Complex Made Simple

Why is it crucial for Saudi to seek solar energy?

Saudi Arabia has for many years subsidized the domestic utility market that depends on crude production. Reuters reported in 2016 that Saudi Arabia aimed to reduce electricity and water subsidies by 200 billion Riyals ($53 billion) as part of the reform drive as well as reduce non-oil subsidies by 20 per cent by 2020.

Oil prices in Saudi Arabia were very cheap, compared to those in the rest of the Arab countries, which prompted Saudis for years to consume energy without any considerations for money or efficiency.

Until the drop in oil prices in 2008, that is, and following long periods where prices lingered between the $45-$50 range, more than half their all time highs, that the Kingdom decided to cut these subsidies, in a bid to minimize losses and help reduce its budget deficits.

Bloomberg reveals that Saudis are planning a one-time hike in gasoline and jet fuel prices by the end of this year, while other fuel prices would gradually increase between 2018 and 2021.

One of the solutions sought by the Kingdom to minimize the pressure on its oil infrastructure is solar energy making use of the sun’s abundance year long and over long stretches of sandy lands where they could ideally install solar plants.

Read: Impact of Saudi removing fuel subsidies

Solar is strategic

Saudi Oil Minister Khalid Al Falih announced at the beginning of the year Saudi Arabia’s plans to generate by 2023 approximately 10 gigawatts of power from renewable energy, primarily solar and wind power.

“Saudi Arabia plans by 2030 to produce 70 percent of its power from natural gas and 30 percent from renewables and other sources,” he was quoted by the media as saying.

Saudi Arabia has been pushing ahead with a multi-billion-dollar plan to diversify its energy mix and allow more oil exports to take place.

This constitutes an essential strategy to save its reserves, because it will allow it to maintain its regional dominance, as stated by the Clean Energy Leadership Institute.

“Saudi Arabia relies on its large spare oil capacity as a tool to influence the global oil market and extend its power not only globally, but regionally,” it said.

Moreover, an analysis by Reuters, dated April 2017, reveals that Saudi Arabia is seeking to use non-oil means to generate much of its additional future energy needs to diversify its economy.

Reuters said that the Kingdom is restructuring its energy sector as part of Vision 2030 and that a focus on renewable projects is a pillar of this transformation, as it would help develop the private sector and create thousands of job opportunities.

“Since the restructuring of the energy sector … one of our key priorities is to engage with the private sector,” Falih was quoted as saying.

Read: Saudi to launch $30-50 billion renewable energy programme soon

The latest solar developments in the Kingdom

On October 3, Saudi Arabia received offers to supply solar electricity for the cheapest prices ever recorded ($1.79 per kilowatt hour).

The Energy Ministry was quoted by Bloomberg as saying that Abu Dhabi’s Masdar and Electricite de France bid offered to supply power from a 300-megawatt photovoltaic plant.

According to Bloomberg, the plant will be the first awarded under the renewables program, which targets 9,500 megawatts of electricity generation capacity using solar and wind by 2030. The project is set to start producing power by June 2019, according to the bid.

Eye-catching solar projects in Saudi Arabia

 KAUST Solar Park: It’s a two megawatt solar park on the rooftop of the King Abdullah University of Science and Technology (KAUST). The plant features two rooftop solar installations with a capacity of 1 MW each.

Saudi Aramco Solar Car Park: The 10 Megawatt-Photovoltaic Carport System covers all of its 4,500 parking spaces.

Read: Beijing, Saudi Arabia agree to more oil cooperation, exports to China

Princess Noura bint Abul Rahman University Solar Plant: Providing more than 900,000 liters of hot water storage, the $14m-plus solar heating plant uses 36,305 sqm of solar panels to feed solar energy into a district heating grid for 40,000 students.

King International Airport Solar Plant: The project integrated photovoltaic panels to remote car parking canopies designed for vehicles’ solar protection. For an installed power of 5.4MW peak and an estimated annual production reaching 9.3GWh, it represented 2.5 per cent of the annual energy consumption of the Passenger Terminal Building.

Saudi ARAMCO’s KAPSARC Solar Project: Solar energy is harvested through rooftop solar thermal hot water panels and a 5.8 MW solar farm at the west end of the campus.