Saudi Arabia’s Energy Future — Not What You would Expect

The name “Saudi Arabia” and oil are inextricably linked together. So, it may come as a surprise to hear that the Middle Eastern country has mapped out an aggressive renewable energy transition as part of its “Vision 2030” program. This is not a purely altruistic and green initiative: if Saudi reduces domestic consumption of oil, it has more oil to export. Currently the country is OPECs largest oil exporter and most of its revenue is derived from oil.

The move to renewables is only part of the Crown Prince Mohammed bin Salman’s plan for transforming the country and creating new revenue streams to get away from Saudi’s dependency on oil, but it is a very large component in that plan. It is not merely an effort to replace fossil fuel consumption, but a strategy to become a leader in renewable energy technology and a net exporter of renewable energy to its neighbours. And why not? The potential for solar energy in this large desert country of 2 million square kilometres is
infinite.

Oil has been having a tumultuous time recently, and so — to cope with the strain — Saudi Arabia has turned to solar power. One expert has said that this move “could change the fundamentals of the oil market”

Plans were already put into action during 2017; starting with two tenders, one for a solar plant to generate 300 MW annually and an onshore wind farm expected to generate 400 MW. The plans for 2018 will add another 3,25 GW via 8 solar projects, and a second 800MW wind farm. The goal is to have over 9 gigawatts of renewable energy available by 2023, thus reducing Saudi’s current 98% dependence on its own oil for energy generation.

This ambitious plan extends to end-of- line users, who will be able to generate their own energy and sell back their excess to the grid. To convert consumers to move to solar, the price of electricity was tripled in January 2018, something that would have caused riots in countries where citizens have more freedom. The effect of doing this is that the payback for the consumer of investing in solar is realised in 5–7 years rather than the previous 15 years.

While there have been some short-term hitches in Saudi Arabia’s renewable strategy, mainly caused by its dependency on revenue from oil, we can only applaud this move to a new greener future for the country.