Transforming Saudi Arabia's Energy Sector: Insights from PwC KSA Report

PwC’s Saudi Economy Watch 2024 report shows Saudi Arabia’s energy sector shift toward sustainability, aiming for net-zero by 2060 and energy diversification.

Saudi Arabia is setting new benchmarks for the energy and utilities sector. The country has an ambitious agenda shaped by sustainability, diversification, and a commitment to clean energy. PwC’s recent report on the Saudi economy highlights the Kingdom's progress and goals for achieving energy independence and reducing its carbon footprint. Here are the main takeaways.

Balancing Energy Demands With Environmental Responsibility 

Saudi Arabia is tackling the energy trilemma by aiming for a reliable, affordable, and sustainable energy supply. The Kingdom’s Vision 2030 includes a target for net-zero emissions by 2060. Here Saudi Arabia is working to grow its economy while protecting the environment. The country is adding renewable energy sources and energy-efficient practices across many sectors. At the same time, it’s cutting back on its dependence on oil.

In 2024, the government made significant strides to tackle these goals. It expanded renewable energy infrastructure to prepare for a greener future. By 2030, Saudi Arabia aims to add up to 130 GW of renewable energy capacity. These steps support economic growth and build a stronger, more sustainable energy system.
Saudi Arabia is Boosting its Renewable Energy Green Initiatives

The Kingdom’s renewable energy initiatives are expanding rapidly. By September 2024, the Kingdom secured over 19 gigawatts of renewable energy projects. They anticipate that almost 5 gigawatts of these projects will be operational by the end of the year. These ambitious goals align with the Saudi Green Initiative. This initiative aims to cut carbon emissions, protect natural resources, and preserve biodiversity by 2030

Important renewable projects include large-scale solar plants. For example, the Sudair solar plant began production in 2023. Another notable project is the 700-megawatt Al-Rass solar plant. Saudi Arabia has also set global records for low-cost electricity production. Recently, a wind power project achieved a rate of 1.56 US cents per kilowatt-hour. According to the PwC report, the Saudi Public Investment Fund (PIF) has played a key role in this expansion. Through its partnerships, the PIF is positioning Saudi Arabia as a leader in clean energy.

Diversifying beyond Oil in Saudi Arabia

Even as the world’s largest oil exporter, Saudi Arabia is working to diversify its energy sources. The Kingdom is increasing natural gas production. It is also exploring nuclear and hydrogen energy options. The development of the Jafurah gas field marks a milestone in this shift. Jafurah, the world’s largest unconventional gas field, should produce 2 billion cubic feet of gas per day by 2030. This output will help reduce Saudi Arabia's reliance on oil for electricity.

Saudi Arabia is also adapting to changes in the global oil market. Production has been lower due to OPEC+ restrictions. But, the Kingdom plans to gradually raise production to almost 10 million barrels per day by late 2025. So oil will remain vital to Saudi Arabia’s economy. Yet, the rising domestic gas supply will lessen the need for oil at home. This shift should boost Saudi Arabia’s ability to export more oil. As a result, the Kingdom can strengthen its economic stability through enhanced export opportunities.

A Growing Focus on Green Hydrogen in Saudi Arabia

In the same report, PwC added that Saudi Arabia is focusing on green hydrogen production too. This move plays a role in the diversification of the Kingdom's energy sector. As part of this, the NEOM Green Hydrogen Project aims to be the world’s largest green hydrogen plant. It plans to produce 1.2 million tons of green ammonia each year. 4 GW of solar and wind energy will power this project too, setting up Saudi Arabia as a global leader in hydrogen. The continued efforts underline the Kingdom's commitment to cutting carbon emissions.

The Rise of Electric Vehicles in Saudi Arabia

Saudi Arabia is also investing heavily in electric vehicles. The Kingdom is building a manufacturing hub in King Abdullah Economic City. It aims to produce 150,000 vehicles by 2026 and reach half a million by 2030. This plan also includes localising much of the supply chain.

Three companies are leading these efforts. Lucid Group, a U.S. firm 60% owned by Saudi’s Public Investment Fund (PIF), opened its first facility in the Kingdom in 2023. Initially, this facility reassembles cars from kits sent from Lucid’s main factory in Arizona. But, Lucid is working toward developing a full production line in Saudi Arabia.
The second major player, Ceer, is a joint venture between PIF and Taiwan’s Foxconn. Ceer is creating its own EV models with technology from BMW. In 2024, Ceer took big steps forward, awarding a $1.3 billion contract to Modern Building Leaders to build its factory. It also signed a $2.2 billion deal with Hyundai Transys for EV drive systems.

Hyundai Motors is also partnering with PIF. Together, they plan to establish a factory for both electric and conventional cars, with operations starting in 2026.

Enhancing Energy Efficiency and Resource Management

On the demand side, Saudi Arabia’s approach involves comprehensive energy efficiency programs. Since the launch of the Saudi Energy Efficiency Program in 2012, the Kingdom has achieved large energy savings. Ongoing efforts include the rollout of energy-efficient public transportation. The Riyadh Metro, for example, will help reduce vehicle emissions.

In the industrial sector, carbon capture and utilisation are priorities. Major companies like SABIC aim to capture and use 11 million tons of CO₂ each year by 2035. This shows Saudi Arabia’s commitment to reducing industrial emissions.

Water sustainability is another key focus. Saudi Arabia is one of the world’s largest producers of desalinated water. However, this comes with distinct resource management and environmental impact challenges. The Kingdom is addressing these issues by exploring new solutions. These new solutions range from sustainable desalination technologies to wastewater reuse. Conservation practices are also in place to protect natural resources.

Long-Term Goals Setting with a Possible Saudi Vision 2050

While the Saudi Vision 2030 is a comprehensive plan, PwC speculates a Vision 2050 could be on the horizon. This future framework could set bold targets, like reaching 100% renewable electricity generation. It would likely drive even more development in sustainable technologies. Reducing domestic fossil fuel consumption could also allow Saudi Arabia to export more oil and gas. At the same time, it could expand its clean energy offerings.

In this light, Saudi Arabia positions itself as a global green economy leader. Its strategy integrates sustainability across sectors like tourism, industry, finance, and resource management. PwC believes this approach strengthens the Kingdom’s role in the energy transition.

The Kingdom continues to invest in clean energy infrastructure. It is building green technologies to support its goals. This investment aligns with the global shift toward sustainability. By focusing on clean energy, Saudi Arabia is contributing to worldwide environmental efforts.

A Sustainable Future for Saudi Arabia's Energy Sector

PwC’s 2024 report highlights Saudi Arabia’s ambitious path toward sustainable energy. The Kingdom’s approach combines renewable energy, diversification, and efficiency improvements. This balance reflects a vision that merges economic growth with ecological responsibility.

Saudi Arabia is leveraging its resources to reach these goals. A key part of achieving these targets is strategic partnerships. It's through these efforts that Saudi Arabia is setting a strong example for other oil-producing nations.

As Vision 2030 progresses, Saudi Arabia’s energy sector is transforming. The possible addition of Vision 2050 could expand on this legacy. This sustainable path will benefit future generations. Saudi Arabia is shaping a legacy of sustainability that could redefine its role on the global stage.

Each step forward reinforces the Kingdom’s commitment to a green future.