KSA to spend $30bn -$50bn on expanding renewables
The Kingdom is taking a measured approach to renewable energy that will see fossil fuels playing an indispensable role in its future energy mix
Saudi Arabia has announced plans for a massive renewable energy programme to be launched over the next few weeks and expected to surpass similar programmes in neighbouring countries.
The move involves an investment of $30-$50bn to produce 10GW of power by 2023, with the first round of bidding for projects to commence in weeks, revealed Khalid Al Falih, Saudi Arabia’s energy minister.
Speaking at the first day of the World Future Energy Summit (WFES) 2017 in Abu Dhabi, Al Falih said that the Kingdom would in parallel to renewable energy programmes, proceed with more fossil fuel power plant projects.
“Concentrating on renewable energies alone without recognising the crucial role of fossil fuels in addressing future energy needs would be a grave mistake,” said Al Falih. “The world population is expanding and so are people’s income levels. Future demand can not be sufficiently met by renewables alone.”
Saudi Arabia has been for years trying to diversify its energy mix so that it can export more of its oil, rather than burning it at power and water desalination plants, but progress has been slow.
The Kingdom plans by 2030 to produce 70% of its power from natural gas and 30% from renewables and other sources.
Saudi Arabia is currently in the feasibility and design stage of two nuclear reactors as part of a wider nuclear power drive inside the Kingdom, revealed the minister. The first phase of the nuclear programme will generate a total of 2.8GW to supplement the 10GW from other renewable energy sources.
In 2012, the King Abdullah City for Atomic and Renewable Energy (KACARE), a body set up by the government to spearhead development of renewable and nuclear energy, recommended that Saudi Arabia install 17 gigawatts of nuclear power but no plans were laid out to do so.
Riyadh has signed nuclear energy cooperation agreements with several countries able to build reactors but recent deals with France, Russia and South Korea go beyond these by including feasibility studies for atomic power plants and fuel cycle work.
The country has recently struggled with budget deficits after oil prices stagnating for two nearly years at around $50 a barrel.
“It’s a very encouraging development that carries significance not only for the Kingdom, but to the entire renewable energy industry across the region and the world,” said Martin Haupts, CEO of Phanes Group.
“Saudi Arabia is vast, with enormous renewable energy potential. Their plan to deploy almost 10 gigawatts from a standing start in six years represents an unprecedented commitment to renewables and a road map to not only a more balanced power portfolio but also a more active investment climate,” continued Haupts.
“As an international solar firm based in Dubai we believe the Saudi renewable energy market may present attractive opportunities for firms of all sizes and specialties to invest and develop projects,” he pointed out. “However, with so much of their legal and regulatory infrastructure in flux, what is key to them achieving their short and medium term ambitions is their ability to offer predictability and certainty to investors.”
Saudi Arabia previously had longer-term targets for renewable power when crude prices were about double their current level. Its earlier solar program forecast more than $100bn of investment in projects to produce 41GWrgy of power by 2040.
In January 2015, the government delayed the deadline for meeting that capacity goal by nearly a decade, saying it needed more time to assess the relevant technologies.