Saudi Arabia to Revive Its Solar Power Program at Smaller Scale

Saudi Arabia is seeking to revive its stalled solar-power program, scaling back more ambitious targets it set four years ago after making little headway in transforming the energy supply of the world’s biggest oil exporting nation.

The kingdom plans to install 9.5 GW of renewable energy under its Vision 2030 program announced last month, about a quarter of the previous goal. The new target is about 14 percent of the country’s current generating capacity and is achievable because of a plunge in the cost of solar PV, government officials said.

“Solar should be the fundamental solution for Saudi Arabia,” Ibrahim Babelli, the country’s deputy minister for economy and planning, told reporters at a conference in Dubai. 

The goals reflect work by Prince Mohammed bin Salman to overhaul the economy of Saudi Arabia, selling off a stake in the state owned Saudi Arabian Oil Co. to diversify away from fossil fuels as a primary revenue source. The desert kingdom relies on oil and natural gas for almost all of its power generation, sapping what it earns from crude it could export.

The energy ministry is working to establish the framework for the new renewable energy plan and needs more time to complete its planning, said Babelli, who directed strategy at the body previously responsible for renewable energy policy. Currently, the nation has almost no solar power.

The solar program at one point envisioned more than $100 billion pouring into renewables over the next two decades. The government scaled back the program once before, in January 2015, saying it needed more time to assess the technologies it would use.

Babelli was previously chief strategist at the King Abdullah City for Atomic and Renewable Energy, the body set up by Saudi Arabia’s former monarch in 2010 to push into renewables. 

Its plans failed to take off because Saudi Arabia’s state-owned utility didn’t want to allow private companies to build power plants and aimed to control the process itself, he said.

Now, the kingdom is returning to its effort to tap new energy resources that would free up more crude for export and provide affordable power for industry and homes. The cost of building solar power plants is declining globally as Chinese panel makers boost manufacturing capacity and slash costs.

“The trend will continue,” Timothy Polega, a manager in the renewables department at state-owned oil company known as Aramco, said at the conference. 

Aramco is waiting for further details about the kingdom’s energy plan before deciding on its own renewable energy plans, Polega said. The price of solar power in projects in the Persian Gulf over the last year has plunged by about 50 percent and plant developers will be able to achieve similar prices in Saudi Arabia, he said.

Dubai, in the United Arab Emirates, awarded a contract for a 200-megawatt solar plant in January 2015 at what was then a record-low price of 5.85 cents per kilowatt-hour. Last month, the emirate received a bid for an 800 MW plant at a power price of 2.99 cents per kilowatt-hour.

© 2016 Bloomberg

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