The long read: Made in MENA

From pv magazine 01/2021

In recent years, the Kingdom of Saudi Arabia has made several commitments to renewable energy, which have so far been accompanied by relatively little action. A current target of 58 GW renewables capacity by 2030 leaves a mountain to climb from the roughly 400 MW currently installed.

Since 2019, however, a series of large-scale PV tenders has brought some of the world’s lowest PV electricity prices. New rules encouraging the development of rooftop PV published last year and other developments offer signs that KSA will no longer drag its feet when it comes to renewable energy.

And the tenders launched by KSA’s Renewable Energy Project Development Office also included a requirement for 17% of components used in a project to be produced inside Saudi Arabia, with local content requirements supposed to go even higher for future tenders. This led to plenty of talk about establishing a manufacturing industry in KSA, with leading Chinese PV players discussing factory plans, as well as Saudi energy players mulling a move into module making.

So far, plans to increase the local content requirement, and further support from the government in establishing manufacturing, have not materialized. “One of the things they want to do is more manufacturing and local content across renewable energy sectors, but they are just not really seeing anything significant,” says Antoine Vagneur-Jones, an analyst in BloombergNEF’s Energy Transitions team. “At this stage it’s just balance of systems components that they can do.”

Saudi Arabia-based Desert Technologies (DT), however, is pushing ahead with PV manufacturing in KSA. It plans to bring 1 GW of cell and module capacity online by the end of 2023, and to extend this to 3 GW by 2026, depending on market growth in KSA and elsewhere.

“We want to invest and grow capacity in cutting edge PV technology,” said Desert Technologies CTO Nabih Cherradi. “Rather than targeting the largest market share, we want to be sure we have the best fit technology that meets the requirements of the region.” For Cherradi, this means moving toward heterojunction (HJT) technology. Producing HJT is key to the company’s strategy to offer a product that stands out in the market, and to stay ahead of larger competitors in Asia.

Scaling up

Desert Technologies currently operates a 110 MW production line at its facility in Jeddah, including R&D in collaboration with research institutes. “This pilot line has laid strong foundations for growth and provides for training and developing a new supply chain,” said Cherradi. “Now we have the knowhow to increase production capacity” Though an earlier plan to reach 500 MW by the end of 2020 was pushed back by the Covid-19 pandemic, Cherradi still sees 1 GW by 2023 as an achievable target.

Some challenges remain and Cherradi is looking to the Saudi government to take action on its stated goal of developing and supporting solar manufacturing by raising local content requirements for renewable energy projects. “Current local content requirements don’t incentivize local investors,” he explained. “If they want to consider real development of the industry, I expect them to pay much more attention to the local product, rather than just considering a simple percentage.” Establishing cell and module manufacturing also requires a strong upstream industry. “By no means can we keep working at GW capacity without importing raw materials,” Cherradi continued. “We have to develop local supply chains at the same time, and this is among the things we are working on, trying to generate the interest with local suppliers.”

One area where he is positive about government actions is on the mobility of manpower, where expected changes to regulations for international employees should make things much easier to attract and retain talent and enable the development of local expertise.

Target markets

Although DT is banking on having plenty of local demand to serve, and planning to produce premium modules designed for Saudi Arabia’s harsh desert conditions, it is also setting its sights further afield. Cherradi says he expects to devote around 30% of DT’s capacity to the domestic market, with a further 10-15% earmarked for local MENA solar PV markets. “And the remainder for global markets,” he said, noting that the development of export industries is a big opportunity for the Kingdom and also on the government’s list of priorities.

“We have a huge opportunity for exports,” said Cherradi. “Maybe not in certain competitive markets, but there are a lot of others to explore and develop. These add up, and they are huge for us.” He cites off/on-grid solar in many African markets as an example, where modules designed for harsh conditions will surely be well suited.

Given KSA’s track record of big announcements when it comes to deploying renewables, it remains to be seen how these ambitions will translate into building local industry. Desert Technologies has set itself ambitious goals, but is optimistic that it can succeed in scaling cell and module manufacturing in KSA. “We are ready for our expansion and challenges ahead to support and meet Vision 2030 ambitions,” said Cherradi. “The future is bright for the solar sector, however, more clear engagement from the government is needed.”