Renewable Energy: Investment Environment & Growth KSA: Solar Industry Briefing and Networking May 8 th , 2018
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Renewable Energy: Investment Environment & Growth
KSA: Solar Industry Briefing and Networking
May 8th , 2018
1
SAGIA's role
Potential incentives
Investment environment
Serving the renewable market beyond KSA
Renewables in Saudi Arabia
Why invest in Saudi Arabia
2
Key facts and figures
Total population
32.5 Mn
Population growth rate2
2.5%
Nominal GDP
$ 646 Bn
Internet speed
6.7 Mbps
Export1
26th largest exporter globally
Import1
31st largest importer globally
GDP per capita
$ 19,858
Saudi labor force
5.7 Mn
1. U.S. Dollar current price (WTO statistics 2016); 2. Average yearly growth rate from 2014 to 2017. Note: 2016 and 2017 data; Source: General Authority for Statistics; The World Bank, Organization for Economic Co-operation and Development; WTO Statistics
3
Seven key reasons to invest in Saudi
1. Middle East, North Africa and Turkey; Source: Saudi Arabia's Vision 2030
Diversification and reform journey
Game-changing opportunities
Integrated infrastructure
Attractive property solutions
Young and skilled population
Expanding quality of life
Leading financial sector
Vision 2030 with clear priorities
12 Vision Realization Programs
Quantifiable initial successes
Privatization program
Localization of value chain
Giga projects across the country
Strategic natural location
Largest seaport on Red Sea
Digital infrastructure
>35 industrial and economic cities
Business areas with cluster-effects
Land at very competitive prices
~50% of Saudis under 30 years old
Universities increasing research
Tax free salaries
Amongst safest places in the world
26th healthcare systems worldwide
Asset financial system 192% of GDP
Well-capitalized banking sector
Biggest capital market in MENAT1
4
4
Unlimited natural endowment for
renewable energy production
Government commitment to unlock
the renewable energy sector
Access to large regional market
Advanced knowledge-based market
Investor-centric ecosystem
key reasons
to invest in
Renewables
in KSA
5
5
Saudi Arabia Ranks 12th Worldwide For Annual Electricity Production
252257264273274286286315339551553582648663
4,351
6,142
331
1,0001,0871,401
Annual electricity production (Twh) and Production-per-capita ranking (#) within top 20 largest producers
#15 #2 #19 #6 #9 #1 #7 #18 #8 #5 #10 #3 #16 #13 #11 #14 #17 N.a #4 #12
#
Saudi Arabia
Note: 2016 values, TWh stands for TeraWatt-hours; Source: British Petroleum Statistical Review of World Energy June 2017; British Petroleum Statistical Review of World Energy 2015 workbook; Workbook of historical data 1985-2013 on Electricity generation: Statistical review of world energy 2014
Annual electricity production
Production-per-capita
ranking
Ranking of production-per-capita within top 20 energy producers
6
6
KSA's natural endowment position it among the best countries globally for solar and wind energy production
33.9
39.944.3
47.352.0
62.3
K Petajoule/Year
25.026.529.230.1
0.50.61.0
0.50.5 0.51.3
1.82.4
2.9
7.47.58.2
K Petajoule/Year
0.5
9.3
Source: Shell global energy resources database
Top 10 countries for energy resource
potential in centralized solar (PV on land)
Top 15 countries for energy resource
potential in wind (onshore)
Great mix of natural resources places KSA among the top markets to deploy renewables
KSA is ranked as the 6th country with highest
potential for production of Solar energy
KSA is ranked as the 13th country with highest
potential for production of onshore wind
7
Today
Renewable sources constitute a small fraction of the energy mix
Going forward
Saudi aims to heavily increase the share of renewable energy
Renewable energy share1 <1%
Note: Share of renewables from total KSA's generation capacity
Source: IRENA, REPDO
Renewable energy share1 >10%
Commitment to
unlock the
renewable
energy sector
Establishment & growth
Focus on localization
We have set ourselves an initial target of generating 9.5 GW of renewable
energy by 2023
We will also seek to localize significant portion of the renewable energy value chain in the Saudi economy, including
R&D, manufacturing, among other stages
Source: Saudi Arabia's Vision 2030
High ambition to establish a strong growing sector
Share of renewables in KSA's total generation capacity
4%
10%
Saudi targets to increase renewable energy generation
capacity to 9.5 GW by 2023
Source: REPDO, Team analysis
9.50
2030202320202017
3.45
<100 MW
Further targets to be announced
soon
Capacity targets (GW)
Source: REPDO, Team analysis
Localization requirement targets
2017
30% localization requirement
2018
40% to 60% localization requirement
Future
Continuously increasing localization requirement
KSA set 30% localization requirement of/in the value chain in 2017, aimed to increase to over 40% - 60%
11
10,09021,600
2,219
3,725
9,500
130 950
300
11,000
1,750
1,582
0–300 301–600 601–900 901–1200 >1200 Export
Expected renewable targets (MW) by 2020/2030
Beyond local consumption, KSA manufacturers have the opportunity to serve 17 GW in the GCC region
5,000
GCC Region
Total renewables market size in GCC countries to reach ~17 GW
IllustrativeMENA map with expected renewable targets (MW) by 2020/2030
Source: IRENA, Team analysis
Total renewables market size in MENA region to reach ~70
GW
Three key factors make export of renewable energy to neighboring countries favorable
Geographical advantage
• KSA is located at a close proximity to the GCC
countries and thus has a logistical advantage (i.e.,
lower transportation cost, shorter delivery time) over
other European and Asian source countries
Trade agreements with other Arab countries
• Following GAFTA1 – Goods produced in any of the
GAFTA member countries shall be exempted from duty
in any other member country
Favourable trade regulations on industrial goods
• KSA has set favorable trade regulations on the export
of industrial products/equipment
1. Greater Arab Free Trade Area
Source: Team analysis
13
Saudi Arabia strategically located to facilitate trade
1. Red Sea Foundation – King Abdullah Economic City (KAEC) 2016
Crossroads of international trade roads between 3 continents
>10%1 of world trade moves through the Red Sea
Riyadh, Jeddah, Dammam in pivotal locations for distribution to key markets of Middle East, Egypt and East Africa
14
20 investment opportunities are identified for the renewable sector
202
5
8
5
0
5
10
15
20
Solar CommonSolar CSP
#Investment opportunities
Wind Tota
l
Solar PV
15
15
Clear governance
and regulatory framework
Incentives to attract private
sector investors
Investor-centric Ecosystem is Established by the Government for Private Sector Investors
16
Clear allocation of roles along the value chain
Sector role allocation
OEMs
Sector Planner/
promoter
Sector
Regulator
Licenses
issuer
Funder
/Investor
Sector
owner Executor
National Renewable Energy Program
(NREP)
Ministry of Commerce & Investment
Private SectorMinistry of Energy, Industry
and Mineral Resources
Renewable Energy Project Development Office
(REPDO)
Saudi Standards, Metrology and Quality Organization
(SASO)*
SAGIA
Saudi Industrial Development
Fund (SIDF)
Other key government supporting entities
Private Sector
17
Selected key incentives offered to investors for renewables investors
Custom duty drawback
Refund to importers/ exporters of raw material imports that
are processed in Saudi Arabia and re-exported as more
finished products
Loans Up to 75% of project financing through soft loan by SIDF
Land incentives
Land for lease starting from $ 0.26 per sqm
Ownership 100% foreign direct ownership allowed
Nationalization incentives
Up to 15% (for male) and 20% (for female) of the monthly
salaries of KSA nationals employees to be covered by HRDF
Repatriation of capital
No restrictions on repatriation of capital
Custom duty exemption
Customs duty exemptions for primary raw materials and
spare parts (not available in KSA)
Source: Responsible entities
18
SAGIA is Saudi Arabia's Investment Promotion Agency,
mandated to work closely with potential investors to
attract investment into the Kingdom
To promote Saudi Arabia as a world-class
investment destination, attract and retain
investors, and expand their investments; for the
benefit of a sustainable national economic
growthMission
SAGIA offers support across multiple dimensions to investors
Find best location for projectAssist investor in fact finding
missions and understand local
value chain
Develop business connections
& linkages with local market
Provide information to help
investors evaluate and plan
Location searchSite visitsMatchmaking and
Linkage
Market & economic
intelligence
Create a better investment
ecosystem
Structure incentives packages
and build business cases
Provide variety of facilitation
and liaison in support
Improving
business climate
Incentives assistanceSet-up assistance
20
Simple, clear and fast business set-up process for manufacturing investors in Saudi
Prepare required documents1
Documents authenticated at
the ministry of foreign affairs
and Saudi embassy
Apply online on SAGIA website
SAGIA license approval Article authentication
Find location & Lease
agreementApply online on MCI website initial industrial license Open bank account Commercial registration at MCI
Open labor office file
Open recruitment file (700)
Register with GOSI, DZIT
Obtain residency visa for
general manager
Final Industrial license
registration at MCI
1 day
1 day 1 day 1 day
1 day 3 days
1. Commercial registration and financial statement for last year
Source: SAGIA
@investsaudi
Thank You
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