The country which has one of the largest oil reserves in the world and is one of the biggest exporters of oil faces a population explosion. Saudi Arabia is blessed with billions of barrels of crude oil, which can be recovered at relatively low costs from the ground. That has allowed the country to build hundreds of billions of dollars in foreign reserves and allowed it to give massive social subsidies to its citizens. It is one of the few countries that can afford to generate electricity using fuel oil.
However, the country is facing the prospects of lower oil exports as its citizens consume increasing amounts of its oil riches. Saudi Arabia now wants to increase its electricity generation from other sources in order to leave oil for exports. The country faces a double whammy of a growing population plus increase in per capital oil usage.
Why is Solar energy advantageous for Saudi Arabia
Saudi Arabia has many advantages of increasing solar energy generation and usage, such as:
i) Huge vast swathes of empty desert land with high amounts of solar radiation
ii) Massive amounts of money which it can easily invest in the capital intensive solar power plants
iii) Solar power technology has matured significantly and does not require massive subsidies like Germany and Spain gave in the earlier years
Saudi Arabia has already signed a deal with global solar power leader SunEdison (SUNE) to build a poly to module factory as well as solar power plants. The company’s investment fund has done a JV with SunEdison. This will allow Saudis to retain more of the solar value addition within the country and build some manufacturing as well.
Saudi Aramco which is one of the world’s largest companies is also planning to increase investment in solar power plants. The company is owned by the government and produces oil from all the major fields. The company is now executing the government’s vision of generating tens of gigawatts of solar power by 2032. The country is a great place for EPC developers and solar panel suppliers. It does not have a lot of in-house expertise and requires technology and management expertise from other places.
Green World Investor