MIDDLE EAST Trends and Developments Contributed by: Brendan Hundt, Dan Feldman, Sam Anastasiou and Saiesh Kamath, King & Spalding LLP
procurement model: the state retaining a majority stake while foreign consortia (for example EDF with Korea’s KOWEPO at Al Zarraf) take minority equity, an approach that de-risks financing and keeps tariffs low. Saudi Arabia is delivering its build-out through the National Renewable Energy Programme (NREP), overseen by the Ministry of Energy, with the Saudi Power Procurement Company (SPPC) acting as the single buyer that signs the power purchase agree- ments. The PIF has been mandated to deliver around 70% of the national renewable energy target (achieved mainly through PIF-backed Acwa) and has repeat- edly set global tariff records. This single-buyer, PIF- anchored model is the engine behind the Kingdom’s rapid, low-cost expansion. The programme has con- sistently delivered record low tariffs, including a record of about USD0.0104 per kWh at Al Shuaibah and a solar floor near USD0.01297 per kWh in Round 5 (3.7 GW). Round 6 (October 2025) covered around 4.5 GW of solar and wind, and Round 7 (2026) is targeting roughly 5.3 GW of awards; however, many more large- scale projects will be required to meet the PIF’s Vision 2030 goals (which will require approximately 130 GW of new capacity). The same trend of low-cost solar PV generation remains true across the GCC. Qatar’s 800 MW Al Kharsaah plant was contracted at around USD0.01567 per kWh (with the price at financial close being USD0.01449 per kWh). Oman has also tendered utility-scale solar IPPs such as Adam and Sinaw to be developed on a build-own-operate basis under Oman’s Vision 2040, and Kuwait has launched bidding for the 500 MW Al Dibdibah/Al Shagaya IPP, although these renewables programmes have not progressed at the same pace as those of other, more highly capitalised countries in the region. Solutions to existing problems – intermittency and distance Using solar PV creates a new problem: the assets over-produce in the middle of the day and generate no energy after sunset. All the while, the net load on the grid rises sharply in the evening as solar output falls (the “duck curve” phenomenon). Historically that evening peak has been met by gas (through natural gas-fired peaking plants), but the green energy com-
mitments will impact the viability of this solution in the future. Because solar PV assets require a lot of space, they are often located in remote desert areas and transmitting electricity over large distances to load centres creates an efficiency problem. A portion of the energy is lost as heat during transmission, with losses increasing in proportion to the distance trav- elled and the resistance in the transmission lines. The advent of larger-scale BESS has begun to address this by providing reserves and grid stability. Storage is therefore the technology that turns intermittent sources of power generation, such as solar energy, into fully dispatchable power sources. It can also be deployed as a captive asset to ensure that a facility can constantly draw on sufficient power from a nearby source, despite the generation asset being some dis- tance away. Alongside increasing storage capacity to address the intermittency issue, markets are also heavily investing in improving the efficiency of their transmission grids. Abu Dhabi, for instance, is upgrading high-voltage lines to stabilise a solar-heavy grid. These kinds of initiatives are playing an increasingly important role in determining how much solar energy can actually be dispatched once it has been generated. The regional grid is being reinforced to match. The GCC Interconnection Authority has established a regional grid which gives member states a route to trade surplus power across borders. The Authority has recently announced plans to upgrade the trans- fer capacities to Kuwait and the UAE to 3.6 GW and around 3.5 GW, respectively, by early 2027. It is also adding a direct 400 kV link to Oman. However, cross- border electricity trade still remains small, almost wholly on a non-cash basis, with Oman being the only country to have a spot market for electricity. The UAE’s round-the-clock flagship In January 2025, Masdar and EWEC launched the world’s first gigascale “round-the-clock” project, pair- ing a 5.2 GW (DC) solar plant with a 19 GWh BESS to deliver 1 GW of baseload power 24 hours a day. It is considered the largest combined solar-and-stor- age facility of its kind in the world, and is explicitly positioned to demonstrate the potential for supplying
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