The Middle East BESS market- where I was wrong

I was wrong. Twice.

Last week I asked whether the Middle East BESS market was heating up or just full of hot air. My conclusion? Mostly sizzle, little steak.

I had three reasons:

1. Vanity projects (NEOM, Red Sea, hydrogen) won’t create real demand.

2. With renewables at ~3% of KSA’s mix, there’s no need for storage.

3. Grid flexibility? Probably not happening.

Well… after digging deeper and hearing from folks who know what’s actually happening on the ground—I’ve changed my mind on two out of three.

Turns out, peak shaving and oil displacement are the real BESS drivers in Saudi Arabia. Peak load hit 60 GW in 2018 and could reach 100 GW by 2030. Right now, that peak is handled by burning oil. Batteries can cut into that—and fast.

The 500 MW Bisha project isn’t about solar integration. It’s about cutting oil use during peak hours, plus black start and frequency regulation. And there’s up to 8 GW more in the pipeline aimed at the same thing.

And here’s the kicker—these projects are being built by private investors, with 15-year off-take contracts from SPPC. Long-term off-takes = risk mitigation = investor confidence. It’s a textbook financing structure. Grid flexibility? Check.

So:

✅ I was wrong about the need for grid flexibility—there’s a mechanism in place.

✅ I was wrong about there being no real decarbonization driver—there is, and it’s oil.

⛔ I still think NEOM and Red Sea projects are not the real market movers despite signed contracts (prove me wrong, but that'll have to wait a bit).

Bottom line: batteries in Saudi Arabia aren’t about renewables (yet). They’re about cutting oil from the peak—and that’s a solid business case.

🤝Thanks to Marek Kubik Dr.-Ing. Ahmed Elbaz Mike Kvetnis Julian Renpenning, for nudging me to look again. 

🗺️ Also, thanks to Marek Kubik for the map of KSA BESS sites. 

Keep it coming, and see you in Dubai next week!