Where the Sun Always Shines (Part 1 of 2)
In Ontario, there hasn’t been much talk of the launch by the Kingdom of Saudi Arabia of its ambitious 54,000 MW renewable energy program. There should be: the sun-soaked country is intent on developing 41,000 MW of solar power capacity alone – well over twice Ontario’s 15,700 MW goal across all renewable sectors.
Saudi Arabia is intent on developing 41,000 MW
of solar power capacity alone – well over twice
Ontario’s 15,700 MW goal across all renewable sectors.
As recent as 2011, Saudi Arabia had no targets for renewable energy. British Petroleum estimates that “less than 1% of Saudi energy came from renewable sources in 2011.”
The newfound emphasis on renewable energy is in part a response to the effects of the country’s generously subsidized domestic fuel consumption. According to a report from Citigroup Inc., almost a quarter of the country’s fuel production is used domestically – and the per capita consumption rate is higher than most industrialized nations, including the United States.
The country’s potential energy crisis does not end there – despite a population of just 28 million, Saudi Arabia’s energy consumption rates are expected to double its projected population growth. Oil is used for close to half of Saudi Arabia’s electricity production, which by some measures is growing at about 8% a year. The “lost” oil and gas revenues caused by domestic consumption are staggering and estimated to be around $80 billion in 2011 alone. Whereas brent crude is traded today at roughly $102 per barrel, domestic power providers in Saudi Arabia pay somewhere in the range of $5 to $15 per barrel. According to Citigroup, at current consumption growth rates the Kingdom could become an oil importer by 2030.
Oil is used for close to half of Saudi Arabia’s electricity production,
which by some measures is growing at about 8% a year […]
According to Citigroup, at current consumption growth rates,
the Kingdom could become an oil importer by 2030.
Enter the drive for renewable energy (and specifically solar power generation). Under the guise of the country’s King Abdullah City for Atomic and Renewable Energy (KA CARE), Saudi Arabia now aims to generate a third of its electricity from renewable sources by 2030 – through roughly 16,000 MW in photovoltaic projects and 25,000 MW in solar thermal projects.
The size and scope of this program is astonishing. The expected costs for solar generation to meet these targets are upwards of $109 billion, which almost matches the $136 billion invested worldwide in solar energy generation in 2011. Joint ventures between the Kingdom and international firms, including solar equipment manufacturers, suppliers and contractors, have already begun.
Watch this space for our next post, in which we will highlight some aspects of the Kingdom’s competitive procurement process that might be of interest to players in Canada’s renewables sector.
brent crude British Petroleum Citigroup Inc. King Abdullah City for Atomic and Renewable Energy Kingdom of Saudi Arabia oil subsidized domestic fuel consumption