 

 

This emphasis on sustainability also extends to NEOM’s water system, with water desalinated with renewables, wastewater kept out of the environment (zero liquid discharge) and brine reclaimed for industrial use.

 

NEOM is also developing the world’s largest “green” hydrogen (generated by renewables-based electrolysis) project. 

 

Saudi Arabia’s highly competitive renewable electricity production costs mean the NEOM Green Hydrogen Company, a joint venture with PIF-backed ACWA Power and Air Products, will affordably produce an average of 600 tons of green hydrogen daily, converted to 1.2 million tons per annum of green ammonia (addressing storage and transport issues) for global export and de-carbonization.

 

 

Completing the hub are ENOWA, NEOM’s water and energy subsidiary, and the Hydrogen and Innovation Development Center speeding lab-to-market solutions.

 

Another PIF giga-project is The Red Sea, a 22-island archipelago. The off-grid luxury destination by Red Sea Global (RSG) will save half a million tons of emissions yearly. 

 

Innovation is also making RSG a regenerative tourism model. Along with telecom provider Zain KSA, RSG last year launched the world’s first zero-carbon 5G network. Indeed, localization is key to supply chain resilience, and PIF is contributing to localizing the production of 75% of the components in Saudi Arabia’s renewable projects by 2030.

 

Developing, Financing Energy Projects

PIF’s strategy takes into consideration Saudi Arabia’s rapid growth alongside the oil and gas sector.

 

Recent power-purchase agreements for three new solar photovoltaic (PV) projects are slated to add 5,500 MW to the national grid in 2027.

 

With investment exceeding $3 billion, Haden, Muwayh and Al Khushaybi are being developed by ACWA Power, PIF’s Water and Electricity Holding Company (Badeel), and the Saudi Aramco Power Company. With Sudair, Shuaibah 2, Ar Rass 2, Al Kahfah and Saad 2, these eight projects represent a 13.6 GW of solar PV capacity and $9+ billion of investment. 

 

Shuaibah 2 will be the Middle East’s largest, and Sudair can cut emissions by 2.9 million tons annually.

 

In 2023, ACWA Power inaugurated its Jubail integrated water desalination and solar PV project to produce 600,000 cubic meters of water daily.

 

To optimize energy efficiency for large projects, PIF’s portfolio company Saudi Tabreed provides customers with district cooling solutions that are energy and resource efficient. 

 

The National Energy Services Company (Tarshid), wholly owned by PIF, has catalyzed the development of Saudi Arabia’s energy services sector. Tarshid’s investments in energy efficiency are already delivering approximately 5 million MWh of electricity consumption savings and approximately 3 million tons of associated emission savings annually. 

 

Also, the Saudi Electricity Company (SEC), majority-owned by PIF, is investing significantly in the electricity transmission and distribution infrastructure serving Saudi Arabia. This grids investment will ensure the successful integration of more than 100 GW of renewable energy capacity targeted to be built in Saudi Arabia by 2030 and ensure system resilience and stability while meeting rising electricity demand across diverse consumer groups including data centers, EVs, industry, commercial and household customers.

 

 

Local Content Development

Localization of key industries supports supply chain resilience, growth in GDP and skilled employment, and broader economic benefits, including strengthening balance of payments and industrial diversification. Aligned with these objectives, PIF is advancing the localized manufacture and assembly of wind and solar power generation equipment. 

 

The PIF-backed Renewable Energy Localization Company (RELC) has recently entered several manufacturing joint ventures: with Envision Energy and Vision Industries (wind turbines, blades and nacelles); Jinko Solar and Vision Industries (solar PV cells and modules); and TCL Zhonghuan Energy (TZE) and Vision Industries (solar PV ingots and wafers).

 

Other sustainability-focused PIF portfolio companies include EV manufacturer Ceer, and EVIQ, which is installing EV fast-charging infrastructure across Saudi Arabia. 

 

PIF’s Green Finance Framework originated the world’s first SWF green bond ($3 billion) on the international securities market, bringing monetary incentives to environmental initiatives.

 

Likewise, PIF’s Regional Voluntary Carbon Market Company (RVCMC) set a record for the world’s largest voluntary carbon-credit auction. Ma’aden mining company, in which PIF holds a major stake, is an inaugural partner of RVCMC, committed to reducing carbon emissions by more than 600,000 tons annually. 

 

A Sustainable Future

Leveraging Saudi Arabia’s natural potential to grow the utilities and renewables sector is reducing the country’s carbon emissions while driving economic growth and financial returns. 

 

PIF’s comprehensive approach, embracing low-carbon and zero-carbon sectors and disruptive technologies, is proving a pathway to deliver benefits for generations to come.

 

To learn more, watch our interviews with leading experts on how PIF is investing in the future of renewables.