A couple days ago Bloomberg reported the following: “Saudi Arabia plans to generate solar electricity equaling the amount of its energy from crude exports, Oil Minister Ali Al-Naimi said.” Wait, what?
That sounds like a ridiculous quantity of solar electricity. The article doesn’t say quantitatively how much energy that is, so I did a quick check. Saudi Arabia exports about 2.7 billion barrels of oil per year, each containing the equivalent of 1,700 Kilowatt hours of electricity for a total of 4.59 × 1012 kWh per year, or the equal of about one quarter or the world’s annual electricity demand.
Okay, so obviously solar electricity equal to the energy in all of Saudi Arabia’s crude exports is far more than the Saudis could ever use, so maybe I’m misunderstanding the Oil Minister’s meaning. Except, Bloomberg goes on to report that “Saudi Arabia, the world’s largest oil exporter, has the potential by 2020 to produce enough solar power to meet more than four times global demand for electricity, al-Naimi said.” Okay, so it appears they really are planning to ramp up huge. World leading huge. Region-or-more powering huge. A development plan this ambitious can only mean that Saudi Arabia intends to become a huge source of exportable electricity.
Why would the world’s largest oil producer wish to so quickly become the world’s largest solar electricity exporter? I’m sure the Saudi leaders, looking around their country, had a conversation that started with, “so, apart from our rapidly depleting oil reserves, what natural resource do we have that could be exploited on an equally massive scale?” The Saudis realize the only answer is sunlight.
And knowing better than anyone that easy-to-retrieve oil is getting scarce, they have made the strategic decision to begin replacing it with their only other form of exportable energy, the only other source they can produce in abundance as massive, solar electricity. Saudi is making what in the medium- to long-term is the state-saving, obvious transition to the Next Economy. And they’re doing it now while they’re awash in enough oil capital to make it happen.
If I’m right about their plan to export ridiculous quantities of solar electricity, one of the next things we should see is investments into transmission capability (there are signs of this already, such as the huge new General Electric (NYSE:GE) power equipment plant, and plans for underwater power cables to Egypt).
Is a quarter of global electricity demand within feasible transmission range of Saudi Arabia? The Saudis would seem to think so. Other things we’ll begin to see are contracts with solar providers and rising demand for materials all along solar industry verticals. Solar stock short sellers — watch your backs.
This article was originally published on AltEnergyStocks.com and was reprinted with permission.