Saudi to invest $109 bn in solar power

0
713
Spread the love
world's biggest solar plant
The construction project is worth more than $11.5 billion and is considered to be the premier solar project in the Middle East. Photo - Alanod-solar.us

Saudi Arabia, the largest crude oil exporter in the world, is seeking investors for a $109 billion plan of establishing solar power industry that will increase the country’s electricity production capacity, according to the planning and development agency officials.

The report said Saudi government aims to generate around 41,000 megawatts of solar energy within the next two decades. Maher-Al-Odan, a consultant at the King Abdullah City for Atomic and Renewable Energy (KA-CARE), explained 21,000 megawatts would be contributed by alternative sources such as geothermal, nuclear and wind. He also hoped that the nation’s renewable energy strategy will get an approval later this year.

“We are not only looking for building solar plants, we want to run a sustainable solar energy sector that will become a driver for the domestic energy for years to come,” Said Al-Odan in an interview in Riyadh.

Saudi Arabia wants to reduce the use of crude oil in the electricity production and domestic consumption, which will enhance exports by saving up to 5,23,000 oil barrels, and will lead to more profits.

Logan Goldie-Scot, an analyst at New Energy Finance in London believes the Saudi government is motivated to expand its energy production sources to reduce dependency on oil. He added that the state could make an internal return rate of around 12% if it built a PV plant and sold the displaced oil on the international markets. He estimated that initial capital costs will stand around $2.17 per watt of the capacity installed for the solar project.

KA-CARE estimates that Saudi Arabia’s electricity demand will peak at 121,000 megawatts in the next two decades, with half of that power produced using hydrocarbons. Gulf oil producers are looking to minimise their dependence on fossil fuels for power generation to enhance exports of valuable crude oil and distribute natural gas to produce petrochemicals.

As European countries are reducing subsidies to cut down their budget deficit, Saudi Arabia wants to open a huge new market for solar panel manufacturers such as First Solar Inc. and Sun Power Corporation.

According to a Deutsche Bank note, the government is aiming at 25,000 megawatts energy out of 41,000 MW forecast to be produced from solar thermal plants, which use mirrors to focus the sun’s rays on heating fluids that turns a power turbine. The rest of 16,000 megawatts would be generated from photovoltaic panels.

Deutsche Bank said that during the first quarter of 2013, capacity would be added through competitive bidding starting with 1,100 megawatts of photovoltaic and 900 megawatts of solar thermal whereas the second round of bidding is slated to take place in second half of 2014. This tender process would differ from the European system where developers are granted above market rates for production of solar power. Whereas in Germany, Spain, Italy and the UK, prevailing lower rates feed-in charges for controlling the rush in installations.

Other Sources

Reports suggest other forms of renewable energy such as nuclear, wind, geothermal, will only generate 21,000 megawatts of the peak-load required by 2032. Under the so-called “balanced scenario,” Saudi Arabia would construct 16 nuclear reactors by 2030 with a capacity of 14,000 MW of electricity. Faisal Habiballah, head of solar at Saudi Aramco, said his company realises the technical potential to generate 25,000 MW of energy from wind and there is also geothermal energy in the western parts of the Kingdom.

According to the representatives of KA-CARE, the cost of developing nuclear reactors may reach $100 billion as the country signed a nuclear cooperation agreement with France, South Korea and Argentina last year. Riyadh also signed a nuclear energy cooperation deal with China in January.

According to Al-Odan, the capital cost of generating 41,000 MW should be $82 billon (approx) and the rest of $27 billon would be used to train Saudis run, maintain and operate the solar power plants. He added that direct implementation will commence once the strategy of new regulations gets formal approval.

Facebook Comments