Saudi Arabia’s Power Capacity To Surpass 106 GW By 2034 Amid Renewable Energy Push

Saudi Arabia’s power market is set for major growth over the next decade, with total installed capacity expected to cross 106 gigawatts (GW) by 2034. According to a recent report by IMARC Group, the market stood at around 84 GW in 2025 and is projected to grow at a steady annual rate of 2.62 percent during the forecast period. The growth reflects the country’s fast urban expansion, rising population, and strong push under Vision 2030 to diversify the economy beyond oil.

A key factor behind this expansion is the shift toward renewable energy. Saudi Arabia has set a target to generate 50 percent of its electricity from clean energy sources by 2030. To support this goal, the country has developed a renewable energy project pipeline of about 130 GW. Under the National Renewable Energy Program, authorities have recently awarded 14 GW of new solar and wind projects. These developments are aimed at reducing reliance on fossil fuels and cutting carbon emissions.

Large-scale solar projects are already making an impact. ACWA Power’s Al Shuaibah project, described as the world’s largest single-site solar plant, has demonstrated that solar power can be produced at record-low tariffs. This has made renewable energy increasingly competitive with conventional energy sources. Falling solar costs and improved technology are encouraging further investment in the sector.

Technology is also transforming how the power system operates. Artificial Intelligence (AI) is being used to improve efficiency and lower operating costs. Some AI-based tools have helped reduce energy consumption by nearly 18 percent and maintenance costs by up to 30 percent. These digital systems support the development of smart grids, which can better manage electricity flow and predict demand. This is particularly important as the country develops new mega-projects such as NEOM and expands its network of large data centers, both of which require stable and reliable electricity supplies.

Electricity demand is also increasing due to industrial growth and the country’s water desalination needs. Desalination plants alone consume nearly one-quarter of Saudi Arabia’s total electricity supply. With growing industries and infrastructure projects, the pressure on the power sector is expected to rise further in the coming years.

To meet this rising demand, the government is encouraging private investment through Independent Power Producer (IPP) models. These models allow private companies to develop and operate power projects, reducing the financial burden on the government while speeding up capacity addition. A significant share of new power projects in the country is now being developed under the IPP framework.

The expansion of the power sector is taking place across all regions of the country, including the Northern, Central, Western, Eastern, and Southern areas. Major players such as Saudi Electricity Company, National Grid SA, and ACWA Power are leading new developments. International partnerships are also strengthening Saudi Arabia’s position in the global energy market. A recent green energy cooperation agreement with Turkiye reflects the kingdom’s efforts to play a larger role in the global clean energy transition.

As Saudi Arabia continues to invest in renewable energy, smart grid systems, and energy storage technologies, it aims to build a reliable and low-carbon power system. These efforts are expected to support the country’s 35 million residents, growing industries, and long-term economic transformation plans.