Fraunhofer Institute for Systems and Innovation Research ISI
Fraunhofer Institute for Systems and Innovation Research ISI

Project

Assessment of the Local Manufacturing Potential for Renewable and Conventional Power Supply and Energy Efficiency Technologies in Saudi Arabia (Manufact Saudi)

The World Bank and the Saudi Arabian Ministry of Water and Electricity (MOWE) commissioned the Fraunhofer Institute for Systems and Innovation Research ISI, the Fraunhofer Institute for Solar Energy Systems ISE and Ernst & Young (EY) to produce a detailed assessment of the local manufacturing potentials for selected conventional and renewable power generation technologies, as well as transmission and distribution components and energy efficiency material and instruments. This assessment is in-line with the 2040 vision for the electricity sector, as detailed by the Saudi Power Sector Strategy (Ministry of Water and Electricity, World Bank, May 2015). Through this strategy, the government and power sector stakeholders seek to provide incentives for local manufacturing of equipment and spare parts, thereby using the power demand as a catalyst for economic and social development.

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The study evaluated the private sector´s technical manufacturing potentials for each of the following technologies and their components:

  • Conventional power generation equipment including steam plants, plus open and combined cycle gas turbines.
  • Key system components of solar energy, specifically concentrated solar power (CSP),  photovoltaic (PV) systems and solar water heaters
  • Major transmission and distribution grid components (i.e. cables, towers, and converter stations) and select components of distribution networks.
  • Thermal insulation components for buildings
  • Energy efficient windows (insulated glazing, reflective coatings, heat-absorbing tints)
  • Air conditioners

The analysis of the value chains of typical projects represents the analytical framework for each considered technology. The value chain defines a conceptual framework, enabling a categorization of the various company types throughout the value chain and allowing the current and potential contribution of national manufacturers to energy projects to be determined. Throughout the value chain analysis, emphasis is set on investigating the components of each technology. In addition to the value chain approach, a summary of the global industry leaders and of their main success factors was performed for the main components. This analysis is necessary to evaluate not only the Saudi Arabian manufacturing capabilities in terms of technological potential and feasibility, but also to consider global market trends and technological standards, which may pose barriers for Saudi companies interested in entering the market. Data was collected throughout desk-research, stakeholder interviews, as well as an online survey containing quantitative and qualitative questions (distributed among the vendors of the Saudi Electrical Company, among others).

There are not only a number of components that could be manufactured locally, but also a high number of companies showing interest in these new industrial trends. The results show a considerable potential for local value creation via the implementation of the various technologies. In particular, the manufacturing of BOP-components as well as all tasks requiring local competences such as the fields of civil works, electrical works, mounting structures, power plant erections, services, etc. are identified as low hanging fruits. The final report contains detailed results for the manufacturing potential for components of every technology, as well as the description of the technology´s international and local market, the mapping of main actors according to their production and sales location and a general SWOT analysis for an expansion of the local manufacturing capabilities.