The Green Revolution in the Desert: Saudi Arabia's Billion-Dollar Gamble, China's Energy Storage Giants Quietly Enter the Arena

At three o'clock in the morning, as the last batch of night owls in Riyadh drifts into dreamland, a smooth power curve is quietly rising on the screen of the Saudi electricity grid control center—this is not from any gas power station, but from the "yesterday's sunshine" released by the energy storage station deep in the desert.

Last October, Saudi Arabia signed a single contract for a 15-gigawatt renewable energy project, setting a record for the largest single bidding scale in global renewable energy. At the same time, a 48-gigawatt-hour energy storage blueprint is gradually unfolding, as this oil kingdom is turning towards a green energy future at an unprecedented speed.

Saudi Arabia, the global "oil reservoir," where the underground flowing black gold was once the lifeblood of its economy. But now, on this country's energy balance sheet, a set of numbers is quietly rewriting everything.

In 2023, the winning bid price for photovoltaic projects in Saudi Arabia fell below 1.1 cents per kilowatt-hour, only equivalent to one-fifth of the local fuel power generation cost. In the vast desert, sunlight has, for the first time, economically outperformed the oil underground.

The "2030 Vision" was born against this backdrop. This national-level transformation strategy aims directly at the core: by 2030, the proportion of renewable energy generation will be increased from less than 1% to 50%.

This is not an environmental sentiment, but an economic calculation—if the goal is achieved, it can save $30 billion annually just in electricity costs. More importantly, the released crude oil can be exported at a higher price, making the economic benefits clear at a glance.

Photovoltaic panels can only generate electricity during the day, but Saudi Arabia's peak electricity demand occurs at night. How can we store the "excess sunlight" from the day for use at night? Energy storage has become the key to breaking the deadlock.

The planned energy storage capacity in Saudi Arabia has reached 48 gigawatt-hours, a figure sufficient to keep the entire Riyadh metropolitan area running normally for several hours during windless and dark nights. Currently, 26 gigawatt-hours of projects have entered the substantial development stage.

In the Bishah area of western Saudi Arabia, a 2.6 GWh energy storage project built with the participation of Chinese enterprises has been connected to the grid and has become the largest energy storage facility in the Middle East and Africa. 488 sets of containerized battery units are neatly arranged, resembling a "power bank," precisely releasing energy when the grid needs it.

A grander blueprint unfolds in the NEOM new city, which plans for an energy storage demand of up to 200 gigawatt-hours, making it the world's first large city to be completely powered by renewable energy.

In the wave of energy transition in Saudi Arabia, the presence of Chinese companies is particularly prominent. From photovoltaic panels, inverters to energy storage batteries, the Chinese supply chain has accounted for over 65% of the equipment costs for new energy projects in Saudi Arabia.

In early 2024, Xiamen Haichen Energy Storage secured a large energy storage order from a Saudi power company for 1 gigawatt/4 gigawatt-hours, valued at approximately 2.6 billion yuan, making it one of the largest single energy storage orders for a Chinese company in Saudi Arabia. BYD is also deeply involved in the construction of Saudi Arabia's first large-scale energy storage project, providing a complete set of energy storage solutions.

Chinese companies bring not only products but also technological solutions that adapt to the extreme desert environment. The specially designed cooling system reduces water consumption by 90%, and the dust-proof design ensures stable operation of equipment during sandstorms. These localized innovations have become the core competitiveness of the Chinese energy storage team in the Saudi market.

Another aspect of Saudi Arabia's energy transition is that the government is gradually reducing fossil fuel subsidies that have lasted for decades. For companies operating in Saudi Arabia, this means a fundamental change in the energy cost structure.

The commercial electricity price has gradually adjusted from a very low level to 0.30 Saudi Riyals per kilowatt-hour, and may further reflect the true cost of power generation in the future. This change has spurred the demand for new energy on the enterprise side—more and more factories and shopping malls are beginning to invest in rooftop photovoltaic systems with energy storage to achieve self-sufficiency in electricity.

Chinese-funded enterprises, leveraging their experience in the distributed energy sector, are helping Saudi industrial and commercial users design integrated "photovoltaic + energy storage" solutions. These projects not only reduce electricity costs but also generate additional revenue by participating in grid frequency regulation, creating new business models.

Behind the grand vision, Saudi Arabia's energy transition still faces multiple challenges. The current installed capacity of new energy is less than 3 gigawatts, and the target is 130 gigawatts by 2030, which means nearly 20 gigawatts need to be added each year. This places extremely high demands on project development, grid absorption, and professional talent.

The resistance of traditional oil and gas interest groups cannot be ignored. Saudi Arabia is still investing in the development of new gas fields and gas power plants. How these traditional energy assets can be coordinated with the rapidly developing renewable energy has become a dilemma for policymakers.

The fluctuation of international oil prices directly affects the financial revenue of the Saudi government, which in turn impacts its investment capacity in renewable energy. Finding a balance between the "comfort zone" of oil revenue and the "investment period" of energy transition tests the wisdom of decision-makers.

At dusk, the photovoltaic power station on the outskirts of Riyadh begins to inject the remaining electricity into the energy storage system. Inside the silver container, the battery packs are storing the last rays of the sunset, preparing to meet the power demands of the desert night.

Once defined by its output of energy, Saudi Arabia is learning how to efficiently store and utilize energy. Beneath this land still lies abundant oil, but the Saudis have turned their gaze to the sky—where there is inexhaustible sunlight and a cleaner future.