Goldman Sachs expects Saudi Arabia to invest $235 billion in clean energy by 2030
This segment is driven by renewable energy which in turn is propelled by solar energy
Out of an expected $1 trillion to be invested in 6 sectors by 2030, the kingdom is likely to divert around 73% to non-oil sectors
As Saudi Arabia pursues an ‘economic diversification’ away from oil, renewable energy driven clean energy sector is set to benefit with the kingdom expected to allocate $235 billion funding for it till 2030. This amount is an increase from $148 billion forecast earlier by Goldman Sachs.
In a recent report, the global investment banking group said that this $235 billion is part of $1 trillion that the kingdom is expected to invest across 6 strategic sectors by the end of this decade.
The reason for this increase in clean energy funding forecast is due to Saudi Arabia planning a significant increase in renewable energy in its energy mix. By 2030, the country targets to install between 100 GW to 130 GW of solar PV capacity alone, which is an increase from its previous target of 58.7 GW.
As of June 2024, Goldman analysts believe the country had around 11 GW of solar PV capacity in execution pipeline, apart from 16.7 GW in solar/wind capacity in planning stages.
Saudi Arabia is also encouraging global investment in the solar PV manufacturing domain to fund its targets (see 20 GW Solar Ingot, Wafer Manufacturing Fab In Saudi Arabia).
The other beneficiary sectors of the kingdom’s ‘CapEx Super-Cycle’ include metals and minerals, transport and logistics, and digitalization.
Oil industry, on the other hand, is likely to secure a smaller portion of the lot as the government diverts around 73% of the investment funds to non-oil sectors. In fact, the Saudi Energy Ministry has directed to bring down CapEx in the oil sector by $40 billion between 2024 and 2028.
Analysts also believe that the government may find it challenging to raise money to fund this cycle as its oil production has come down and oil prices are also not as high. Nonetheless, Goldman analysts believe this CapEx Super-Cycle will likely remain an important theme in Saudi Arabia in the foreseeable future.