When the Dunes Become New Oil Fields: Unveiling Saudi Arabia's Billion-Dollar Energy Gamble

In the late night at the Saudi National Grid Control Center, engineers are monitoring an unusual load curve—it is remarkably stable. The power source indicates that this is the "time energy" released by the Red Sea New City Energy Storage Station, which precisely schedules the sunlight collected in the afternoon to the peak electricity demand at night.

Saudi Arabia is rewriting the global energy landscape at an astonishing pace. According to the latest report from the International Energy Agency (IEA), Saudi Arabia plans to deploy approximately 48 gigawatt-hours of energy storage capacity by 2030, a figure sufficient to power the entire Riyadh metropolitan area for over 5 hours on windless and dark nights. Meanwhile, the country’s photovoltaic project bidding prices have consecutively set new global low records six times.

In early 2025, Saudi Aramco announced a seemingly contradictory decision: on one hand, advancing the world's largest shale gas development project, and on the other hand, investing billions of dollars in the NEOM city renewable energy plan. This reveals the dual logic of Saudi Arabia's energy strategy—using oil and gas profits to invest in the future of new energy.

According to the "Vision 2030 Progress Report" released by the Saudi government, non-oil revenue has increased from 166 billion riyals in 2016 to over 500 billion riyals in 2024. Economic diversification is no longer just a slogan, but a tangible fiscal transformation.

In the energy sector, this transformation is particularly radical. The latest bidding from the Saudi Renewable Energy Project Development Office (REPDO) shows that the average winning bid price for photovoltaic projects has dropped to below 1.2 cents per kilowatt-hour, which is only one-third of the cost of new gas-fired power plants in the country. Saudi Arabia plans to increase its renewable energy installed capacity to 130 gigawatts by 2030, equivalent to the current total electricity installed capacity of the United Kingdom.

Saudi Arabia's energy transition faces a geographical paradox—its richest solar resources are located in the west, while the main population and industrial centers are in the east. How can the "golden sunlight" from the west be stably transmitted over thousands of kilometers to the cities in the east?

Energy storage technology provides disruptive solutions. Compared to traditional grid expansion, building large-scale energy storage facilities next to photovoltaic power stations in the west has become a more economical choice through the "integrated storage and transportation" model. This explains why Saudi Arabia's investment in the energy storage sector is so aggressive—it's not just a technological choice, but also a geopolitical energy layout.

According to analysis by Bloomberg New Energy Finance (BNEF), approximately 60% of the energy storage systems planned by Saudi Arabia will be deployed in the western renewable energy-rich areas, rather than in traditional load centers. This "resource-based storage" model is changing the fundamental planning logic of the power system.

The more profound impact lies in the trade model. The Saudi Energy Minister has stated that in the future, Saudi Arabia may export "green power packages"—standardized power units stored in batteries, which will make electricity a storable and transportable international commodity, just like crude oil.

The competition in the Saudi energy storage market has entered a heated stage. In 2024, the Saudi Power Procurement Company (SPPC) launched a 2 GWh energy storage tender, attracting bids from 12 companies from countries such as China, the United States, and South Korea. The levelized cost of electricity for the shortlisted technical proposals has dropped to 5.2 cents/kWh, nearly a 40% decrease compared to three years ago.

The breakthroughs of Chinese companies in the Saudi energy storage market rely not only on price advantages. In the energy storage project in Yanbu Industrial City, the desert-adaptive cooling system developed by the Chinese team has solved the key problem of battery life reduction in high-temperature environments, allowing the system to maintain 92% of its rated power output even at extreme temperatures of 55°C, far exceeding the industry average.

The business model is also innovating. Some Chinese enterprises are no longer just providing equipment, but have launched a "storage as a service" model—where investors build and operate energy storage facilities, and Saudi users pay for the actual amount of energy stored that they use. This model lowers the initial investment threshold for users and accelerates the popularization of energy storage technology.

According to data from the Saudi Ministry of Investment, there are currently more than 40 Chinese companies active in the Saudi new energy sector, forming a complete industrial chain from equipment manufacturing, project development to operation and maintenance.

The Saudi energy market is undergoing a silent revolution. According to data from the Saudi Electricity and Cogeneration Regulatory Authority (ECRA), industrial electricity price subsidies have decreased from an average of 75% in 2018 to 35% in 2024, and are expected to be completely eliminated by 2030.

The decline of subsidies is driving the emergence of new market behaviors. In the Jidda Industrial Zone, 30% of factories have installed or plan to install "photovoltaic + energy storage" systems. This is not only to reduce electricity costs but also to obtain predictable energy costs—this is crucial for business operations against the backdrop of increasing fluctuations in traditional grid electricity prices.

More noteworthy is the rise of virtual power plants (VPP). Saudi Arabia is experimenting with aggregating distributed energy storage systems to participate in grid frequency regulation and reserve capacity markets. In the fourth quarter of 2024, over 200 megawatts of distributed energy storage resources in the Riyadh area alone participated in grid regulation services.

This "cellular grid" model endows the power system with unprecedented resilience. When a fault occurs in a certain area, surrounding energy storage units can automatically isolate and form a local microgrid, maintaining power supply to critical loads—this functionality's value is self-evident in the climate-variable Middle East region.

The ambition of Saudi Arabia's energy transition goes beyond the power sector. The "Oxihydrogen Valley" being built in NEOM aims to become the world's largest green hydrogen production base by 2026, with an annual output of 1.2 million tons.

The logic here is very clear: use low-cost solar energy to produce green hydrogen, and then replace fossil fuels in industrial sectors with green hydrogen—from steelmaking to chemicals, from shipping to aviation. According to estimates from the Saudi Ministry of Energy, green hydrogen and its derivatives alone could generate an annual export revenue of $15 billion by 2030.

A grander plan is to extend the energy storage concept to the entire energy system. The "multi-energy storage" technology that Saudi Arabia is researching attempts to collaboratively store and dispatch various forms of energy, such as electricity, hydrogen, and thermal energy, through intelligent systems, maximizing the energy utilization efficiency of the entire city.

The International Renewable Energy Agency (IRENA) pointed out in a recent report that Saudi Arabia's energy transition pathway offers a new model: instead of simply replacing fossil fuels with renewable energy, it builds a completely different energy system through systematic innovation.

The engineers of the Yanbu Industrial City have become accustomed to such scenes: at sunset, the energy storage station begins to absorb the last photovoltaic power; after nightfall, this energy is precisely released to the petrochemical facilities that operate 24 hours a day. An industrial area that once relied entirely on oil and gas combustion now sources 30% of its energy from "yesterday's sunshine."

The story of Saudi Arabia reveals a profound energy logic: true transformation is not just about changing energy types, but also about reshaping the temporal and spatial value of energy. When sunlight can be "stored" in batteries, transmitted over thousands of miles, and precisely released at the moment of need, the rules of the energy world have been completely rewritten.

This ancient desert is perhaps nurturing a paradigm revolution in the way humanity utilizes energy. Energy storage is transforming renewable energy from a "supplementary energy" to a "dominant energy," and Saudi Arabia is attempting to redefine its position in the global energy landscape during this transformation—from an "underground oil kingdom" to a "solar bank in the sky."