Saudi Arabia advances renewable goals with 5,500 MW solar PPAs

The PPAs, signed by Saudi Minister of Energy Prince Abdulaziz bin Salman Al-Saud, are integral to the NREP supervised by the ministry. Supplied
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Updated 27 June 2024
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Saudi Arabia advances renewable goals with 5,500 MW solar PPAs

RIYADH: Saudi Arabia is set to add 5,500 megawatts of solar energy following the signing of three deals by its principal buyer, advancing its strategy to enhance renewable sources. 

The Saudi Power Procurement Co. finalized power purchase agreements worth SR12.3 billion ($3.3 billion) for three new solar photovoltaic projects with ACWA Power Co., Water & Electricity Holding Co., also known as Badeel, a wholly-owned subsidiary of the Public Investment Fund, and Aramco Power.

This comes as Saudi Arabia’s National Renewable Energy Program aims to achieve the Kingdom’s target energy mix of 50 percent renewables by the end of this decade, supporting efforts to reduce liquid fuel consumption and aligning with Saudi Vision 2030 objectives for the energy sector. 

The PPAs, signed by Saudi Minister of Energy Prince Abdulaziz bin Salman Al-Saud, are integral to the NREP supervised by the ministry. The contract duration for each PPA is 25 years.

The solar projects include Haden Solar PV and Al-Muwaih Solar PV, both located in the Makkah region, each with a capacity of 2,000 MW. The third project, Al-Khushaybi PV in Qassim Province, has a total capacity of 1,500 MW. 

Saudi Arabia plans to begin awarding contracts for new renewable energy projects in 2024, aiming for a maximum capacity of 20 gigawatts. By 2030, the goal is to achieve a capacity between 100 and 130 gigawatts, contingent on the growth of electricity demand, the ministry said. 

The financial impact of the contracted revenues is expected to be reflected after the Commercial Operation Dates expected by the first half of 2027.

Since the inception of the renewables program, a total of 21 projects have been awarded, amounting to 19 GW in capacity. 

Currently, seven projects totaling 4.1 GW are operational and connected to the grid, while eight projects with a total capacity of 8.2 GW are under construction. Additionally, six projects totaling 7 GW are in the final stages of financial closure. 

Furthermore, six additional renewable energy projects with a combined capacity of 6.7 GW have been put out to bid since the beginning of 2024. 

Further capacities are planned to be tendered before year-end to achieve the target of tendering 20 GW annually. 

In May, SPPC signed two PPAs with a consortium led by Japan’s Marubeni Corp. in Tokyo. These agreements were part of the fourth phase of Saudi Arabia’s NREP, overseen by the Ministry of Energy. 

The agreements pertain to the Al-Ghat wind power project, with a capacity of 600 MW, and the Waad Al-Shamal wind power project, with a capacity of 500 MW. These agreements were signed during the Saudi-Japan Vision 2030 Business Forum held in Japan. 


Saudi Arabia eyes global halal market lead

Updated 7 sec ago
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Saudi Arabia eyes global halal market lead

  • Kingdom’s regulatory framework ensures compliance with halal standards

JEDDAH: Saudi Arabia stands at the forefront of the global halal product industry, capitalizing on its unique status as the birthplace of Islam, thus earning the trust of around 2 billion Muslims worldwide.

This unparalleled position imbues Saudi halal regulations and certifications with a high degree of religious authenticity and credibility, making them highly respected and sought after worldwide. The Kingdom’s regulatory framework, spearheaded by key bodies such as the Saudi Food and Drug Authority, ensures stringent compliance with halal standards, reinforcing its leadership in the market.

The Kingdom’s importance in the sector was underscored during the inaugural edition of the Makkah Halal Forum, held in January and attended by Saudi Minister of Commerce Majid bin Abdullah Al-Qasabi. The minister pointed out that the industry is one of the most rapidly expanding sectors globally.

“Presently, the food market is valued at approximately $2.5 trillion, and is expected to reach $5.8 trillion in 2033.” the minister said at that time.

As part of its Vision 2030 initiative, Saudi Arabia is actively fostering innovation and investment in the halal sector, aiming to diversify its economy and expand its influence in the global halal market.

Through strategic collaborations, international forums like the Makkah Halal Forum, and advanced certification processes, Saudi Arabia is not only meeting the growing global demand for halal products but also shaping the future of the industry.

In a recent interview with Arab News, Yousuf Khalawi, secretary-general of the Islamic Chamber of Commerce and Development, highlighted the significant regulations overseeing the production and certification of halal products in Saudi Arabia.

He emphasized that key regulatory bodies governing the halal industry in the Kingdom include the Saudi Food and Drug Authority, the Saudi Standards, Metrology and Quality Organization, and the Saudi Accreditation Center.

“The government of Saudi Arabia regulates the halal market using the GSO 2055-1:2015 (Gulf Standardization Organization), which sets the general requirements for halal food throughout the production chain,” Khalawi said. He added that companies that deal in halal products need to be certified for compliance to Saudi standards by Saudi accredited conformity assessment bodies.

Khalawi pointed out that while many countries have other halal standards and regulations, the Islamic Chamber’s halal conferences, held around the world, are striving to pave the way for businesses to navigate such different standards and regulatory requirements.

“In the meanwhile, and through the Islamic Chamber halal services, we strive to simplify companies’ compliance with multiple standards through our unique auditing process that combines standards using artificial intelligence algorithms and ends with granting a halal certificate which can be verified using simple quick-response code readers,” he said. Commenting on Saudi Arabia’s position as the birthplace of Islam, influencing consumer perceptions and demand for halal products globally, the secretary general said that this position adds a layer of trust and potential influence in the global halal market, but it is not the only factor.

“Saudi Arabia’s status as the Islamic holy land imbues their halal regulations with a perception of greater authenticity and religious legitimacy. Some Muslim consumers might view products originating from or certified by Saudi Arabia as more trustworthy in adhering to Islamic principles,” he said.

He added: “Manafea emphasized those facts and organized the Makkah Halal Forum to be the platform where halal leaders from all over the world meet to shape the halal future.”

In 2022, the Makkah and Madinah chamber, along with the Islamic Chamber, signed the Manafea agreement, which aims to transform the two holy cities into hubs for financial and business activities in the Islamic world.

From another perspective, he said, Saudi Arabia is a major consumer and investor in the halal industry. This gives the country significant influence in shaping the global halal market and that is why the Halal Product Development Company was the strategic partner sponsoring Makkah Halal Forum.

Khalawi shed light on the strategies Saudi Arabia has employed to take its halal products to international markets, saying that the Saudi Halal Center and its collaboration with the Saudi Exports Development Authority streamline the certification process for exporters.

“This aims to make Saudi certification more attractive and user-friendly for international companies. Saudi Arabia promotes its halal standards – based on GSO 2055-1 – as a globally recognized benchmark for halal production. This leverages their position as the birthplace of Islam to enhance the credibility of their certifications,” he said. 

Saudi Arabia’s status as the Islamic holy land imbues their halal regulations with a perception of greater authenticity and religious legitimacy.

Yousuf Khalawi, Secretary-general of the Islamic Chamber of Commerce and Development

The official added that to help Saudi business reach trade partners around the globe, they are availing halal exchange, HalEx, an online platform for halal products and services exchange, operated by the Islamic Chamber’s halal services and allowing only halal products to be listed.

Moreover, Vision 2030’s focus on economic diversification presents an opportunity to attract investment in the Saudi halal industry.

Khalawi added that in the latest Makkah Halal Forum, 21 presidents of Muslim countries’ chambers of commerce attended the event to network and discuss business.

Elaborating on how Saudi Arabia is supporting the development of the halal industry within the country, he said that as part of Vision 2030, the national economic diversification plan prioritizes attracting investment in the halal sector.

“This fosters innovation and the development of new products and technologies to meet the evolving demands of the global halal market. The Saudi government is actively supporting the development of the halal industry within the country, the Halal Products Development Company plays a key role seeking partnerships with foreign companies to establish production facilities in Saudi Arabia. This strategy aims to create a robust domestic halal industry with the capacity to serve international markets,” Khalawi said.

Giving an idea about how Saudi Arabia is collaborating with other countries and organizations to promote halal standards and trade facilitation on a global scale, the Islamic Chamber’s secretary-general said that Saudi Arabia is a key player in shaping the global halal landscape through its collaborations with international organizations and bilateral agreements.

“Saudi Arabia works closely with the Organization of Islamic Cooperation to achieve harmonization of halal standards across member states and catalyst trade. Manafea is striving to bridge the gaps between countries through the Makkah Halal Forum where major players in the global halal economy meet,” he concluded.

Karim Chehade, associate partner at Bain & Co. highlighted the key factors driving the growth of the global halal product industry, emphasizing that Muslims represented around 12 percent of the world population in the beginning of the last century, but now account for nearly 25 percent.

“This number grew over the years to reach 2 billion today … with further rise expected in the future to 2.8 billion in 2050 – accounting for around 30 percent of the global population,” he said.

Chehade added that purchasing power per Muslim around the world is also on the rise, and said: “On the supply side, companies around the world have adapted their offering to meet this growing demand. 

“Food sector multinationals have widened their portfolio to include halal-certified SKUs. Other sectors such as pharmaceuticals, cosmetics, fashion have also tailored part or the entirety of their portfolio to ensure they are halal-compliant.” 

He went on to say that technology advancement and automation is another key factor, leading to higher productivity levels and increased yields, and making it financially sustainable for companies to meet halal standards, typically more stringent, while remaining competitive with main market leaders

Moreover, Chehade believes the wider assortment of halal products, driven both by new entrants and market incumbents, have improved the perceived quality, leveling it to non-halal offering and making it attractive to a non-Muslim population that is interested in the overall value proposition offered rather than the religious aspect.

“Also, governments of Muslim countries around the world are becoming more active in supporting their local champions to ensure a wider presence in local and international markets,” he said.

“Private sector companies have evolved from ensuring to meet halal certification requirements to now investing in research and development to create new halal products that meet the evolving needs and preferences of consumers,” Chehade added.

Religious institutions also play a role in shaping the halal product industry in Saudi Arabia with the Islamic Fiqh Academy, an international organization, providing guidelines and recommendations for the certification of halal products, the Bain & Co. official said, noting that many halal certification bodies follow these guidelines to ensure that their products are in compliance with Islamic laws and regulations.

Speaking about the challenger and opportunities facing the halal product industry in Saudi Arabia, both domestically and internationally, Chehade pointed out that some of the challenges include the ability for companies to scale, operational complexity, and international regulations, as well as the recent growing Islamophobia sentiment coupled with unfavorable macro-conditions could also play a role in limiting halal products consumption in selected non-Muslim countries.

As for the opportunities, the Bain & Co. associate partner highlighted growing global demand, diversification of products, and Saudi Arabia’s position as a trusted halal exporter as key opportunities.

Explaining how Saudi Arabia’s position in the halal product industry contributes to its broader economic goals and strategies, Chehade stated that the development of a strong industry in this arena serves the Vision 2030 objectives by diversifying the economy.

“The halal industry is a significant contributor to Saudi non-oil exports. The country’s position in the industry has enabled it to increase its exports of halal products to other countries, particularly in Asia and Africa,” he said.

The halal sector is also a significant employer in Saudi Arabia, providing jobs for both men and women in various areas, including manufacturing, distribution, and certification.

“Also, the halal product industry is closely linked to Islamic values, and the Saudi government has identified it as a means of fostering Islamic values of moderation and tolerance,” he concluded.


Aramco to buy 10 percent stake in Renault-Geely thermal engines venture

Updated 28 June 2024
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Aramco to buy 10 percent stake in Renault-Geely thermal engines venture

  • Geely and Renault will own around 45 percent each of the powertrain venture, called Horse Powertrain

LONDON: Saudi Aramco will buy a 10 percent stake in a thermal engines joint venture between French carmaker Renault and Chinese automaker Geely, the companies said on Friday, valuing the business at €7.40 billion ($7.93 billion).

Geely and Renault will own around 45 percent each of the powertrain venture, called Horse Powertrain, which will supply gasoline engines, hybrid systems and gearboxes for thermal vehicles.

Renault CEO Luca de Meo described the deal in a statement as creating a “dream team” that would “reinvent” the future of combustion-engine and hybrid technologies.

“Aramco’s stake in the thermal engine joint venture could stabilize investments in legacy automakers, providing a safety net amidst the electric shift,” investor platform Finimize wrote, ahead of the official announcement.

“Aramco’s investment is expected to directly contribute to the development and deployment of affordable, efficient, and lower-carbon emission internal combustion engines globally, Ahmad O. Al-Khowaiter, Aramco executive vice president of technology and innovation, said.

“With Geely and Renault, we plan to leverage our collective expertise and resources to support ground-breaking advances in both engine and fuel technologies.

“With a strong emphasis on innovation, our goal is to provide solutions that can help reduce transport greenhouse gas emissions while meeting the needs of both vehicle manufacturers and motorists. In securing long-term partnership between Valvoline Global and Horse Powertrain Limited, Renault Group, and Geely in connection with this investment, we are also demonstrating Aramco’s ability to both create and capture value at the global level,” he added.

Aramco, which this month raised around $11.2 billion through a secondary share sale, had originally signalled it would buy a 20 percent stake in Horse Powertrain.

The company signed a letter of intent in March 2023 with a view to possibly becoming a minority shareholder in the venture.

Horse Powertrain was formally established on May 31.

“I am delighted that Aramco has joined Horse Powertrain Limited. Their expertise in fuels and hydrogen makes them a great partner for us to deliver cutting-edge, lower-emission powertrain solutions, driving our industry’s carbon mitigation efforts forward. Together, we will set new benchmarks for innovation in the automotive sector,” CEO Matias Giannini said.

* With Reuters


Foreign investment levels and sukuk funds among milestones revealed by CMA report

Updated 28 June 2024
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Foreign investment levels and sukuk funds among milestones revealed by CMA report

RIYADH: Raising SR29.95 billion ($8 billion) from sukuk and debt instruments and securing SR198 billion in foreign investments are some of Saudi Arabia’s achievements underscored in the Kingdom’s Capital Markets Authority’s latest report.

In an analysis of 2023, the CMA set out how its efforts have led to new regulations, robust increased market listings, rigorous enforcement activities, and improved global financial rankings, all in alignment with Saudi Vision 2030.

In a press release, the authority’s chairman Mohammed El-Kuwaiz commended the Saudi capital market’s achievements, highlighting its ongoing collaboration with partners in the Financial Sector Development Program.

The work of the CMA came against a backdrop of a resurgence in emerging markets – including the Middle East and North Africa – after sell-offs prompted by the COVID-19 pandemic.

Global investor inflows into the region are driven by attractive returns and comprehensive reforms in capital markets, including the adoption ofl best practices and the digitalization of pre- and post-trade processes to boost liquidity.

Under the leadership of the CMA, significant regulatory advancements were made in 2023, including the approval of a new regulation and amendments to four existing principles, rules, and instructions. Additionally, the Council of Ministers sanctioned the Real Estate Contributions Law, thereby strengthening the legislative framework.

Additionally, the CMA introduced the Rules for Foreign Investment in Securities and updated critical regulations such as the Implementing Regulations of the Companies Law for Listed Joint Stock Companies, Capital Market Institutions Regulations, Instructions for Company Announcements, and Investment Accounts Instructions.

Sukuk and debt market

The adoption of the Debt Market Development Strategy marked a pivotal step in fostering market growth.

To stimulate secondary market activities and enhance liquidity, the CMA canceled its share of the trading commission on sukuk and bonds. As a result, the sukuk and debt instruments market reached 18.3 percent of gross domestic product.

Additionally, 70 sukuk and debt instruments were listed, raising a total of SR29.95 billion, with SR29.85 billion from private placements and SR100 million from public offerings.

According to the authority in a previous report in June, the Kingdom’s sukuk and debt capital market has grown significantly since 2019, surpassing SR30 billion with an annual growth rate of 7.9 percent.

Unlisted issuances showed a robust 9.6 percent yearly growth, expanding from SR72 billion in 2019 to SR105 billion by the end of 2023. The total size of the corporate sukuk and debt market reached SR125 billion, with the number of issuing companies tripling.

In the final quarter of 2023, sukuk and bond issuances rose 2.8 percent year-over-year to SR758.8 billion, driven by government-issued instruments. The CMA’s initiatives have significantly increased market activity, with traded values rising to SR2.5 billion and transactions surging from 3,722 in 2021 to 36,961 in 2023. Individual investor participation rose to 12.5 percent by the end of 2023, while the share of banks and government entities declined.

Foreign investment and market listing

According to the report, in 2023 net foreign investments in the Saudi capital market reached SR198 billion, marking a 7.7 percent increase from the previous year, with foreign investor ownership rising to SR401 billion.

The market also saw substantial growth in listings, with 43 new listings representing a 79 percent increase from the target. This included seven companies in the main market, 29 in the parallel market, six direct listings in the parallel market, and one traded real estate fund.

Global financial market rankings

Saudi Arabia’s capital market achieved notable global standings in 2023, ranking first among G20 countries in the Board of Directors Index.

Additionally, it secured second place in several key indices such as the Ease of Access to Financial Markets Index, Stock Market Capitalization Index, Shareholder Rights Index, and Venture Capital Index.

According to the IMD World Competitiveness Yearbook, Saudi Arabia improved its position in six out of 12 financial market indicators, underscoring its advancement and competitiveness on the global stage.

The report added that these rankings highlight the Kingdom’s strides in enhancing governance, market accessibility, investor protections, and overall market vibrancy.


UAE developers embrace sustainability to boost property values

Updated 28 June 2024
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UAE developers embrace sustainability to boost property values

RIYADH: UAE developers can leverage sustainability to add value to their properties, as new data shows that 70 percent of investors are willing to pay premiums for green facilities.  

According to real estate firm Property Finder’s latest paper, this trend is driven by increasing consumer demand for sustainability in community design, with a strong preference for Leadership in Energy and Environmental Design, known as LEED, certification.  

LEED is the world’s most widely used green building rating system, providing a framework for creating healthy, highly efficient, and cost-saving green buildings that offer environmental, social, and governance benefits.  

Amidst notable success in the UAE’s real estate sector, which saw a surge in diversified demand and the highest volume and value of transactions in May, the report highlighted sustainability as a leading factor driving these demands.  

Cherif Sleiman, chief revenue officer at Property Finder, said: “It is promising to see the growing conversation around sustainability in the industry, aligned with the broader national vision.”  

Citing their latest findings, he noted that consumers are prioritizing this factor in their home-seeking journey, both within communities and across residential buildings. 

Louise Heatly, owner and managing director at Exclusive Links Real Estate, noted that while cost can be seen as a challenge to eco-conscious living, it actually presents an opportunity in disguise. 

“Developers can leverage sustainability as a unique selling point, capitalizing on the willingness of 70 percent of investors to pay premiums for green properties. Overcoming challenges through education and innovative financing models presents an avenue for Dubai to continue leading the charge toward a more sustainable future in real estate,” she said.  

This aligns with the government’s various initiatives aimed at creating future cities that integrate sustainability and livability into their fabric, such as Dubai’s Clean Energy Strategy 2050 and Abu Dhabi’s Vision 2030 plan.  

Kika Pavese, the managing director at MD Real Estate, noted a significant rise in consumer interest in green living, further highlighting that this shift reflects a broader awareness and commitment to sustainability among residents and investors. 

“Among the challenges is balancing the expansion of projects like Masdar City and the forthcoming Aldar Sustainable City with the imperative of affordability for residents. Ultimately, the success of sustainable housing in the UAE will depend on a collaborative approach. One that includes government initiatives, private sector innovation, and public willingness to embrace a sustainable lifestyle,” she added. 

Pavese mentioned that, on the opportunity front, the UAE’s embrace of renewable energy opens doors for solar-powered homes and communities, potentially incorporating energy-plus housing, where buildings generate more energy than they consume. 

“There’s also potential for advancements in sustainable building materials, such as those that are recycled, locally sourced, or that reduce energy consumption,” she added. 

According to the report, this new era is further underpinned by diversified visa policies launched by the nation. 

Earlier this year, the UAE government introduced the Blue Residency Visa, a 10-year entry permit designed for individuals who have made significant contributions to the overall environment in the UAE. 

The report underscores that this decision lays the foundation for increased sustainable choices nationwide, which could impact the real estate sector as well. 

Commenting on this, Pavese highlighted that the Blue Residency Visa is “a game-changer” for the real estate market in Abu Dhabi, as it attracts a demographic seeking long-term stability while promoting investments in sustainable living. 

“We expect this visa to significantly increase the demand for sustainable properties, as more residents look for homes that align with their environmental values and offer long-term cost savings,” the MD Real Estate official said. 

For investors, she added, this is a substantial advantage, “as properties with sustainable solutions will see higher demand compared to those without.”  

“This initiative is set to attract considerable international investment into the capital, positioning the UAE as a focal point on the global stage,” Pavese concluded.


Oil Updates – prices steady after US inflation data lifts rate cut hopes

Updated 28 June 2024
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Oil Updates – prices steady after US inflation data lifts rate cut hopes

BENGALURU: Oil prices were steady on Friday after key US inflation data for May was largely in line with expectations, lifting hopes that the Federal Reserve could start cutting interest rates this year, according to Reuters.

Brent crude futures for August settlement, which expired on Friday, were up 34 cents, or 0.4 percent, at $86.73 a barrel by 4:05 p.m Saudi time. The more liquid September contract was up 0.39 percent at $85.59.

US West Texas Intermediate crude futures rose 32 cents, or 0.4 percent, to $82.06.

Brent and WTI futures have risen nearly 2 percent this week, with both benchmarks on track for monthly gains of more than 6 percent.

The US personal consumption expenditures price index — the Federal Reserve’s preferred inflation gauge — was flat, in line with expectations. On an annual basis, PCE inflation rose 2.6 percent, as forecast.

Reaction in financial markets was minimal. For oil traders, the release passed unnoticed, said Charalampos Pissouros, senior investment analyst at brokerage XM.

Growing expectations of an imminent Fed easing cycle have sparked a risk rally across stock markets. Traders are now pricing in a 64 percent chance of a first Fed rate cut in September, up from 50 percent a month ago, according to the CME FedWatch tool.

Easing interest rates could be a boon for oil because it could increase demand from consumers.

“Oil prices have been converging with our fair value estimates recently, revealing the underlying strength in fundamentals through a clearing in the fog of war,” Barclays analyst Amarpreet Singh wrote in a client note.

Barclays expects Brent crude to remain around $90 a barrel over the coming months.

Oil prices might not change much in the second half of 2024, with concern over Chinese demand and the prospect of higher supply from key producers countering geopolitical risks, a Reuters poll indicated on Friday.

Brent crude is expected to average $83.93 a barrel in 2024 with US crude avergaing $79.72, the poll found.