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The government in Saudi Arabia sells gasoline to consumers for about 13 cents per liter, and electricity for as little as 1 cent a kilowatt-hour. The highways buzz with monster SUVs; few buildings have insulation; and people keep their home air conditioners running 24 hours a day, which accounts for 70% of all kingdom’s energy consumption.
Saudi Arabia spends about $80bn billion a year on energy subsidies.
For comparison, a private company Acwa Power International is ready to produce and sell in Saudi Arabia solar energy for 5.84 cents a kilowatt-hour. This is the lowest cost of solar energy in the world, but with the government subsidies of oil-burning power this price is still too high to attract consumers.
Major part of electricity in Saudi Arabia is produced by oil-burning facilities. As a result, it is the world’s sixth-largest consumer of oil, although the kingdom has just 30 million people, aside from poor efficiency of such generation.
The Saudis burn about a quarter of the oil they produce – and their domestic consumption has been rising at an alarming 7% a year.
Crude oil production cost in the country is around 4 dollars a barrel. With such an abundance of cheap oil, solar power may seem eccentricity. But the government thinks that it is necessary to move forward and think about the future. They believe that to keep the 1st place in oil exports, they need to switch to alternative energy sources. The kingdom burns 25% of the oil they produce while its exports could bring huge money even with the current barrel price.
Moreover, if power consumption will continue to grow at such a pace, the country will have to import oil in 2038. Without oil revenues, Saudi Arabia, where citizens do not even pay taxes, will simply fall apart. Therefore energy without oil is the matter of national security and the government signed an agreement with South Korea for the construction of two nuclear power plants.
The goal is not just to install solar panels across Saudi Arabia but to export them to USA and other countries.
Saudi Arabia is a perfect location for solar power plants. With its vast areas of open desert Saudi Arabia also has some of the world’s most intense sunlight. Here you can cover hundreds and thousands square kilometers with solar panels. Without any precipitation solar power stations would require minimum maintenance unless sandstorms.
By 2032 Saudi Arabia was planning to launch 41 gigawatts of solar capacity, which could meet more than 20% of country’s energy needs. But the target date was pushed back to 2040. The plan will require reshaping of the entire energy system of the country. Perhaps someday Saudi Arabia will become a model for other countries that want to stop using fossil fuels.
NEOSUN Energy is an international high-tech company, manufacturer of a new generation solar panels and lithium batteries. Provider of advanced solar power solutions and ESS.