Energy shift fueled by economic reforms and sustainability goals marks a new chapter for Saudi Arabia’s energy landscape.
In recent years, Saudi Arabia has seen a quiet revolution in its energy sector, one that doesn’t revolve around oil. With the kingdom cutting back on energy subsidies, big businesses are increasingly turning to solar power, a move driven by both cost-saving measures and long-term sustainability targets.
The shift towards renewables is gaining momentum in sectors as diverse as logistics, healthcare, and retail, with companies installing rooftop solar panels to curb energy costs. This green initiative aligns with the government’s vision of reaching net-zero emissions by 2060 and sourcing 50% of the nation’s power from renewable sources by 2030.
The Subsidy Phase-Out: A Turning Point
In 2018, the Saudi government began phasing out energy subsidies, a move that had a profound impact on the kingdom’s energy landscape. The elimination of these subsidies, part of broader economic reforms, pushed businesses to find new ways to manage costs.
For companies that have long relied on subsidized electricity, the sharp rise in energy costs was a wake-up call. And that’s where solar power came in. Once seen as an expensive alternative, the plummeting cost of photovoltaic (PV) panels has made solar energy more accessible for companies, despite the upfront capital investment.
Take Fakeeh Care Group, for example. Headquartered in Jeddah, the healthcare company installed solar panels on the roof of its multistory car park. The investment, although costly, is already showing results. In 2024, the company saved over SR170,000 ($45,000) on electricity bills.
“We invested in solar and actually it’s paying back,” said Mazen Fakeeh, president of Fakeeh Care Group. “It’s a long-term investment, so to see the full return on investment, you need two or three decades, actually. But we’re encouraged by the initial results.”
Solar Adoption Grows Across Key Sectors
As energy prices rise, businesses in Saudi Arabia are turning to solar not only to reduce costs but to align with national sustainability goals. The government’s push for renewable energy has prompted several major companies, from retail giants to logistics providers, to follow suit.
The trend is most evident in the commercial sector. Large buildings, office complexes, and manufacturing plants are increasingly being equipped with rooftop solar systems. In fact, the retail and logistics sectors, traditionally energy-hungry, have been some of the fastest adopters of solar technology. The decreasing cost of solar panels, alongside increased government support, is expected to fuel this growth for years to come.
In 2020, the Saudi government launched the National Renewable Energy Program, which aims to install 27.3 gigawatts of renewable energy by 2030. The program’s success has accelerated the shift towards solar energy in both the public and private sectors.
Financial Incentives and Government Support
The Saudi government’s commitment to renewable energy is not just about meeting sustainability targets. It is also about boosting economic diversification and job creation. Several financial incentives have been introduced to support solar adoption, making it more financially viable for businesses.
For instance, companies investing in renewable energy projects are eligible for tax breaks and grants. In addition, the government has introduced several initiatives to make the process of installing solar systems more straightforward and affordable. These include low-interest financing options and technical support for businesses adopting green technologies.
Saudi Arabia’s focus on renewable energy isn’t limited to solar. Wind power and other renewable sources are also part of the mix, though solar energy is expected to dominate in the coming decades. With the government aiming to have 50% of the country’s energy come from renewables by 2030, solar power is becoming a central player in the kingdom’s energy strategy.
Looking Ahead: The Long-Term Benefits
While the financial benefits of solar power may not be immediately apparent, the long-term gains are becoming clearer. Businesses that have already made the leap to solar are starting to see tangible returns on their investment, and the numbers are expected to grow over time.
The initial investment in solar panels can be significant, but many companies view this as a necessary step toward securing a more sustainable future. The long-term environmental benefits, such as reducing carbon footprints, are also a major incentive.
For companies like Fakeeh Care Group, the transition to solar energy is more than just a financial decision—it’s about reducing their environmental impact. With Saudi Arabia’s rapid economic growth, businesses are increasingly feeling the pressure to meet sustainability standards, both locally and globally.
What’s Next for Saudi Arabia’s Solar Future?
The momentum towards solar energy is building, but the shift won’t be without challenges. For one, the upfront costs of installing solar systems are still high, which could deter some smaller businesses from making the move. However, as technology continues to improve and the cost of panels decreases, the gap is expected to narrow.
In the coming years, expect to see even more businesses embracing solar as a primary energy source. With the Saudi government’s continued support and global pressure to reduce carbon emissions, solar power is poised to play a crucial role in the kingdom’s energy transformation.
