Why Public-Private Partnerships are Essential in Advancing Energy Projects

Public-private partnerships (PPPs) are a vital instrument driving the energy transition. And according to the World Economic Forum, PPPs can offer a practical solution to what is called the “energy trilemma”: balancing energy security, affordability, and sustainability.

About 80% of the world’s energy still comes from fossil fuels, but the global energy landscape is transforming. And for this green shift to happen — and for more non-carbon sources such as wind, solar, and geothermal to be mobilised — a stronger collaboration between the public and private sectors is needed.

Why PPPs matter

Public-private partnerships (PPPs) are a vital instrument driving the energy transition. And according to the World Economic Forum, PPPs can offer a practical solution to what is called the “energy trilemma”: balancing energy security, affordability, and sustainability.

Through PPPs, energy projects can benefit from the strengths of the public and private sectors that go beyond monetary advantages. Governments are there to offer policy direction and regulatory support. Meanwhile, private companies provide the necessary technical expertise, investment, and innovation.

Such partnerships help propel large-scale energy initiatives forward, promoting renewable energy and accelerating the shift toward a more sustainable future.

Saudi Arabia, UAE lead the way

In the Middle East, especially in Gulf Cooperation Council (GCC) countries where governments have set ambitious energy targets, PPPs prove to be beneficial in implementing renewable energy projects.

Saudi Arabia is a key player in utilising PPPs. For instance, its National Renewable Energy Programme (NREP) supports energy initiatives that have already attracted major international investors — thanks to a transparent regulatory framework and a clear commitment to supporting PPPs.

Earlier this year, Saudi Power Procurement Co. and a consortium led by Japan's Marubeni Co. signed two power purchase agreements for major wind farm projects: the 600-MW Al Ghat and 500-MW Wa'ad Al Shamal. The deals were finalised at the Saudi-Japan Vision 2030 Business Forum in Japan.

According to Saudi Energy Minister, Prince Abdulaziz bin Salman, the Al Ghat project set a world record for the lowest wind energy production cost, at 1.56558 cents/kWh, while the Wa’ad Al Shamal project achieved the second-lowest cost, at 1.70187 cents/kWh.

The United Arab Emirates (UAE) has also long acknowledged how PPPs are transforming the energy sector in the region. Dubai, one of its emirates, is home to the Mohammed bin Rashid Al Maktoum Solar Park. Dubbed the world’s largest single-site solar park, it was developed through a PPP model — with the Dubai Electricity and Water Authority (DEWA) collaborating with various private sector entities. When fully completed, it will provide 5,000 MW of energy.  

In addition to solar energy, the UAE is also leveraging PPPs for critical infrastructure projects like desalination. A prime example is the 30-year water purchase agreement between DEWA and Saudi-based ACWA Power for a seawater reverse osmosis plant at Hassyan. 

More PPPs in the Middle East

Beyond Saudi Arabia and the UAE, more Middle Eastern countries have also made strides in advancing energy projects via PPPs.  

Oman boasts a robust legal framework supporting PPPs, including the 2019 PPP Law that facilitates public-private collaborations in energy and water sectors. Over the years, the Oman Power and Water Procurement Company (OPWP) has successfully implemented multiple PPP projects, including wind and solar power plants.

Recently, Oman awarded its first green hydrogen block to a consortium through a PPP. This project, which is part of the country’s broader strategy to become a major exporter of green hydrogen, will not only contribute to Oman's energy transition but also position it as a leader in the global hydrogen market.

Meanwhile, Qatar has been investing in solar energy projects, with plans to generate 10% of its electricity from renewable sources by 2030. The Al-Kharsaah Solar Power Plant, developed through a PPP, is a flagship project.

Kuwait is also developing its renewable energy sector through PPPs. The Shagaya Renewable Energy Park, which includes solar, wind, and concentrated solar power projects, is being developed under a public-private framework. These projects are crucial to help the country hit its goal of generating 15% of its energy from renewables by 2030.

As the region — along with the rest of the world — continues to diversify its energy sources, PPPs will remain a critical tool for ushering in a cleaner future.