Desalination attracts private sector in Saudi Arabia

Saudi Arabia’s drive to sharply expand its water desalination capacity is drawing growing interest from private operators and financiers, as the kingdom targets an increase in capacity of more than 40 percent by 2030.

Reuters | A worker stands at a Saudi desalination plant. The country is trying to increase its capacity by more than 40 percent

• Target of 40% capacity increase

• US company makes investment

• Sustainability is a concern

The push is opening the door to billions of dollars in new contracts, with local and international water management groups moving to deepen their footprint in a sector central to the country’s long-term growth and water security.

Va Tech Wabag, an Indian water management company, became one of the latest after winning a contract last month from the Saudi Water Authority to build a desalination plant for brackish water – a mix of salt and fresh water – in the northern province of Aljouf with a daily capacity of 50,000 cubic metres.

Saudi Arabia, the world’s largest country without a river, is also the largest market for water desalination, the process of extracting salt from seawater or brackish water to create fresh water.

It produces 11.5 million cubic metres of desalinated water daily, nearly a quarter of the world’s total. The Ministry of Environment, Water and Agriculture said it wants to increase this to more than 16 million cubic metres within the next five years, creating opportunities for private companies but also challenging its sustainability goals given the sector’s heavy energy demands and wider environmental impact.

“There’s a huge pipeline that they want to achieve by 2030,” said Turki Alshehri, regional vice president for Engie, a French engineering company that is the second largest fresh water producer in the GCC.

The bulk of Saudi Arabia’s desalination projects are developed through public-private partnerships, giving companies such as Engie the opportunity to build utility-scale plants on long-term government contracts.

Saudi Arabia, along with neighbouring UAE, is among Engie’s 10 largest growth markets, said Alshehri. “We do see a lot of potential in Saudi Arabia. One of the reasons is the size of the projects. When they roll out projects they’re in gigawatt scales. They’re hundreds of thousands of cubic metres per day. That does not exist anywhere else in the world.”

US makes investment

US private equity company KKR chose to make its first Saudi investment in desalination. Late last month, it announced a private credit deal with Acwa Power, Saudi Arabia’s largest desalination provider, to finance the Rabigh 3 desalination plant that supplies the city of Mecca.

On Monday Acwa also announced that it reached a financial close on a separate desalination plant, Ras Mohaisen, with project financing from a banking consortium that includes Banque Saudi Fransi, Riyad Bank, Saudi Investment Bank and Standard Chartered Bank.

Alshehri said desalination projects are relatively easy to sell to investors. “They’re proven, they are bankable, and, especially with desalination, you’re obtaining guarantees from the government.”

SPA | Acwa Power’s Shuaibah 3 desalination plant

Saudi Arabia’s expansion ambitions open opportunities beyond the desalination plants. The country also requires pipelines and pumping stations with spare capacity to carry fresh water to its growing cities such as Riyadh, where the government expects the population to grow from 7 million to 9.6 million by 2030.

The capital lies more than 600 metres above sea level around 400km from the nearest coastline.

“It’s a huge distance,” said Arnaud Delamare, a partner at consultancy Oliver Wyman who works with Gulf governments on water issues.

He said the country needs an overhaul in its infrastructure to keep the water flowing. “These are massive pipelines. We’re not talking about the small pipelines you would typically find in a city. We’re talking about high pressure, big pumps.”

Transmitting desalinated water over long distances also adds to what is already an energy-intensive operation. Despite its success in attracting private sector interest, the kingdom has been less successful in ensuring the sustainability of its desalination projects.

As of 2020, desalination accounted for 6 percent of the nation’s energy mix, a proportion set to grow with the increase in desalination capacity. And while Saudi Arabia hopes to obtain 50 percent of its electricity from renewable sources by 2030, the grid presently runs almost entirely on hydrocarbons.

“There’s already an effort to move towards renewables,” said Delamare. “But it will take time.”

By Edmund Bower | January 7, 2026, 12:34 PM