Saudia Arabia committed to renewables, just ‘at its own pace’

RIYADH: Around the world, high oil prices tend to accelerate the shift to renewable energy and electric vehicles. In Saudi Arabia, they have the opposite effect.

Over the past six years, the Saudis have announced investments of more than US$350 billion (RM1.46 trillion) aimed at making the sun-drenched kingdom the, well, Saudi Arabia of renewable energy.

But virtually no construction has begun, and with crude prices more than doubling from early 2016 to this October, the Saudis’ commitment to renewable energy has wavered, says Fatih Birol, executive director of the International Energy Agency.

“There has been a lot of stop and go,” says Birol.

“There’s a need to increase electricity generation, decrease oil-based power, and make use of the huge solar potential.”

Last year, the government said by 2023, the country could generate 10 per cent of its power from solar and wind plants, at a projected cost of US$50 billion.

And in March, Crown Prince Mohammed Salman announced a US$200 billion agreement with Japan’s SoftBank Group Corp to build enough solar capacity to triple the kingdom’s current electric output.

The crown prince insists the renewable energy initiative is still on, and in October he told Bloomberg he expected four gigawatts of solar capacity by 2021, about five per cent of the country’s electrical output.

“We have finalised the structure of the solar investment,” said the crown prince.

On paper, at least, the Saudis’ ambitions make sense. The kingdom is bathed in sunlight, with fewer than 45 cloudy days per year on average. Blanketing the country’s vast empty spaces with solar panels could theoretically generate power equivalent to the Saudis’ proven oil reserves of 266 million barrels in just two years.

But the Saudis today get threefifths of their electricity from oil, burning as much as one million barrels of crude a day in power plants.

When oil headed for a low of US$27.88 per barrel in 2016, the national budget swung from a surplus of US$104 billion in 2015 to a deficit of US$83 billion in 2016, giving the solar push greater urgency.

As oil prices rebounded, the motivation to install solar farms waned. The government denies reports that the agreement with SoftBank has been delayed or even cancelled, but little has been done to build any of the promised projects.

With oil prices off by about 30 per cent since their October peak, the Saudis today have greater incentive to push ahead with their solar plans. But they’re still about double their 2016 trough, so the situation isn’t as urgent as it was a couple of years ago.

Nawaz Peerbocus, head of energy transitions at the King Abdullah Petroleum Studies and Research Centre, here, says the ups and downs are only natural, and that the country remains committed to renewable energy — just at its own pace.

As technologies develop and priorities evolve, the Saudis have fine-tuned their plans, but “in terms of where they want to be in 2030 and beyond, that’s very clear,” he says. “It’s visionary, but like many visions, sometimes you aim high and adjust your expectations given how world is changing.”