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Thu 25 Mar 2010 02:25 AM

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Saudi considers all energy sources for power

Growth of sector causes government to seriously consider diversification of power.

Fast growing power demand is forcing top oil exporter Saudi Arabia to look at all sources of energy, the kingdom's deputy minister of electricity said. Saleh Al Awaji, deputy minister for electricity told Reuters in an interview on Tuesday that demand grew last year by more than 8 percent and some regions in the kingdom saw demand rise by at least 13 percent.

Al Awaji said: "The growth of the sector invites us to seriously think about diversifying ways to generate power."

The Gulf Arab state has said it was investing $80 billion to boost capacity to 60,000 MW by 2020.

Saudi Arabia hopes to begin exporting power from solar energy by 2020.

The kingdom continues to study nuclear energy, Awaji, who is also acting chairman of Saudi Electricity Co (SEC) said. Costs of renewable energy are still very high when compared to conventional sources, he said.

He added: 0"Nuclear might be one of the long term strategies to produce electricity and desalinate water if we take into consideration that the daily average for power generation is around 1.3 million barrels of oil equivalent."

The more oil that the kingdom consumes for power generation, the less it can export. Many of its plants run on oil as it lacks the gas necessary to fully meet power plant demand and industrial needs.

Installed capacity in the kingdom has so far reached 46,000 megawatts (MW), Awaji said. It was around 43,000 MW in 2009, with peak demand at around 40,000 MW, he added.

Al Awaji said: "We need to add 3,000 MW every year to meet demand, it is huge as it matches the installed capacity of Oman, Jordan...and one of the biggest challenges is to provide the necessary funding for these projects."

More than 40 percent of the $80 billion is expected to come from partnership with the private sector, while the rest would be financed by the Saudi Electricity Co.

The kingdom's power generation capacity would need to rise to 125,000 MW under the kingdom's 25 year development plan, Awaji said.

The kingdom was considering raising electricity tariffs in the industrial zones as demand peaks in the summer when air conditioners work at full throttle to counter soaring desert temperatures.

Jeddah, the Red Sea port and commercial hub of the kingdom, faced power cuts in its industrial zone for up to five hours a day last year.

The change, still under study, calls for a tariff of up to 0.26 riyals per kilowatt hour at peak times, up from 0.12 riyals now, said Awaji. This will only be applicable to the industrial sector, Awaji added.

Gulf countries have similar patterns of consumption, which sees demand peak in the summer. They have taken measures to connect their grids in an effort to stave off shortages.

The first phase of the $1.6 billion project to link the power grids of Saudi Arabia, Kuwait, Bahrain, Qatar was completed last year.

The first phase of the 3,000 MW power link between Egypt and Saudi Arabia would take place in 2015, Awaji said.

In the long run, Saudi Arabia plans to export electricity to Europe and other potential markets, Awaji said.

Restructuring of SEC, into 6 units was expected to be completed within three years. The transmission company would be the first to be created by the end of 2010 and be operational in the first half of 2011, Awaji said. (Reuters)

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