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Page added on September 28, 2014

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Solar Market Potential in Saudi Arabia

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When 13 MW of renewable capacity is installed in the United States, understandably, no one bats an eyelash. When 13 MW of renewable capacity is installed in the Gulf, there’s a multimillion-dollar inauguration party, in true Gulf opulence.

At the end of October 2013, the UAE celebrated the inauguration of its second utility scale power project. Located in Dubai, this first phase of a project slated to total 100 MW marks a significant, albeit very gradual, shift in the global renewable energy game.

As the world increasingly looks to renewable energy to satiate growing global energy demand, the Middle East is no exception. Across the region, decreasing costs and evolving markets have led to a priming of the Middle East as potentially the next big front for renewable energy.

Whether states are working towards decreasing dependency on hydrocarbon imports or diversifying economies and offsetting domestic consumption of oil, the region is abuzz with clean energy development. And yet, there is one prize everyone is anxiously awaiting – the Kingdom.

Blessed with some of the highest solar irradiation levels in the world, averaging between 1,800 to 2,200 kWh/m2/yr, Saudi Arabia stands out as the largest potential solar market in the region. Not only do the solar irradiance levels make PV cost competitive in the Kingdom, the opportunity cost of domestic oil use provides a very compelling argument for the Saudis to go green. According to a report by EuPD research, the opportunity cost for oil used in domestic electricity generation is estimated at $139 per MWh.  With peak power demand estimated to triple in the next 20 years, from 40 GW to 120 GW between 2010 and 2028, there is speculation that Saudi Arabia could become a net importer in the next decade if current trends persist.

In an effort to offset the skyrocketing fossil fuel usage and develop new local knowledge-based economies, the Saudi government created the King Abdullah City for Atomic and Renewable Energy, or K.A.CARE.  This entity was created with the mandate to develop and deploy the Kingdom’s renewable energy goals. In 2011, K.A.CARE announced lofty targets of 54 GW of renewable energy by 2032. Of this, 16 GW will be devoted to PV, 25 GW to CSP, and 8 GW of nuclear energy. Following the announcement, a white paper, which is still under development, was produced with input from international industry experts, to outline the proposed implementation strategy for the procurement process to develop renewable energy projects in Saudi Arabia.

Despite eager industry enthusiasm, the Kingdom has yet to formally initiate the first round of tendering, as outlined in the K.A.CARE white paper. Industry fatigue may be starting to set in as international players anxiously wait on the sidelines for their chance to bid on projects. The biggest challenge in development over the last 2 years has consistently been identified as policy frameworks. On a panel at the Solar Middle East conference in Dubai this past February, experts suggest that regulatory support is still lacking, and continues to be the main inhibiting factor, not only in Saudi Arabia, but across the region as well.

In addition to the policy impediments that are halting renewables development, technology is another a critical make-or-break issue in the region. Although sun is plentiful, the harsh desert environment causes dust storms, sand accumulation, and haze, which greatly reduce module efficiency. As such, technologies like CSP and CPV that require direct sunlight are still not deployable on a large scale. Implementable grid connectivity technologies for the harsh desert environments continue to be extensively researched. State-of-the-art research facilities like the King Abdullah University for Science and Technology have devoted millions of dollars to explore these challenges domestically.

Although utility-scale projects are still slow to develop, KACARE has, however, made significant progress in the Renewable Resource Monitoring and Mapping (RRMM) program. This atlas provides pre-project data on solar patterns, dust levels, and other meteorological information, which will provide optimal information for project planning and R&D efforts. The RRMM program will undoubtedly be a very valuable resource for all future developers and investors, giving them the ability to develop accurate and reliable power production models, once the competitive bidding process is initiated.

For now, the renewable energy grid connections in the Kingdom remain scarce, as either test sites or residential-size installations. The first grid-connected PV project in the KSA was undertaken by KAUST, and was an on-campus 2 MW rooftop project. Although quite small, the system has been creating valuable learning for the solar sector in the Kingdom

Just this past January, The Saudi Electric Company (SEC) announced the first Integrated Solar Combined Cycle with 20-30 MW CSP plant, known as DUBA 1, with total capacity of 550MW.  The Expression Of Interests (EOI) are now being solicited by SEC to build, own, and operate this plant.

Saudi Arabia’s very ambitious renewable program is going through anticipated growing pains, though perhaps slower than the industry would like. International solar stakeholders continue to lobby for policy clarity as the domestic players debate appropriate frameworks and region-specific technologies. At the World Future Energy Summit in Abu Dhabi this year, there was speculative consensus that 2014 may be the year Saudi finally goes green. Tangible sector development remains to be seen.

Energy Collective

8 Comments on "Solar Market Potential in Saudi Arabia"

  1. Aire on Sun, 28th Sep 2014 9:05 am 

    Solar seems like a solution but it won’t be especially placing these panels in the Middle East – one day they are bound to be mortar d and blown to smithereens

  2. Davy on Sun, 28th Sep 2014 9:31 am 

    This is great news and I am pro Saudi solar. It is better them buying F22’s or M1 Abrams. Yet, with Liebig’s law this is no panacea for a region in vast overshoot to carrying capacity with food and water. Sure they got energy but they can’t eat or drink energy. There is a limit to desalinization and no guarantee of food imports in a collapsing world. This solar is a good bet for the next 5-10 years when liquid fuels go into shortage. Every single drop of oil is going to be needed to cushion our fall globally. The ME will need oil exports to mitigate their overshoot in food and water. This is true if we are capable of holding some kind of economic activity and coordinated civilization together when BAU fractures. I again mention the low cost, low tech, simple/robust AltE technology for the end user over the utility scale developments. These large investments will be shut out investments when the grid destabilizes. Variable energy sources with a variable grid will not work well. Yet, any vital resource investment is better than discretionary and non-essential like a new football stadium or formula 1 track.

  3. Kenz300 on Sun, 28th Sep 2014 10:20 am 

    Wind and solar energy production is expanding to countries around the world.

    The world is in transition to safer, cleaner and cheaper alternative energy sources. It may not be happening fast enough, but it is happening.

    Global Renewable Energy Status Uncovered

  4. JuanP on Sun, 28th Sep 2014 10:50 am 

    I am all for solar, but think small scale is the way to go. Nothing larger than village sized systems, and preferably even smaller. And if you build a system using chemical batteries for energy storage, make sure you have all you need to operate at least part of it without them foe specific uses. Storing thermal energy and compressed air are interesting additions to batteries. There are a couple of cool compressed air cars online, but only good for short rides.

  5. Plantagenet on Sun, 28th Sep 2014 10:57 am 

    With endless sunny deserts and huge amounts of capital to invest, Saudi Arabia is well positioned to eventually become the Saudi Arabia of solar energy.

  6. Davy on Sun, 28th Sep 2014 12:35 pm 

    Juan, I am glad someone else thinks like me or I think like you. You are more solar adept then I am but I am quick study.

  7. Makati1 on Sun, 28th Sep 2014 7:48 pm 

    Well, solar is a band aid that will peel off at the end of the oil age. Odds are, these ME systems will only be nicw targets in future wars there, but…

    As for how they spend their oil wealth, they already have all the bling they need. A few Durhams thrown to the peasants in the form of electric is a nice gesture. Been there. No better place for the ‘dust to dust’ quote to become real. Start breeding camels if you want to invest in their future.

  8. Makati1 on Sun, 28th Sep 2014 7:52 pm 

    Ooops! Got sidetracked… Saudi, not Dubai…lol. And Riyals, not Durhams, but the comment still holds for Saudi Arabia.

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