The Middle East needs to turn the tide away from oil as the primary feedstock to fire its power stations, says Michael Suess, of German energy giant Siemens
Two months ago Citigroup said Saudi Arabia, the world’s biggest producer of oil may become a net importer of the black gold by 2030. To put things in perspective, oil exports account for 90 percent of the kingdom’s exports, and 45 percent of the country’s gross domestic product. By 2020, Citi forecasts US production could reach as much as 15 million barrels per day, with the US overtaking the kingdom as the top producer. As consumption in the Gulf and wider Arab world rises in tandem with growing populations and higher demand, the argument to turn to alternative forms of energy is becoming more compelling.
Enter Michael Suess of Siemens AG’s Energy Sector. The Arab world should move away from its dependence on oil for generating electricity and look towards gas as a primary source of energy and renewables as a future alternative as the global power mix continues to grow, he says.
“I believe this part of the world should stop burning oil for electricity and focus much stronger on gas and put some solar and wind around,” Suess says in an interview with Arabian Business. “Oil is easier to transport on the one hand, [but] with gas if you do it right you have efficiencies of 61 percent.”
Hydro power and wind energy will remain the major renewable contributors to the global power generation mix in the future, he says. Siemens predicts that energy from renewable sources will account for 28 percent of the global power mix in 2030. According to Siemens’ estimates, global power consumption will rise from 22,100 terawatt-hours (TWh) in 2011 to 37,100 TWh by 2030. Hydro power and wind energy will continue to contribute the largest share of energy from renewable sources.
“In the [Middle East] region there is so much potential to work on efficiency where you have a very quick benefit on the resources which you save, and by that saving, the additional volume you can sell to the oil-hungry countries in the world,” Suess says. “A lot of the power plants in the Middle East were built 20 to 30 years ago when no one had an outlook on efficiency.”
Last month at the Global Economic Symposium in Brazil, Prince Turki Al Faisal Al Saud said he would like to see “Saudi Arabia using 100 percent renewable energy within my lifetime.” The 67-year-old member of the ruling family in the kingdom said: “Oil is too valuable to be burned and should rather be used for other purposes.”
Solar and renewables can help reduce carbon emissions while also providing power generation and desalination for the Gulf countries and in turn limit the use of fossil fuels as part of a renewable energy mix. Saudi Arabia — like other Gulf states — suffers from a fresh water shortage problem and produces more than 24 million cubic metres of water per day from desalination plants, which have largely been fuelled by oil or gas, a process that is costly and can vary depending on the price of fuel. The higher oil prices are, the more expensive the cost of desalinated water is.
If Saudi Arabia, which is burning between fifteen and 20 percent of its oil production for electricity was hypothetically able to halve that, it would save 1 million barrels, equivalent to $100m, Suess says.
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