Saudis take new interest in renewable energy
Kingdom is now ready to roll out robust plans to develop nascent solar and wind power capabilities that could have far-reaching effects.
A 2012 file picture shows a Saudi man walking past solar panels at the King Abdulaziz City for Science and Technology, Al-Oyeynah Research Station. (Reuters)
2017/02/05 Issue: 92 Page: 21
The Arab Weekly
Washington - Plans to develop renewable energy sources in Saudi Arabia are gaining new life as part of Saudi Vision 2030, the massive economic revamping brainchild of Saudi Deputy Crown Prince Mohammed bin Salman bin Abdulaziz.
Fledgling efforts during former King Abdullah bin Abdulaziz Al Saud’s era began six years before he was installed in office. With King Fahd’s incapacitating illness, Crown Prince Abdullah’s role to introduce renewables, such as solar and wind power, were moving at a snail’s pace. They were effectively put on hold in the first two years of King Salman bin Abdulaziz Al Saud’s reign as the kingdom prioritised making fundamental changes to how the Saudi government works and shifting its oil-centric economy towards a more diversified one with an enhanced private sector.
The kingdom is now ready to roll out robust plans to develop nascent solar and wind power capabilities that could have far-reaching effects outside its borders.
In mid-January, Saudi Oil Minister Khalid al-Falih announced that the government was weeks away from introducing a renewable energy programme that would involve investment of $30 billion-$50 billion by 2023. Falih said the first round of bidding for projects under the programme would begin within weeks. The first tender is reportedly for 400 megawatts (MW) of wind capacity and 300MW of solar capacity, valued at $700 million.
Saudi Arabia’s domestic power demand is growing 8% each year and the kingdom burns as much crude oil products as it does natural gas to generate electricity. The Saudis are thus motivated to develop renewables and other energy sources so as to not lose potential export revenue from crude that is currently used to meet domestic consumption.
Unwilling to assume the full financial burden that these energy projects will require, the Saudi government wants to work with domestic and foreign firms that will take on much of the cost and risk.
When Saudi Vision 2030 was unveiled last April, it pointed to renewable energy as an essential component of the diversification away from an oil-dependent economy. The 5-year National Transformation Programme (NTP) announced in June established a target of 3.45 gigawatts (GW) — 4% of total power consumption — from renewable energy by 2023, though Saudi Aramco recently stated that the 3.45GW goal was being accelerated to 2020.
The kingdom generates less than 1% of its total energy from renewable energy. In May 2012, the King Abdullah City for Atomic and Renewable Energy announced its plan to install 41GW of solar power by 2032, which was considered far-fetched given that the kingdom was essentially starting from scratch. In January 2015, it pushed back that timeframe from 2032 to 2040. It is unclear whether that 41GW target for 2040 is still in play in the latest plans that have been announced.
King Salman’s government says the effects of cultivating Saudi solar and wind power can extend beyond the kingdom’s borders and benefit not only the government’s coffers but meet the electricity needs of other regions. Speaking January 20th at the World Economic Forum in Davos, Switzerland, Falih suggested that Saudi Arabia could become a “major exporter” of renewable energy, saying, “solar that is produced in Saudi Arabia can be exported all the way to Europe through a network”.
Speaking at an energy conference in Abu Dhabi a few days earlier, Falih pointed to Africa as a potential recipient of Saudi renewable energy, saying that the kingdom was developing ways to connect its renewable energy projects with Yemen, Egypt and Jordan. The Saudi government hopes not only to export power from its renewable energy sources but also supply other regions with solar panels and wind turbines.
The Saudi government, Falih said, is also planning to make “significant investment in nuclear energy”. He said the government was in the early stages of feasibility and design studies for the construction of two commercial nuclear reactors that together would produce 2.8GW. Although Saudi Arabia has in recent years signed a number of nuclear energy cooperation accords with other governments, agreements with France, South Korea and Russia go further by including feasibility studies for atomic power plants and fuel cycle work in the kingdom.
In 2011, King Abdullah City for Atomic and Renewable Energy announced its intention to build 16 nuclear power reactors by 2032 to produce up to 17.6GW of power. It estimated that the cost of constructing that number of nuclear plants would be $80 billion and Saudi Arabia’s recent financial constraints have dampened momentum on making that type of commitment.
King Salman’s government has not indicated whether it is sticking to the proposed schedule and nuclear power generation target. It is also unclear how much of a stake the Saudis would allow private domestic firms or foreign state companies in partial ownership of the nuclear power facilities.