The Race for Solar
|Back to Page One|
|Susan Kraemer||May 23rd 2012|
Saudi Arabia has finally noticed it has twenty centuries of solar reserves and has made plans to tap them. For its own use. The Kingdom has just announced a $109 billion plan to create a solar industry that generates a third of the nation’s electricity by 2032, according to Bloomberg Businessweek. Maher al- Odan, a consultant at the King Abdullah City for Atomic and Renewable Energy (KACARE) announced a plan to have 41 GW of solar capacity within two decades.
To put 41 GW in perspective, China is the world’s leader in wind power now, overtaking Germany and the U.S. with about 48 GW of wind. This is a very serious move by a country well able to afford this kind of investment, that till recently has lagged the rest of the MENA region in renewables trailing Egypt, Morocco, Tunisia, Algeria and the United Arab Emirates.
Traditional photovoltaic (PV) solar is to supply 16 GW, but the bulk of the solar (25 GW) is to come from the very desert-friendly concentrated solar power (CSP) that focuses the sun with mirrors to create the intense heat that drives turbines in a thermal power plant. Citing government officials, Deutsche Bank said the capacity would be added in competitive bidding starting with 1,100 megawatts of PV and 900 megawatts of solar thermal in the first quarter of 2013. A second round of bidding is due in the second half of 2014.
Solar Reserve, which is constructing the largest 24 hour solar CSP project worldwide in Nevada has already been in talks with the Saudis. Kevin Smith the CEO of Solar Reserve told GreenProphet that the company is among those looking to bid. The CSP company uses similar technology to the Gemasolar project built in Spain by Abu Dhabi’s visionary state-funded clean energy company Masdar. Because both use molten salt as both the transfer liquid and the storage medium, they can supply electricity long after dark.
“They really only–in the last couple of years–have started to really increase their solar activity” he said of Saudi solar ambitions. “We expect there will be projects going into construction in Saudi next year. Hopefully with us, but certainly, with someone. We expect that their program will kick off next year. We hope we get can projects in construction in 2013.”
The Saudis could potentially save 523,000 barrels of oil equivalent a day over the next 20 years by such a boost to renewable energy, according to Saudi officials. “The difficulties the Saudis have is their economy is all oil based” Smith concurred. “Really they want to maximise their exports of oil, but really what they’re using a lot of their oil for power generation in the country. It’s fine if oil is $20 a barrel, but now that they can sell it for $100 plus a barrel, it’s not a very cost-effective use of their oil.”
Nuclear, wind and geothermal would together contribute just half that amount at a still staggering 21,000 megawatts (21 GW) as we covered here: Solar-Rich Saudis Running after Nukes. But the new solar plans dwarf these. As they should. “We are not only looking for building solar plants,” al- Odan said in an interview in Riyadh yesterday. “We want to run a sustainable solar energy sector that will become a driver for the domestic energy for years to come.”
The Saudis may require bid winners to supply from factories built in the nation, according to Vishal Shah, an analyst at Deutsche Bank AG in New York, as we have covered previously: Saudis to Make Desert Sands into Solar Polysilicon. About $82 billion will go to capital costs, with the remainder of the $109 billion going to train the Saudis to run the solar plants as well as for maintenance and operation, al-Odan told Bloomberg. Once the strategy, which includes new regulations and financial incentives for private investors, is approved “we will start implementation directly,” al-Odan said.
Saudi Arabia may burn 850 million barrels of oil a year, or 30 percent of its crude output, to generate electricity by 2030 if doesn’t become efficient in energy consumption, Electricity & Co-Generation Regulatory Authority Governor Abdullah Al-Shehri said in a presentation in Riyadh May 8.
Its plans are likely to be approved later this year, al-Suliman said, according to a copy of the presentation he gave on May 8. “The Saudi Arabian government has a powerful incentive to diversify its energy mix to reduce dependence on oil,” said Logan Goldie-Scot, an analyst at New Energy Finance in London. Assuming initial capital costs for the solar projects of about $2.17 per watt of capacity installed, he added “The state could generate an internal rate of return of approximately 12 percent if it built a PV plant and sold the displaced oil on the international markets.”
Susan Kraemer writes for the Green Prophet, from where this article was adapted.