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GE Banking on Saudi Arabia's Shift Toward Solar Power

GE Banking on Saudi Arabia's Shift Toward Solar Power

General Electric Co. predicts demand for its gas turbines will increase in Saudi Arabia, even with the kingdom working to supply a third of power needs from solar energy within the next two decades.

Saudi Arabia already has 500 installed gas turbines from GE that generate about half its electricity, and the Middle Eastern country plans to more than double its power capacity by 2030 to meet utility-demand growth of about 8 percent a year.

“In the short- to medium-term, it’s still a lot of thermal power, so we will support that just like we have been, both by providing advanced technology and servicing it locally,” Steve Bolze, head of GE Power & Water, said in an Oct. 1 interview in Dammam.

The company announced an order for eight gas-turbine generators to expand a power plant in Riyadh the day before, as Saudi Arabia adds 33,000 megawatts of generation capacity in the next eight years alone.

GE, which draws about half of its approximately $10 billion a year in Middle Eastern sales from energy, expects to benefit from climbing solar demand in that period, too.

Saudi Arabia’s central government, seeking to curb crude oil use internally to preserve more of the fuel for export, is seeking $109 billion of investment to build a solar industry.

The target is almost as much as the $136 billion invested worldwide in solar energy last year, according to Bloomberg New Energy Finance. That may boost sales of concentrated solar panels, “which are really the ones that get a lot of attention from our customer base in Saudi Arabia,” Bolze said.

Renewable Energy

Talks are under way with Saudi customers about developing other renewable-energy resources as well, Bolze said. GE said in June 2011 that it expected to double energy revenue from Saudi Arabia in five years by increasing sales of gas turbines, while helping the country curb the amount of oil needed locally to produce electricity.

Renewables are the second-largest business at GE Energy, and gas turbines are the biggest. The Fairfield, Connecticut-based company introduced a new line of gas-powered turbines in September that are designed to run alongside renewable-energy installations, powering up when the sun isn’t shining or the wind isn’t blowing.

Saudi Electricity Co. is one of the first clients for the new technology, Bolze said. The push to develop renewables would help curb the kingdom’s use of heavy fuel oil, which was about 65 percent of that of the U.S. this year and 41 percent of that of China, according to government figures on the Joint Organisations Data Initiative website.

Saudi Arabia may need to import oil by 2030 if the country’s domestic crude use continues to outpace gains in production, New York-based Citigroup said in a September report. The kingdom depends on oil for 86 percent of its annual revenue.

Copyright 2012 Bloomberg.

Lead image: Solar panels provide the electric power for the monitoring equipment on a pipeline in the texas panhandle via Shutterstock

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03/01/2015
Volume 18, Issue 3
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