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

At three in the morning, as the last batch of night returnees in Riyadh falls into slumber, a smooth power curve is quietly rising on the screen of the Saudi power grid control center—this does not come 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 tender size in global renewable energy. At the same time, a 48-gigawatt-hour energy storage blueprint has gradually unfolded, as this oil kingdom is turning towards a future of green energy at an unprecedented pace.

Saudi Arabia, the world's "oil reservoir," where the underground flows with 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 cost of oil-fired power generation. In the vast desert, sunlight has, for the first time, economically outperformed the oil beneath the ground.

The "2030 Vision" was born against this backdrop. This national-level transformation strategy targets 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 account 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 this 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 substantive development stage.

In the Bisha region of western Saudi Arabia, a 2.6 GWh energy storage project built with the participation of Chinese enterprises has been connected to the grid, becoming 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 NEOM, the new city, which has planned an energy storage demand of up to 200 gigawatt-hours, making it the world's first large city to be entirely powered by renewable energy.

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

In early 2024, Xiamen Haichen Energy Storage secured a large-scale energy storage order from Saudi Electricity 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 Chinese companies 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 conditions of the desert. The specially designed cooling system reduces water consumption by 90%, and the sandstorm-resistant design allows equipment to operate stably 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 commercial and industrial users in Saudi Arabia design integrated "photovoltaic + energy storage" solutions. These projects not only reduce electricity costs but also generate additional revenue by participating in grid frequency regulation, forming new business models.

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

The resistance from 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, and how these traditional energy assets can be coordinated with 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 electricity demand of the desert night.

Saudi Arabia, which once defined its value by exporting energy, 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.

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