Wouldn't it be ironic if the biggest oil exporters in the world became the biggest solar energy investors with plans to export solar energy?
That may seem like a far-fetched idea but it's exactly what Saudi Arabia has in mind. Here's a telling quote from one of the companies looking to provide some of the country's solar energy needs.
I think in 2020 we're going to look back and say -- if we pick one year as a point of inflexion -- I'm very confident it will be 2015."
-- Paddy Padmanathan, CEO of ACWA Power, a renewable energy developer in the Middle East
What's driving the world's largest oil exporter to solar may tell us more about the future of energy than you think.
Saudi Arabia is better off selling oil than consuming it
One of the challenges being a developing nation that's made its money on oil exports is that a rising standard of living can eat into previous energy exports. Over the past decade, Saudi Arabia's oil consumption has risen 53% while its production is up just 5%. The result is falling oil exports, which is where the country makes its money.
A recent Chatham House paper suggested that at its current pace Saudi Arabia would actually become a net oil importer by 2038. That's only 23 years away, hardly a long time in the oil industry.
On top of the fact that Saudi Arabia would like to export more oil instead of consuming it, oil is a relatively expensive way to produce electricity. Renewable energy is much cheaper than oil power generators today, particularly in desert areas. A project bid below $0.06 per kWh in Dubai earlier this year showed the potential solar energy has in the Middle East and with Saudi Arabia getting 55% of its electricity from oil, there's an economic driver to making a change.
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