Reuters reported that Saudi Arabia, the world’s top oil exporter, will generate solar power as it lacks coal or enough natural gas output to meet rapidly rising power demand.

Doing so would allow it to slash the volume of oil it burns in power plants bankrolled by billions of dollars worth of saved oil earnings. Thousands of solar power panels have sprung up across Europe over the past few years, thanks to generous subsidies that make the technology an attractive alternative to conventional energy.

Mr Maher Al Odan senior consultant at King Abdullah City for Atomic and Renewable Research which was set up to plan Saudi Arabia's energy mix said that at world market prices, solar is competitive if you use crude oil to generate electricity.

Saudi Arabia has said it wants to become a major solar producer before but its investments amount to much less than 50 MW versus several countries which have added thousands of megawatts a year.

This month, KA Care set forth a much more ambitious plan, recommending that the kingdom aim to get more than a third of its peak load power supply or about 41 GW from the sun within two decades at an estimated cost well over USD 100 billion.

Making the plan work economically rests on three assumptions that technology improvements will cut costs that a domestic solar industry will emerge and create jobs for a booming population and that many billions of dollars worth of exportable oil will be saved.

According to official data supplied to the Joint Organizations Data Initiative, an average of 700,000 barrels a day of crude were used in Saudi Arabia’s power stations during the peak air conditioning demand period from May to September last year. Although a rise in gas production should temper crude burning this summer, it will likely rise substantially in years ahead unless alternatives are found and fast.

Mr Paul Gamble chief economist at Jadwa Research in Riyadh said that domestic oil consumption is rising very rapidly and you get far more value for oil if it's exported than if it's consumed domestically.

Mr Khalid al Sulaiman VP for renewables at KA-Care said that “We know well that the cost of generating power from these sources will be higher and we did a model that will help us bridge the gap. You call it subsidies. I don't call it subsidies and many countries don't call it subsidies. They are incentives for the sector.”

Source - Reuters

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