The Saudi Power Procurement Company has finalized four 15-year storage service agreements worth more than $1.16 billion, marking the first phase of a battery storage build-out that aims to reach 48 GWh by 2030. The deals, signed with consortiums led by ACWA Power and Engie, cover 2 GW of capacity with four-hour duration across sites in the Makkah, Hail, and Qassim regions.
Tristan Rayner, writing for ESS News, reported that the four projects — Al Muwyah, Haden, Al Kahafa, and Al Khushaybi — will each be rated at 500 MW / 2,000 MWh and delivered under a build-own-operate model. Three went to a Saudi Energy, ACWA Power, and Al Sharif Contracting consortium. The fourth, in Qassim, went to Engie and Haji Abdullah Alireza & Co.
Vision 2030 drives storage ambition
Saudi Arabia's renewable energy targets have been public for years, but the pace of procurement is accelerating. The Kingdom's Vision 2030 framework calls for 48 GWh of battery energy storage capacity by the end of the decade. This first 8 GWh tranche represents roughly one-sixth of that goal, awarded less than two years after the initial tender launched in November 2024.
The SPPC prequalified 33 companies for the first round in December 2024. Under the tender structure, winning consortiums hold 100 percent equity in special purpose vehicles that develop and operate the assets, backed by 15-year Storage Services Agreements with the SPPC. The Ministry of Energy supervises the projects.
A second tender group, launched in April 2026, targets 3 GW / 12 GWh across six projects. In July, the SPPC announced a prequalification list of 27 companies for that round, including Masdar, EDF, TotalEnergies, and China Longyuan Power Group. If both groups are fully awarded, Saudi Arabia would have 20 GWh under contract — nearly halfway to the 2030 target.
According to the SPPC's press release, the four sites aim to support the integration of utility-scale renewables into the Kingdom's electricity system, enhancing operational flexibility and supporting security of supply. The accompanying statement noted this will also bolster Saudi Arabia's global leadership in the energy sector.
Lithium-ion dominates but alternatives advance
The Saudi projects use lithium-ion battery technology, the default choice for four-hour grid storage worldwide. But the same week these awards were announced, China moved forward on a different storage chemistry. An EPC tender for a 660 MW / 3.96 GWh advanced compressed air energy storage project in Henan province entered the bidding stage, with a September 22 deadline.
The Jiyuan project will use an advanced adiabatic CAES configuration, capturing compression heat in pressurized water storage and reusing it during expansion. Unlike traditional CAES, which burns natural gas to reheat expanding air, the adiabatic approach eliminates fossil fuel consumption. The project targets six-hour duration — longer than the Saudi BESS — with a planned investment of approximately $670 million.
China has accelerated CAES deployment in recent years as it seeks alternatives to conventional batteries for multi-hour storage. Representative projects include the 100 MW Zhangjiakou demonstration facility in Hebei, the 300 MW / 1.8 GWh Feicheng project in Shandong, and several 300 MW to 660 MW projects under development in Henan.
Vincent Shaw, reporting for ESS News, noted that underground storage is a key factor in CAES economics. Salt caverns provide naturally sealed and cost-effective storage space but are geographically limited. Artificial rock caverns, such as the system planned in Jiyuan, can expand deployment possibilities in regions without suitable salt formations, although they require additional excavation and sealing work.
Grid storage economics reshape procurement
The Saudi awards illustrate how storage procurement is shifting from pilot projects to utility-scale programs. Four-hour lithium-ion systems have become the de facto standard for peak-shifting and renewable integration, but the economics favor longer durations as solar penetration increases.
The Saudi tenders use a capacity-payment model through Storage Services Agreements, providing revenue certainty that enables project finance. This structure — similar to power purchase agreements for generation — has become the template for large-scale storage procurement across the Middle East and North Africa.
For ACWA Power, the awards extend a pipeline that already includes major renewable and desalination projects across the region. Engie's win marks its first major Saudi storage project, adding to a global storage portfolio that spans Europe, the Americas, and Asia-Pacific.
Battery supply chain implications
The scale of Saudi Arabia's storage program has direct implications for battery supply chains. Eight gigawatt-hours of lithium-ion cells represents a substantial slice of annual global production capacity for stationary storage. Major cell manufacturers — CATL, BYD, Samsung SDI, LG Energy Solution — will likely compete to supply the projects, either directly or through system integrators.
Saudi Arabia's Public Investment Fund has already signaled interest in domestic battery manufacturing. A PIF-backed gigafactory could supply future tender rounds, reducing import dependence and creating a local value chain from raw materials to installed systems. The Kingdom's lithium resources, while modest compared to Australia or Chile, are being assessed for development.
Domestic industry gets a stake
The consortium structure ensures Saudi companies participate in equity and construction. Al Sharif Contracting and Haji Abdullah Alireza & Co. take equity positions alongside international developers. This mirrors the localization requirements seen in the Kingdom's renewable energy program, where local content targets have driven joint ventures and technology transfer.
Saudi Energy, a subsidiary of the Public Investment Fund, holds equity in three of the four projects. The PIF's involvement signals that storage is now treated as a strategic infrastructure asset class, not just a renewable energy enabler.
What comes next
The second tender group's prequalification list suggests strong international interest. Masdar, EDF, and TotalEnergies bring global storage experience. China Longyuan Power Group's presence highlights Chinese developers' growing role in Middle East energy infrastructure.
Saudi Arabia's 48 GWh target by 2030 would require roughly 10 GW of four-hour storage — equivalent to about five more tranches the size of this first award. At the current pace, the Kingdom could reach that goal ahead of schedule.
The broader lesson: grid-scale storage has moved from demonstration to procurement. Countries with high renewable penetration are now buying storage by the gigawatt-hour, using long-term contracts that make these assets financeable. The technology mix — lithium-ion for four-hour, CAES and flow batteries for longer duration — will evolve, but the procurement model is established.
Sources: ESS News — Saudi Arabia awards $1.16 billion for 8 GWh of battery storage, ESS News — China launches EPC tender for 660 MW/3.96 GWh CAES project
Internal links: Battery Tech, EV
Keywords: Saudi Arabia, battery storage, BESS, ACWA Power, Engie, Vision 2030, grid-scale storage, compressed air energy storage, renewable integration, Saudi Power Procurement Company