By Ed Attwood
The kingdom may be late to the game, but canny investment can help it become one of the world’s most influential renewable energy players, says Ed Attwood
“Solar should be the fundamental solution for Saudi Arabia,” the country’s deputy minister for economy and planning, Ibrahim Babelli, said last week at a conference in Dubai.
You may be forgiven for thinking that the minister’s comment was simply stating the obvious, but the truth is that Saudi Arabia has been woefully behind the curve when it comes to solar.
The ambition has been there — the kingdom announced plans in 2012 to invest around $100bn in ensuring solar energy would make up to 23 percent of the energy mix by 2030 — but the execution has been utterly absent. Four years on from that announcement, the body set up to oversee this strategy, King Abdullah City for Atomic and Renewable Energy — has been largely redundant, with the private sector left to take the lead.
But in an era of low oil prices, more efficient technology and the removal of energy subsidies, the business case for solar has become impossible to ignore. With the price of crude at $50, every barrel of oil that fuels Saudi Arabia’s voracious electricity generation network means $45 that could have been earned from exporting it overseas is lost to the economy.
A more modest — but still tricky — target was announced in April as part of Saudi Arabia’s Vision 2030 plan. By then, the kingdom is aiming to install 9.5 gigawatts (GW) of renewable energy (probably a mixture of solar and wind), which will make up around 14 percent of the energy mix.
For several years now, Saudi Aramco has been billed as the organisation to take on Saudi Arabia’s renewable energy ambitions. In his interview with Bloomberg earlier this year, Deputy Crown Prince Mohammed Bin Salman said that “the most important” new project for the revamped Aramco would be the kingdom’s first solar energy plant. There are, as yet, no details as to the size, scope or location of the plant, but it is clear that solar is now being backed at the highest level.
But as we have seen before — and as is the case with many of the other targets Saudi Arabia has set itself as part of its economic transformation plan — plans are nothing without delivery. Other than the 9.5GW target itself, we still have no idea how the kingdom will try and achieve this goal. But aside from its own plans, there are plenty of things the government can do to energise private sector participation. Feed-in tariffs, low or zero-interest loans for local operators and technology manufacturers, and encouraging more public-private partnerships would all help.
An even bigger incentive should be the fact that a successful solar energy programme could allow the kingdom to scale back — or even cancel completely – its plans to build 16 nuclear power plants at a cost of $100bn. And if guidance were required, the Saudis need look no further than Dubai, where the independent power producer (IPP) model employed at the Mohammed Bin Rashid Solar Park has seen world-record low bids for the third phase of the project.
Despite the economic difficulties Saudi Arabia is facing, it still has the financial clout that can enable it to be one of the world’s most influential solar players. Government investment into renewable energy research and development would also help build the knowledge economy — another plank of the 2030 strategy. But the time to act is now. The kingdom may be late to the solar energy game, but there’s still plenty to play for.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.