The Saudi energy industry is entering a period of change. Multiple gigawatts of renewable electricity are coming online each year, helping to displace oil in domestic power generation and lower the carbon intensity of the energy mix, while carbon capture, utilisation and storage (CCUS) supports emissions mitigation across the power and utilities sector as part of the Kingdom’s multi-pathway approach. Together, these shifts align with national efforts to reduce domestic crude burn, increasing flexibility over how hydrocarbon production is allocated between domestic use and export markets. The utilities sector has seen major developments: water companies have been restructured and are being prepared for partial privatisation, and electricity companies are facing an expanding number of independent power producers (IPPs), especially in renewables.
Water scarcity may become a growing concern. Agriculture consumes the majority of Saudi Arabia’s water despite contributing relatively little to national GDP and increased desalination demands will put additional pressure on the power system. This challenge is further amplified by climate change, which exacerbates drought conditions and makes efficient water management increasingly critical. Balancing growing energy demand with an energy system that increasingly relies on intermittent renewable sources will be the growing challenge for Saudi Arabia’s energy sector through to 2030, but the country has both the governmental institutions and private enterprises to overcome it.
Structure
Policy for the energy and utilities sectors are primarily formulated by two ministries: the Ministry of Energy and the Ministry of Environment, Water and Agriculture (MEWA). The Ministry of Energy has been led by Abdulaziz bin Salman Al Saud since September 2019, and is responsible for regulation and policy-making in both the hydrocarbons sector and electricity generation, both from gas and renewables. It handles strategic planning in the energy sector, such as policy studies and data collection, and oversees the local content strategy to bring more of the energy value chain to Saudi Arabia. Through sub-departments, the Ministry of Energy implements procurement plans, manages energy tenders and runs two incubators targeting local energy start-ups. MEWA, for its part, is responsible for water policy, and has been led by Abdulrahman Abdulmohsen Al Fadley since 2015. By way of the Deputy Ministry for Water, MEWA develops policies to increase water and food security, in addition to the planning and regulation of wells and desalination.
MEWA is responsible for the execution of the National Water Strategy, a sub-plan of Vision 2030 that aims to increase water security in the Kingdom. According to MEWA and the Saudi Central Bank, agriculture consumes approximately 84% of the Kingdom’s water, despite contributing 2.6% to GDP. Around 90% of the water supplied to the agriculture sector is allocated from non-renewable resources, and MEWA argues that this consumption is primarily due to disparities in water sector policies, poor regulation and inefficient usage.
The National Water Strategy aims to ensure more sustainable water usage, not only in agriculture but also urban use, where MEWA estimates that 25% of produced water is lost. The elevated subsidies, costs of production and transmission expense of getting water from the coasts to the populated inland regions pose a significant challenge. These are all issues that the National Water Strategy seeks to address. Related is the Water National Transformation Plan, which has multiple targets: reducing network losses, increasing strategic reservoir capacity, boosting underground water resources and reusing treated wastewater more efficiently.
Oversight
The regulation of the energy and utilities sector is done by two entities: formerly the Water and Electricity Regulatory Authority (WERA), the authority was split into the Saudi Electricity Regulatory Authority (SERA) and the Saudi Water Authority (SWA) in May 2024. SERA regulates the electricity sector, meaning from generation and co-generation through transmission, distribution, and trading to offtakers and district cooling. Its board chairman is the minister of energy. In June 2024 the Saline Water Conversion Corporation (SWCC), the main producer of desalinated water, was transformed into the Saudi Water Authority and became the designated regulator for water services in the Kingdom. The SWCC, in turn, became the operational arm of the SWA.
Royal Decree No. 262/2020, more generally known as the Electricity Law, is the main law for the electricity sector. It makes the Ministry of Energy responsible for drafting laws and policies, overseeing relevant regulatory agencies and conducting feasibility studies. It also made WERA – now SERA – the primary regulator, in addition to the issuer of technical regulations and rules for licensing, permitting and tariffs in the sector. SERA is also responsible, through its tariff capacity, to estimate the level of subsidies required each year to cover the difference between market and subsidised electricity rates. Lastly, the law opened the electricity sector up to privatisation, in line with Vision 2030’s privatisation programme.
Royal Decree No. 2020/159 is the Water Law and gives similar roles to MEWA as the Ministry of Energy was assigned in the Electricity Law. It lays out the SWA’s responsibility to carry out MEWA policy, while also regulating how different classes of water are to be used and stored. It encourages the SWA to further support the participation of the private sector in water resources activities and projects. The Law of Gas Supplies and Pricing, of Royal Decree No. 36/2003, is central to the utilities and energy sector due to the large role of gas in the Kingdom’s electricity generation. It makes Aramco the sole entity responsible for supplying gas into the country’s gas network, regulates licensing for companies connected to local gas networks, and makes Aramco the sole seller and marketer of natural gas on the main gas network. It also lays out price categories for dry gas, ethane and natural gas liquids.
Energy Players
Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), is indirectly involved in the Kingdom’s energy industry. It is a 16% shareholder, both directly and through subsidiaries, of Aramco, the national oil company. Aramco is in turn the sole shareholder of the Saudi Aramco Power Company (SAPCO), which supplies water and electricity to Aramco installations and the grid. SAPCO is also often a shareholder in renewable energy projects. SAPCO has stakes in the Saudi Electricity Company and Marafiq, two major utilities companies. SABIC, one of the largest petrochemicals companies in the world and therefore a major player in the downstream industry, is 70% owned by Aramco.
ACWA Power, another major player, is the project developer for many of Saudi Arabia’s desalination, gas turbine and renewable energy plants, and is 44.2% owned by the PIF. In Saudi Arabia, ACWA Power has built assets supplying 19.5 GW of renewables capacity, 22.8 GW non-renewable capacity, and its 19 desalination plants produce 4.7m cu metres per day of desalinated water, almost half of the Kingdom’s demand. In addition, it operates in Central Asia, eight Middle Eastern markets and China.
Utilities Players
The structure of entities on the utilities side is similar. The PIF is a 74.3% shareholder in the Saudi Electricity Company (SEC), which is the country’s main producer, transmitter and distributor of electricity. The SEC has two notable subsidiaries. The Saudi Energy Production Company is the SEC’s electricity production arm, doing so through 38 power plants. National Grid SA operates the electricity grid through 95,562 km of transmission line and 1234 substations. The Saudi Power Procurement Company (SPPC) was a subsidiary of the SEC until August 2022, when it was acquired by the ministries of finance and energy, and is the main offtaker for electricity from IPPs in addition to negotiating power purchase agreements. All renewable energy projects, including those developed by ACWA Power and SAPCO, sell their electricity to the SPPC.
The water sector has a variety of players with important roles in the segment. The SWCC is the primary supplier of desalinated water, with a daily production capacity of 6.6m cu metres through 30 desalination plants, equal to approximately 70% of production. SWCC plants also have a 7.1 GW electricity production capacity, which is about 12% of the total generation in Saudi Arabia. The Water Transmission Company is a government-owned organisation and was established in September 2019. It is responsible for water transmission and storage, in addition to maintaining pipelines. The Saudi Water Partnership Company (SWPC) is owned and funded by the Ministry of Finance and is the main offtaker for water, including desalinated, treated and untreated wastewater, and was previously jointly owned by the SEC and SWCC. SWPC is responsible for the tendering process for independent water projects (IWPs), as well as operating strategic water storage locations. Lastly, the National Water Company, owned by the PIF, oversees water and wastewater treatment, in addition to sewage. The segmented nature of the water utilities is in part due to it being a target sector for privatisation, though a timeline has not been established for full privatisation.
One last notable organisation in the utilities sector that encompasses electricity, power and water is Marafiq. The company is responsible for utilities, including power, water and waste, in four Saudi industrial cities – Jubail, Yanbu, Ras Al Khair and Jazan. In Jazan and Jubail the company handles wastewater, drinking water and seawater cooling, and in Yanbu the organisation is also responsible for power generation and transmission. Marafiq in turn holds stakes, together with the SEC, in IPPs and IWPs, such as the Jubail Water and Power Company.
Fundamentals
Saudi Arabia has the second-largest proven hydrocarbons reserves in the world, with Aramco reporting 250bn barrels of oil equivalent (boe) in 2024, equivalent to about 17% of global reserves. The firm reported that its total hydrocarbons production in 2024 was 12.4m boe per day (boepd), a refining capacity of 4.1m bpd and a gas production of 10.8bn standard cu feet per day (scfd). In 2023 gas production was slightly lower, at 10.7bn scfd and in 2022 it was 10.6bn scfd, while refining capacity stayed steady at 4.1m bpd. Hydrocarbons production has dipped from 2022, when it was 13.6m boepd to 12.8m boepd in 2023. While not being a utility firm, Aramco has also consistently supplied 1.1-1.3 GW to the grid each year.
The country’s oil production hovered between 9m barrels per day (bpd) to 10.5m bpd between 2016 and 2025, reaching a high in 2016 with 10.5m bpd and a low in 2024 with 9m bpd. Gas production experienced a steady increase over the same period, from 340.9bn standard cu feet (scf) in 2016 to an estimated 354.3bn scf in 2024. On the consumption side, oil usage has remained broadly steady at around 3.8m-4m bpd between 2016 and 2024, reflecting rising power and transport demand even as oil’s share in electricity generation has declined.
Gas consumption has increased in line with production, as Saudi Arabia domestically consumes all its gas output, primarily to generate electricity; natural gas is responsible for almost two-thirds of Saudi electricity generation. However, Saudi Arabia has begun engaging with the liquefied natural gas (LNG) market through overseas investments, reflecting expectations that LNG will play a growing role in balancing renewable energy intermittency. Demand for gas is expected to rise in the MENA region by 3.5% in 2026 compared with the previous year. Accordingly, Saudi Arabia’s 2026 budget showed that the Kingdom aims to increase its natural gas production capacity by 7%.
Performance
The energy sector plays a central role in the Saudi economy and government budget. In 2022 oil and gas contributed SR1trn ($266.7bn) to the Saudi economy, equalling 39% of GDP, more than the government, retail, construction and manufacturing sectors combined. At constant prices the oil and gas industry contributed 40.8% to GDP, and the sector accounts for approximately 85% of budget revenue and 90% of export earnings. Recent price trends underline the sector’s exposure to global market conditions: Aramco’s average realised crude oil price fell from $100.2 per barrel in 2022 to $83.6 in 2023 and $80.2 in 2024.
Saudi Arabia is the largest oil exporter in the world, and in 2023 the Kingdom exported $227bn in oil and mineral products, of which crude petroleum made up $181bn, refined petroleum $38.9bn, and petroleum gas was $4.5bn. China is by far the country’s largest market, buying $53.8bn in crude petroleum that year, followed by Japan at $33.2bn, India at $23.6bn and the US at $10.8bn. For refined petroleum, the US was the largest market at $3.3bn, followed by France with $3.2bn, Oman at $3bn and Egypt with $2.15bn. Saudi Arabia imported refined petroleum worth $12.3bn in 2023, primarily from the UAE ($3.5bn), Egypt ($2.7bn) and Russia ($2.2bn).
Aramco had SR398bn ($106.1bn) in net income in 2024 and paid SR466bn ($124.2bn) in dividends to its shareholders, primarily the PIF and the government. In 2023 income was slightly higher at SR455bn ($121.3bn), though dividends were lower and SR367bn ($97.8bn), a trend that continued in 2022, with a SR604bn ($161bn) net income and SR281bn ($74.9bn) in dividends. ACWA Power’s profit, in contrast, has risen, from SR1.8bn ($471.9m) in 2023 to SR2bn ($530.5m) in 2024. Its revenue also improved slightly from SR6bn ($1.6bn) to SR6.3bn ($1.7bn). Dividends, however, have gone down, from SR560m ($149.3m) in 2021 and SR606m ($161.6m) in 2022 to SR328m ($87.4m) in 2023. No dividends were proposed for 2024.
For the SEC, revenue rose between 2023 and 2024, from SR75.3bn ($20.1bn) to SR88.6bn ($23.6bn), though operating profit dropped by 17% from SR14.2bn ($3.8bn) to SR11.8bn ($3.2bn), and net profit contracted by 33%, from SR10.2bn ($2.7bn) to SR6.9bn ($1.8bn). In line with revenue, the SEC’s total assets have risen from SR485.4bn ($129.4bn) in 2020 to SR547bn ($145.9bn) in 2024. Broken down by activity, electric power generation was 24% of assets and 19% of expenses in 2024, electricity transmission was 42% of assets and 25% of expenses, while distribution was 32% of fixed assets but 55% of operating expenses. Data from National Grid SA indicates that the transmission network is highly profitable: revenue has risen from SR13.2bn ($3.5bn) in 2019 to SR25.3bn ($6.8bn) in 2023, and profit has almost tripled from SR2.6bn ($690m) to SR6.7bn ($1.8bn).
In the downstream sector, SABIC’s trend is slightly negative. Assets have seen a steady decline from a high of SR340bn ($90.6bn) in 2014 to SR278bn ($74.1bn) in 2024, while revenue has gone from a high of SR190bn ($50.7bn) in 2011 to SR140bn ($37.3bn) in 2024. However, part of the decline in assets was the organisation’s sale of the Saudi Iron and Steel Company to the PIF in 2024.
Electricity
According to SERA’s statistical report, Saudi Arabia’s electricity-generating capacity stood at 92,527 MW as of December 2024, of which 88,379 was from conventional resources and 4148 from renewable resources. The SEC is responsible for 60.8% of that production, with 56,228 MW in capacity, followed by the SWA, with 7397 MW. The majority of the remaining organisations are individual plants, such as the Jubail Water and Power Company, Jubail Energy Company, and Shuqaiq Water and Electricity Company. Aramco operates nine plants with a combined capacity of 2406 MW. The renewable energy plants are all operated by IPPs. IPPs under the purview of Marafiq have 4800 MW of electricity and 1.3m cu metres per day water desalination capacity.
The residential sector is the largest consumer of electricity, consuming 47.4% in 2024, followed by industry at 18.6%, the commercial sector at 17.3% and other sectors at 16.7%. The per capita consumption rate in 2024 was 9642 KWh per person, but if industry consumers are excluded it drops to 4567 KWh per person. This number has risen slightly since 2020, when it was 4363 KWh per person. In 2024 SERA received SR508.5m ($135.6m) from licence fees. SERA sets tariff ranges based on sector, with residential consumers paying SR0.18 ($0.05) per KWh for the first 6000 KWh and then SR0.30 ($0.08) for any higher usage. Commercial uses pay SR0.22 ($0.06) until 6000 KWh, then SR0.32 ($0.09); governmental consumers pay a flat rate of SR0.32 ($0.09) per KWh no matter the usage, while industrial consumers pay a flat rate of SR0.20 ($0.05)per KWh; Cloud computing providers pay a flat rate of SR0.18 ($0.05).
Water
According to the 2023 MEWA statistical report, of the 3.6bn cu metres of water distributed to urban areas, 2.5bn cu metres, or 70%, came from SWCC-operated desalination plants. Another 1bn cu metres, or 28.8%, came from groundwater abstraction. According to the SWCC 2022 annual report, the company operated 30 desalination plants in six cities: Khobar, Jubail, Ras Al Khair, Yanbu, Jeddah, Shuaiba and Shuqaiq, with a daily capacity of 6.6m cu metres. Agriculture is the biggest consumer of water, consuming 12.3bn cu metres of water in 2023, compared to 2.3bn cu metres in the industry sector and 1.2bn cu metres in the residential segment.
According to the SWPC, the Saudi desalination system is divided into four supply groups: East, South, West and North, of which the latter does not have local production capacity due to the small population size in the area. The Eastern Supply Group covers the Riyadh, Qassim, and Eastern provinces and about half the country’s population. This group has 10 desalination plants producing a total of 4.3m cu metres per day. To contend with the growing population and shortage of in-region production, the SWPC has plans for an additional 4m cu metres per day to be built by 2030, with much of the additional capacity to be added in the Ras Al Khair complex. The Western Supply Group has about a third of Saudi’s population and covers the Makkah, Tabuk, Baha and Al Madinah provinces, and has 11 desalination plants with a total combined capacity of 3.6m cu metres per day. In this area, another 3.4m cu metres per day in capacity is planned to be added by 2030. The Southern Supply Group has six desalination plants with a combined capacity of 1.2m cu metres per day, with an additional 850,000 cu metres per day planned to be operational by 2030.
Sustainability
Saudi Arabia has set the most ambitious renewable energy goals in the GCC, targeting 130 GW of capacity to cover 50% of electricity generation by 2030. The National Renewable Energy Programme is the renewable energy plan, carried out by the Renewable Energy Project Development Office, under the Ministry of Energy. These renewable energy and carbon capture initiatives aim combat climate change by managing domestic emissions while preparing for a low-carbon future.
The government intends to tender 20 GW or more annually through to 2030 to achieve this goal, of which 30% is earmarked for competitive tenders, while the remaining 70% is awarded by the PIF. ACWA Power is the main beneficiary of this policy, as it is guaranteed projects through the PIF track, which it carries out with SAPCO and Badeel, another PIF owned entity, while being able to submit proposals for competitively tendered 30%. In July 2025 the SPPC signed power purchase agreements (PPAs) for a 700-MW wind project and seven other renewable energy projects totalling 15 GW, and in October of that year it signed PPAs for 4.5 GW of solar and wind, for an annual total of 20.2 GW. To help facilitate this, the PIF published its Green Finance Framework in February 2022, allowing it to issue green bonds and sukuk (Islamic bonds) to fund projects. As of 2024 PIF had invested $386.5m in renewable energy projects through green debt, with green buildings and sustainable water management the main spending priorities, receiving almost $1.2bn each.
Part of the push into renewables is building local capacity. The PIF-owned Renewable Energy Localisation Company (RELC) partners with international manufacturers to create joint venture projects in Saudi Arabia to bring more of the renewables value chain in-country. In July 2024 RELC signed deals with two Chinese solar photovoltaic manufacturers to bring 30 GW of manufacturing capacity to Saudi Arabia through two joint ventures. The same month RELC signed an agreement with Envision Energy and Vision Industries to manufacture wind turbine components. In October 2025 the Al Yamamah Wind Energy Systems Factory started operations, the first producer of towers for windmills in Saudi Arabia.
Additionally, Saudi Arabia is investing in CCUS. Aramco, the Ministry of Energy, Germany’s Linde and US-headquartered Schlumberger announced plans to construct a CCUS centre in Jubail, with a capacity of 9m tonnes of CO₂ per year, slated to begin operations in between 2027 and 2028. The facility is intended to capture CO₂ from Aramco gas plants and downstream industries. By 2035 the country plans to store 44m tonnes of CO₂ annually as the Jubail-based project is expanded.
Outlook
Saudi Arabia is one of the fastest-growing markets for renewable energy in the world and is also at the forefront of the impacts of climate change. The lessons the government and Saudi enterprises learn from large-scale adoption of renewables, increasing water efficiency and tackling the challenges of extreme heat will be vital throughout the region and the world in the medium and long term. As a major global player, Saudi Arabia is playing an active role in ensuring a balanced and realistic global energy landscape. These efforts will ensure that the Kingdom remains a key player across the evolving international energy landscape, while continuously innovating to ensure sustainable environmental and economic value of its hydrocarbon resources.
Low oil prices and rising debt could put pressure on the budget, though the utilities sector is now prepared for partial privatisation, which will bring efficiency improvements. If the renewable energy buildout continues at the pace it set in 2024, a majority of Saudi electricity could be sourced from solar energy by the mid 2030s, giving the country a competitive advantage for the industries of the future, such as data centres and hydrogen. Players across the sector are working to diversify the economy while bolstering and extending the development of hydrocarbons for long-term sustainable applications. A focus on energy efficiency will be key to managing emissions, controlling system costs and maintaining policy flexibility as the energy transition accelerates.
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