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Saudi battles heat, dust to build solar power, save oil

Saudi battles heat, dust to build solar power, save oil thumbnail

Saudi Arabia, the world’s top oil exporter, may finally be getting serious about overcoming the technical and financial hurdles for tapping its other main resource: sunshine.
Thousands of solar power panels have sprung up across Europe over the past few years, thanks to generous subsidies that make the technology an attractive alternative to conventional energy.
Saudi Arabia too, wants to generate much more solar power as it lacks coal or enough natural gas output to meet rapidly rising power demand.
Doing so would allow it to slash the volume of oil it burns in power plants bankrolled by billions of dollars worth of saved oil earnings.
“At world market prices, solar is competitive if you use crude oil to generate electricity,” said Maher al-Odan, a senior consultant at King Abdullah City for Atomic and Renewable Research (KA-CARE) which was set up to plan Saudi Arabia’s energy mix.
Saudi Arabia has said it wants to become a major solar producer before, but its investments amount to much less than 50MW versus several countries which have added thousands of megawatts a year.
This month, KA-CARE set forth a much more ambitious plan, recommending that the kingdom aim to get more than a third of its peak-load power supply, or about 41 gigawatts (GW), from the sun within two decades at an estimated cost well over $100bn.
Making the plan work economically rests on three assumptions: that technology improvements will cut costs, that a domestic solar industry will emerge and create jobs for a booming population, and that many billions of dollars worth of exportable oil will be saved.
An average of 700,000 bpd of crude were used in Saudi power stations during the peak air-conditioning demand period from May to September last year, according to official data supplied to the Joint Organisations Data Initiative (JODI).
Although a rise in gas production should temper crude burning this summer, it will likely rise substantially in years ahead unless alternatives are found, and fast.
“Domestic oil consumption is rising very rapidly and you get far more value for oil if it’s exported than if it’s consumed domestically,” said Paul Gamble, chief economist at Jadwa Research in Riyadh.
KA-CARE said the first two solar plants, with combined capacity of 3GW, might be put to tender in the first quarter of next year.
One of these will use concentrated solar power (CSP), which Riyadh says could supply an eventual 25GW of the total 41GW of planned solar capacity.
The other will use photovoltaic (PV), the technology expected to meet the rest of the overall goal.
CSP is relatively new and much more expensive than PV. But unlike PV, it can store solar energy for several hours, which is a big advantage in a country where air conditioning demand remains high in summer long after the sun has gone down.
Both technologies will suffer efficiency losses in Saudi Arabia’s harsh, arid conditions, but long periods of intense sunshine should help compensate.
“High temperatures in situations with high direct solar irradiation can have a significant impact on the maximum possible power output,” according to GFZ Potsdam, Germany’s national research centre for Earth Sciences.
Another problem could stem from desert dust that can reduce solar energy by 10%-20% in efficiency, according to King Fahd University of Petroleum & Minerals.
“We have losses due to high temperatures and so on,” KA-CARE’s al-Odan said in an interview, comparing the likely performance of solar power in Saudi Arabia with that of Germany, the world’s leading solar power.
“But what we gain from high radiation (from increased sunshine) more than compensates for the loss of efficiency.”
Paddy Padmanathan, chief executive of Acwa Power, which has developed eight fossil fuel power plants in Saudi Arabia and is bidding to build a large CSP plant in Morocco, said solar should be competitive for peak-time supply against gas and oil.
He said that at Saudi Arabia’s heavily subsidised gas price of $0.75 per million British thermal units (mmbtu), utilities could provide electricity at a cost of 7.5 halalas ($0.02) per kilowatt hour (kWh).
However, if the gas was valued at $6 per mmbtu, closer to world market prices, the cost of electricity would rise to 34 halalas/kWh.
Yet oil-fired power costs around 12.5 halalas/kWh at the Saudi oil supply price of $4.40 a barrel, rising to 60 halalas/kWh with oil valued closer to world levels at $80 a barrel.
By comparison, PV could deliver electricity for 45 halalas/kWh and CSP for 70 halalas.
While those prices are uncompetitive against low gas prices in Saudi Arabia, he said solar power should work out cheaper when the cost of keeping large oil and gas plants on standby for delivering peak-load power are factored in.
“It makes economic sense as a kilowatt hour produced from solar will be cheaper than that produced through traditional electricity production,” said Christopher Burghardt, managing director at First Solar, which is opening a Gulf office.
But some industry experts say that while a recent slide in PV costs makes the maturing technology attractive, CSP costs need to fall further to guarantee swift payback on the Saudi investment plan.
“PV is highly competitive now against oil and against the higher cost gas the Saudis have available,” Robin Mills, head of Manaar Energy Consulting, said.
“For CSP, would it be competitive against oil valued against international prices? I think it would be marginal,” said Mills, who has published studies on the commercial viability of solar power in the Middle East.
KA-CARE’s al-Odan said he anticipated the cost of CSP in particular would drop as the technology evolves and the market grows but Mills said there is more downside on PV costs.
Because Saudi Arabia wants to keep consumer electricity prices very low, solar power investments will need hefty state support.
But the economic benefits of saving hundreds of thousands of barrels a day of oil, the country’s largest export earner, supports the economic case.
“We know well that the cost of generating power from these sources will be higher and we did a model that will help us bridge the gap,” said Khalid al-Sulaiman, vice president for renewables at KA-CARE.
“You call it subsidies. I don’t call it subsidies and many countries don’t call it subsidies. They are incentives for the sector.”
KA-CARE expects the aim of developing an indigenous solar industry to increase costs.
Yet this offers the benefit of hi-tech job creation and the prospect for developing new solar technologies in the country.
To that end, the kingdom will require bidders for big solar projects to offer jobs to Saudi nationals and technology transfers.
KA-CARE plans to pick the best technology currently available around the world and develop it further and sees most scope for this in the comparatively immature CSP market.
“They factor in an assumption about domestic value creation to the local economy from the creation of a new industry, and also for the export of new technology,” said Gamble.
“I think to justify that level of money you would need to make some assumptions that both those factors would be significant.”

Gulf Times

8 Comments on "Saudi battles heat, dust to build solar power, save oil"

  1. BillT on Mon, 28th May 2012 1:20 pm 

    Interesting. I wonder how much damage one sandstorm can do to those hi tech toys? But, I guess they have to try as they are finally running out of oil.

  2. MrEnergyCzar on Mon, 28th May 2012 2:39 pm 

    If this isn’t a sign their oil production has about peaked, I’m not sure what is..


  3. bobinget on Mon, 28th May 2012 2:50 pm 


    I’ve been using PV panels now for almost six years.
    The most damaging, to efficiency, seems to be heat and dust, in that order. Here in S.Oregon we get very little rain in summer months. It’s surprising how quickly dust is attracted to protective glass. Like
    older CRT TV screens, everyone has observed, a fine layer of dust covering, when just last August you had wiped your monitor clean.
    I use a pressure washer in dry months or just pray for a thunderstorm. In spring there are the hail stones.
    We’ve had about one each year, so far glass covering has proven tough enough.

    On the farm I mounted an 8 KW system on racks, not a roof top. This way we catch north breezes
    that help keep PVs’ cooler.

    Post sandstorm, betcha that glass becomes obscured.
    (sandblasted) one wonders how that will effect efficiency?

    As an investor in energy related companies, I wonder who will build those millions of panels for Kingdom of Saudi Arabia. Anyone know?

    Japan is facing a bigger power shortage. I’m betting on the world’s largest PV providers on that one.

    BTW, servicing PV from the ground (with a pressure washer) is a job far simpler
    then specialists climbing hundred foot towers to work on wind generators. What effect will sandstorms have on carbon fiber wind catchers and moving parts.

  4. SOS on Mon, 28th May 2012 3:01 pm 

    This is not a sign of any oil shortage, this is a sign that oil prices have been driven to extreme levels by peak politics. The Saudis are using solar not to replace oil but to bring electricity to remote regions. That is one of solars most efficient uses: as a substitute in areas where other, more cost effective energy supplies, are not available resulting in costs that are even higher than solar.

    Solar energy is a terrible investment. The sector has been falling for several years. Its totally dependent on subsidies. Stop or reduce them and the solar industry stops or shrinks. On the other hand oil investments are red hot. Why? Artificially high prices and rapidly increasing supplies are driving production and profits.

  5. bobinget on Mon, 28th May 2012 3:19 pm 

    Mr Energy Czar,
    Yes, of course KSA has peaked. They know it too.
    Saudis population has also grown and shows no sign of ‘peaking’. Domestic needs are cutting into exports.
    It’s that simple. Air conditioning alone will prevent KSA from covering lost Iranian, Sudanese, Russian,
    Syrian production.

    Japan’s oil and gas needs for cooling this summer
    have increased exponentially.

    We should have turned Iran onto PV instead of nuclear in the 1970s’ -;) Iran (the second biggest oil supplier) says all they want nuclear for is to generate electricity. So….Why not bomb Iran with shiploads of US made solar panels, inverters.

    While we are at it instead of billions in military aid why not plaster Pakistan with PVs’?
    (Pakistan averages three hours of power a day, WHEN
    it happens at all)

    When traveling in Mexico observe how they generate
    electricity, burning oil. I’ll bet if Mexico too would
    start to manufacture wind and solar machines, their
    oil exports would not be falling as precipitously.
    Maybe offer employment other then agriculture and drugs trades.

  6. DC on Mon, 28th May 2012 6:25 pm 

    Good example of how fossil-fuel subsidies distort real markets from makeing correct choices about what to invest in. At some point SA will have to stop the insanely low prices it charges to its own citizens, regardless of how un-popular it is at home. If SA payed anything like world prices, SA would be one gigantic solar farm from top-to-bottom. But they charge pennies for fuel when they should be chargeing many dollars-thus solar ‘looks bad’ fromt that distorted perspective.

    In any event, with SA oil fields being pumped full of sea-water under very high pressures just to keep w/e oil they have left flowing, those Solar Panels better be in place soon, because in 20 years time, SA wont be pumping the 10mbd they are now. And once the oil is gone, so is the money to pay for solar or wind, and there will be what..50million+? hot angry saudis with no electricy of any kind if they dont act now…

  7. cephalotus on Mon, 28th May 2012 8:16 pm 

    Sandstorms will harm solar power plants about a bit more than windows and less than cars.

  8. Rollin on Mon, 28th May 2012 8:19 pm 

    That is a great photo, a Saudi walking down the middle of the road where obviously cars are not running, framed by PV panels. Seeing the future now.

    Too bad everybody seems hooked on economics instead of success and long term survival.

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