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SunEdison Mulls Massive PV Factory in Saudi Arabia

The Middle East holds a lot of growth promise for solar energy, particularly large-scale generation. Can solar PV pencil out in this high-DNI region -- especially if you build out most of the entire supply chain there?

Saudi Arabia has a looming problem: it's not only dependent on oil for exports and revenues (though no longer the biggest producer, thanks to U.S. fracking) it's also a heavy consumer of oil as well, and with its current energy demand it could become a net importer within a decade or two. Recognizing this path, the country has laid out some very aggressive goals to adopt renewable energy: 54 GW by 2032, equating to roughly a third of its energy demand. That includes 16 GW of solar PV, up from barely a few megawatts of solar PV installed today -- with more near-term goals of installing nearly 1.5 GW of solar PV by 2017, and 6 GW by 2020. The King Abdullah City for Atomic and Renewable Energy (KA CARE) just released a "renewable resource atlas" tracking where some of those renewable energy sites should go, deploying dozens of monitoring stations to measure solar resources.

To secure a foothold in this market, SunEdison says it's exploring whether to build a massive 3-GW vertically-integrated solar PV manufacturing complex in Saudi Arabia, through a new feasibility study with the Saudi government's Public Investment Fund and Saudi Arabian Investment Company (Sanabil Investments), following what the company says was "a successful preliminary study" completed in the past year. The $6.4 billion project would include everything from polysilicon ingot creation to wafering, solar cell production, and module manufacturing, targeting output to start in 2017. "We want to make sure the business dynamics make sense," including assumptions about costs and profit margins, explained a company spokesperson. On that timeline, such a feasibility study would probably have to be signed off relatively quickly -- already the proposal has commitments from the Saudi Electrical Company and Ministry of Petroleum and Minerals to support the site with power requirements (silicon production is very energy-intensive) and natural gas.

SunEdison's official statement pegs this deal as consistent with its preferred "equity light approach," emphasizing its proprietary technical contributions -- technology and equipment for polysilicon production, up through solar cells and the company's Silvantis modules -- but that doesn't mean there won't be any SunEdison capital committed to the final project, the spokesperson added. Most of the polysilicon and ingot output from this Saudi plant would go for the on-site produced modules, and whatever's left will be considered for sale into the market for sale.

The proposal would help SunEdison tap into other MENA countries showing high-growth promise -- UAE, Dubai, and Jordan also are chasing large-scale PV dreams. "We anticipate substantial growth of solar PV within the Kingdom and the region," both for manufacturing and downstream solar PV development, stated SunEdison CEO Ahmad Chatila.

One of the hurdles will be balancing project bids vs. technology costs, which might include significant local content provisions. Plunking down a 3-GW plant in Saudi Arabia would go a long way towards solving all of those, especially for a company like SunEdison who plays both on the manufacturing and projects side of the equation. "While PV module production costs are expected to drop by half during the next decade, for Saudi Arabia to benefit from global price reductions its supply chain for modules must be transparent and not overruled by mandates for local content," said IHS' Henning Wicht in a report last October.

Lead image: Saudi Arabia flag waving on the wind, via Shutterstock

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