The ben­e­fits of Saudi Ara­bia’s re­new­able en­ergy push

Arab News - - Opinion - AB­DEL AZIZ ALUWAISHEG

En­ergy Min­is­ter Prince Ab­dul Aziz bin Sal­man on Thurs­day an­nounced that Saudi Ara­bia is plan­ning to pro­duce 50 per­cent of its elec­tric­ity from re­new­able sources by 2030. That is an am­bi­tious goal, im­ply­ing the con­sid­er­able scal­ing up of ear­lier en­ergy di­ver­si­fi­ca­tion plans and a faster pace of trans­for­ma­tion to re­new­ables. It is also am­bi­tious com­pared to the cur­rent use of re­new­ables. Last year, fewer than 2 per­cent of Saudi house­holds used re­new­ables, mainly so­lar en­ergy, to meet their elec­tric­ity needs, ac­cord­ing to fig­ures pub­lished by the Gen­eral Author­ity on Sta­tis­tics.

In a coun­try rich with con­ven­tional fos­sil fu­els, the com­pa­ra­bly high cost of re­new­ables has, up to now, made it dif­fi­cult to wean elec­tric­ity pro­duc­ers off cheap oil. Al­though the cost of so­lar en­ergy has de­clined dra­mat­i­cally across the world over the past decade, it re­mains more ex­pen­sive than oil and gas fu­els in Saudi Ara­bia. This may change.

Prince Ab­dul Aziz said the King­dom will soon an­nounce a so­lar en­ergy project that will pro­duce elec­tric­ity at “the low­est cost per kilo­watt… in the world.” When the price of so­lar en­ergy and other re­new­ables be­come com­pet­i­tive, the switch could take place quickly. Grow­ing aware­ness among young Saudis of the need to re­duce car­bon emis­sions will con­trib­ute to that ac­cel­er­a­tion. As nu­mer­ous stud­ies have shown, Saudi Ara­bia has an ob­vi­ous com­par­a­tive ad­van­tage in har­ness­ing so­lar en­ergy in par­tic­u­lar, given its vast area and sunny cli­mate. That po­ten­tial has yet to be fully ex­plored or uti­lized on a mean­ing­ful scale. In 2011, King Ab­du­laziz City for Science and Tech­nol­ogy es­tab­lished a so­lar en­ergy re­search sta­tion in a small town just north of Riyadh. In the same year, Saudi Ara­bia also com­mis­sioned its first so­lar power plant on the is­land of Farasan, off the coast of Jizan in the south­west, with a lim­ited ca­pac­ity. As the cost of so­lar en­ergy has de­creased by about 90 per­cent since, Saudis liv­ing in ar­eas not reached by the na­tional grid have in­creas­ingly uti­lized so­lar pan­els to power their homes and farms, but they only add up to 1.6 per­cent of all house­holds in Saudi Ara­bia. Di­ver­si­fy­ing the en­ergy mix in Saudi Ara­bia and other Gulf Co­op­er­a­tion Coun­cil (GCC) coun­tries is a strate­gic de­ci­sion based on eco­nomic, se­cu­rity and en­vi­ron­men­tal con­sid­er­a­tions. Eco­nom­i­cally, re­duc­ing the coun­try’s re­liance on con­ven­tional fu­els fits well with the di­ver­si­fi­ca­tion plans adopted by all six

GCC mem­ber states. Di­ver­si­fi­ca­tion plans are un­der­way and they are pre­cisely meant to ad­dress th­ese chal­lenges. They im­ply sev­eral mean­ings, all of which are priorities.

First, eco­nomic di­ver­si­fi­ca­tion aims at in­creas­ing the share of non-oil goods and ser­vices in the gross do­mes­tic prod­uct. Sec­ond, gov­ern­ment rev­enue di­ver­si­fi­ca­tion seeks to de­velop non-oil and gas sources, such as taxes and re­turns for non-oil and gas in­vest­ment. Tax­a­tion in it­self is a chal­lenge and needs to be cal­i­brated eco­nom­i­cally and po­lit­i­cally, be­cause it is some­what new and could have con­trac­tionary ef­fects on the econ­omy. Third, ex­port mix di­ver­si­fi­ca­tion means en­cour­ag­ing non-oil ex­ports and set­ting re­al­is­tic tar­gets for rais­ing the share of non-oil ex­ports to end the cur­rent dom­i­nance of oil and gas ex­ports. Fourth, en­ergy di­ver­si­fi­ca­tion is pur­sued to in­crease the con­tri­bu­tion of re­new­ables in the mix of en­ergy sources. From a se­cu­rity per­spec­tive, re­new­ables are less vul­ner­a­ble to dis­rup­tion than oil and gas. Dis­persed and de­cen­tral­ized, they are less vul­ner­a­ble to sab­o­tage, such as the at­tacks in 2019 against oil fa­cil­i­ties in Saudi Ara­bia. En­vi­ron­men­tally, in­creas­ing the con­tri­bu­tion of re­new­ables to the en­ergy mix helps GCC coun­tries meet global cli­mate change com­mit­ments.

Given the great po­ten­tial that Saudi Ara­bia and its GCC neigh­bors have for pro­duc­ing so­lar en­ergy, they should be able to ex­port it in the fu­ture. They al­ready have the in­fra­struc­ture to ex­port elec­tric­ity via the GCC In­ter­con­nec­tion Author­ity (GCCIA), based in Dam­mam. Economies of scale pro­vided by this project should make the price of re­new­ables more com­pet­i­tive.

While so­lar en­ergy is the most ob­vi­ous choice presently, Saudi Ara­bia also has con­sid­er­able po­ten­tial in wind and other types of re­new­able power pro­duc­tion. Ac­cord­ing to re­cent re­search, the King­dom could be­come a re­gional heavy­weight in wind power dur­ing the com­ing two decades. Ac­cord­ing to one es­ti­mate, it has the po­ten­tial to build more than 6 gi­gawatts of wind ca­pac­ity, or 45 per­cent of the re­gion’s to­tal wind ca­pac­ity ad­di­tion, by 2030. A num­ber of wind power projects are be­ing un­der­taken in north­ern Saudi Ara­bia, in Sakaka, Du­mat Al-Jan­dal and else­where.

When th­ese so­lar and wind power projects come on stream, they will con­trib­ute to re­gional en­ergy se­cu­rity, while also help­ing Saudi Ara­bia di­ver­sify its econ­omy, ex­ports and sources of in­come.

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