The production of solar electricity is about to get a big boost in a country sitting on some of the richest oil reserves on the planet.
According to an article in The Atlantic, the Saudi Arabian government is set to get into the photovoltaics (PV) business in a big way by beginning construction of solar projects around the country and by opening a commercial-scale PV module factory of its own.
Although it has since pushed back the target date, the government announced three years ago that it would have 41 gigawatts of solar capacity online by 2032, besting the output of the current No. 1 solar country in the world, Germany. It also sees an international market for the solar panels it produces as the global market for PV continues to expand.
The root of the Saudi push for solar energy has nothing to do with concerns about lowering the country’s carbon footprint, the article says, and everything to do with self-preservation.
With a population of just 30 million people, Saudi Arabia is the sixth largest consumer of oil in the world. The country burns about one-quarter of the oil it produces, and consumption has been rising by 7% per year, three times the rate of population growth. If the trend continues, a 2011 report predicted, domestic consumption would eat into exports in another six years, and turn the kingdom into a net importer of oil by 2038.
Unless its use of oil can be trimmed, the country faces an alarming future.
Great reserves means great waste
Its huge reserves of oil make it easy for Saudi Arabia to put energy conservation on a back burner.
“The government sells gasoline to consumers for about 50 cents a gallon and electricity for as little as 1 cent a kilowatt-hour, a fraction of the lowest prices in the United States,” Jeffrey Ball writes in The Atlantic. “As a result, the highways buzz with Cadillacs, Lincolns, and monster SUVs; few buildings have insulation; and people keep their home air conditioners running — often at temperatures that require sweaters — even when they go on vacation.”
Air conditioning consumes about 70% of all electricity in the kingdom, much of which is produced by burning oil. Power plants are inefficient.
If this trend continues, the outcome would be “cataclysmic” for the kingdom, Ball says. Oil exports underwrite the generous benefits available to Saudi citizens — not only cheap energy at home, but extensive social services (all in a country without income taxes). If oil exports decline, so does the income that pays for all of that.
Great potential for solar growth
On the production side, the Saudis are planning to open a big solar panel factory near Riyadh. On the coast of the Persian Gulf, another factory will soon begin producing large quantities of polysilicon, a key raw material for PV cells, Ball reports.
Saudi Arabia not only has huge oil reserves, but also some of the best solar potential on earth. Next year, two state-owned companies plan to break ground on 10 PV projects around the country.
There are still many difficulties ahead, Ball says, including bureaucratic infighting that pits entrenched oil interests against the nascent renewables industry, dust and sandstorms that can blot out the sun and cut the production of electricity quickly, and a lack of public interest in conserving oil.
The threat posed by unchecked consumption at home is a powerful incentive. Aramco sells oil to the Saudi Electric Company for about $4 a barrel, and with global prices now about $60 a barrel it means that the kingdom forfeits some $56 for every barrel of oil it uses at home and doesn’t send to market.
More domestic oil consumption also lowers the country’s ability to keep competitors like the U.S. shale oil industry from gaining too much power.
But moving to a solar future will be difficult. Skeptics think even the revised 2040 target date for the 41 GW of solar capacity is impossible.
“Proving them wrong would require reshuffling an economic deck that the kingdom’s leaders have stacked for decades to favor petroleum,” Ball writes. “In that sense, Saudi Arabia’s energy challenge is a more extreme version of the one that faces the rest of the world. But if the kingdom’s leaders can find the political courage to act decisively, Saudi Arabia, of all nations, could become a model for other countries trying to shift away from oil.”