Saudi solar energy may soon grow exponentially under the government’s plans to diversify away from oil.
To replace its current system of costly oil and gas burning power plants, Saudi Arabia is taking another shot at solar power. Although targets set four years ago ended up too ambitious as efforts ultimately stalled out, the falling cost of solar panels combined with cheap land and intense sunlight have encouraged the kingdom to try again.
Under its Vision 2030 program, the kingdom is planning to install 9.5 GW of renewable energy, about 14% of the country’s current generating capacity, from virtually zero capacity today.
“Solar should be the fundamental solution for Saudi Arabia,” Ibrahim Babelli, the country’s deputy minister for economy and planning.
Since stepping into the spotlight as the guiding hand of Saudi Arabia’s economy, Prince Mohammed bin Salman, the heir-apparent to the current king, has made several moves aimed at seeing the kingdom diversify away from fossil fuels. Besides the new renewable energy capacity, the Prince has pushed for selling off part of the massive, state owned Saudi Arabian Oil Co., encouraged the adoption of the new renewable energy plan, and acted antagonistically towards other members of OPEC such as Iran in an unusual mixing of economic and political policy.
Previous plans to increase Saudi solar power capacity were stymied by the state-owned utility which limited private company involvement to safeguard its own control. This time around, the kingdom may have more luck as it seeks to free up crude for export by reducing use in inefficient, domestic power plants and take advantage of Chinese-driven cost reductions in solar panel manufacturing. The price of solar power in projects in the Persian Gulf over the last year has plunged by about 50%, falling from 5.85 cents per kilowatt-hour in 2015 to as low as 2.99 cents per kilowatt-hour in recent months.