Saudi Arabia's Renewable Energy Goals in Jeopardy Amid War and Funding Headaches

Saudi Arabia's ambitious target of generating 50% of its electricity from renewable sources by 2030 is under strain due to war-related supply-chain disruptions and tighter funding.

The kingdom, the world's second-largest crude oil producer, currently relies on hydrocarbons for more than 97% of its electricity. To reach its goal, over 20 gigawatts (GW) need to be added to the grid each year, a deployment rate comparable to those seen in advanced renewable energy markets.

Despite having massive solar and wind resources, ample space for power generation, and high-level political support behind building green energy resources, Saudi Arabia's renewable energy sector is facing significant challenges. The country's potential for renewable projects is high, but supply-chain constrictions caused by the Iran war and a nationwide slowdown in loan growth are exacerbating the situation.

Renewable capacity has effectively doubled every year since 2020 to reach 12.3GW last year, but this is still less than one-tenth of the 2030 goal of 130GW. The International Energy Agency projects that worldwide renewable capacity will rise by 4,600GW by 2030, and Saudi Arabia finds itself in competition globally for expertise and equipment.