Saudi Arabia to raise clean energy funding, cut oil capex

Saudi Arabia is ramping up its efforts to expand green energy, with a shift in investment focus expected to favor clean energy over oil industry funding, according to a recent report by Goldman Sachs Research.

The Kingdom is anticipated to allocate USD 1 trillion (EUR 908bn) by 2030 across six key sectors, with the proportion of non-oil investments projected to grow to 73%, up from an earlier estimate of 66%, Goldman Sachs stated on Thursday.

Funding for clean energy is set to rise to USD 235 billion, a significant increase from the previous estimate of USD 148 billion, largely driven by Saudi Arabia’s decision to more than double its 2030 renewable capacity target. Capital expenditures for renewable energy are estimated at USD 190 billion, while investments in clean hydrogen are expected to reach USD 36 billion.

The Kingdom has made notable strides in expanding renewables. By June 2024, approximately 11 GW of solar photovoltaic capacity was in the execution pipeline, alongside 16.7 GW of solar and wind capacity in the planning phase, as reported by Goldman Sachs Research. The Saudi government has also raised its 2030 solar energy target from 58.7 GW to between 100 and 130 GW.

Moreover, Saudi Arabia is investing in sectors such as metals and minerals, transport and logistics, and digitalization to support its efforts to diversify its economy away from oil dependency.

Conversely, capital expenditures in the oil sector are expected to decrease by USD 40 billion between 2024 and 2028. However, natural gas remains a crucial part of Saudi Arabia’s strategy, as it is expected to account for 50% of the power mix in 2030, with the remainder coming from renewables. The forecast for Saudi Arabia’s potential investments in “upstream” oil and gas has been reduced to a range of USD 190 billion-220 billion, down from the previous projection of USD 230 billion-260 billion.