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Published on January 8th, 2012 | by Andrew


Could Saudi Arabia Become the Next Solar Market Hotspot?

January 8th, 2012 by  

Image courtesty EcoFriend

Oil’s more than likely the first thing that pops into your mind when Saudi Arabia is mentioned. Sunlight might follow close behind, though, and for good reason. Located within the equatorial “Sun Belt,” where more solar radiation hits the earth than any other part of the globe, best available measurements are that Saudi Arabia receives an average 2,200 thermal kilowatt hours (kWh) of solar energy per square meter of land area every day. That’s an abundant amount of freely available solar energy just waiting to be harnessed. Crafting policies that would stimulate adoption of solar energy systems and development of a solar energy economic value chain could also make significant contributions to critical social and environmental challenges the country faces.

Besides receiving a lot of solar energy, the ‘Desert Kingdom’ has other competitive advantages when it comes to the potential to develop solar energy markets and technology. For one, there’s lots of open land. Secondly, it has lots of sand, which contains a high percentage of silicon, the starting material for silicon solar photovoltaic (PV) cells and panels, as well as semiconductor chips. Thirdly, it has a fast-growing, relatively young and educated population, many of whom are looking for good private sector jobs and careers.

The Resource Curse; the Deep Roots of Oil

Being so rich and intensively invested in petroleum and natural gas, Saudi Arabia, along with other Gulf Cooperation Council (GCC) countries, have been resisting and even trying to turn back the renewable, clean energy tide. The latest statistics show that the petroleum sector accounted for between 80%-90% of Saudi government budget revenue, 45% of national GDP and 90% of total export earnings. Saudi oil revenues for 2011 are expected to be about $324 billion, according to the IMF.

Saudi Arabia holds an estimated 20% of proven world petroleum reserves, though some Saudi oil industry experts question government estimates of proven reserves, asserting that the country has already reached or gone past the point of peak oil production.

In a dramatic change in position, at least given its status quo-oriented, conservatively authoritative nature, the International Energy Agency (IEA), in its 2010 World Energy Outlook, acknowledged that global conventional crude oil production peaked in 2006. With worldwide energy demand forecast to more than double by 2030, Saudi and GCC leaders appear to be reconsidering their positions on solar and renewable energy, and are directing at least some capital investment into the sector.

Saudi Arabia burns more oil to generate electricity than any of its GCC neighbors. The executive director of Saudi Aramco Power Systems, Ziyad Al Shiha, last May told the press that Saudi Arabia was burning 800,000 barrels a day in turbines and that consumption was growing fast.

Peak Oil, Environmental Degradation

Just as Peak Oil appears upon us, or at least on the horizon and approaching fast, a number of other factors have prompted Saudi and GCC leaders to give some serious consideration to renewable energy, even if mostly in the context of its potential to reduce demand for fossil fuels and its own revenues.

One such impetus is environmental degradation- of air, land and water resources, which is high in a region critically lacking in water and food security. All are threats to the health and welfare of the region’s residents, as well as to their economies. Flat or declining crude oil production, as well as the escalating costs of finding and extracting new and existing reserves, poses another challenge.

An aggressive government-led program of renewable energy and clean tech investment would address these issues. Solar, wind, geothermal and marine energy plants are much less environmentally damaging than fossil fuel plants. Solar and wind power can be incorporated into sea water desalination plants, an energy-intensive process that Saudi Arabia already relies on extensively to meet its freshwater needs. Moreover, peak electricity demand occurs during summer daytime hours in Saudi Arabia, just when solar energy production peaks.

Key Challenges: Employment and Population Growth

Another, inter-related key challenge facing Saudi Arabia and GCC governments is the need to create jobs and diversify their economies. Subsidized by oil revenue, the Saudi monarchy, essentially runs a highly militarized social welfare state.

With a population estimated at more than 26 million and growing at more than 1.5% per year (77th among all countries in the world), nearly 68% of Saudis are between the ages of 15 and 64. Young Saudis are allotted jobs in government, industries and commercial businesses, mostly in the services sector, that are either controlled by government, an oligopoly of royals and/or well-connected, super-wealthy individuals and families. Strictly limited in their employment opportunities, it’s estimated that 7% – 15% of Saudi women are employed.

Cheap foreign labor is imported to do almost all the manual labor and provide the vast majority of basic business administration and services. More expensive labor is imported to provide a wide range of more specialized skills and services. In total, it’s estimated that around 5 million foreign workers are employed in Saudi Arabia, about 2/3 of the total work force and as much as 95% of the private sector work force.

Such a strictly controlled system limits innovation and economic opportunities, and it really doesn’t make a dent in the need to create productive employment or develop a diversified economy, even as the growth in population continues to be nearly as high or higher than real economic growth. Put at 3.17 million in 1999, the native Saudi labor force has been forecast to grow to 10.76 million in 2020. With an unemployment rate estimated by government authorities at nearly 11% in 2010, some experts believe it to be higher, particularly if under-utilization of human resources is considered.

The Saudi government has poured billions into education and training in the past decade and more in an attempt to diversify the country’s economy and create jobs for Saudis. It enacted a “Saudization” program that stipulates that certain percentages of all foreign company employees must be Saudi, all of which has come to no great effect.

Solar and Renewable Energy: One Pillar of a Possible Solution

Renewable energy and clean technology have ranked among the fastest growing economic sectors in the growing number of countries that have provided adequate government support and protection, and enacted energy market reforms during the past decade. In a few major developed world economies, they’ve grown and developed into foundations for the economy and engines for job creation. Given the comparative advantages it has, there’s no reason why it couldn’t be the same in Saudi Arabia, except lack of political will, led by the opposition of powerful, vested interests.

Despite occasional public announcements that it will invest aggressively in solar and renewable energy, little in the way of real progress has taken place to date. In February, Oman’s Phoenix Solar announced it had been commissioned to build Saudi Arabia’s largest solar PV plant to date – a 3.5-megawatt project near Riyadh.

A variety of different of solar panels and configurations from Phoenix had been tested prior to the company being commissioned to take on the project. The testing and evaluation was carried out by Saudi Aramco, Saudi Arabia’s national petroleum company, the world’s largest producer of crude oil. That’s not even a drop in an extremely large bucket, when compared to the country’s solar energy potential. The Riyadh plant was due to come on line in September, 2011. A cursory Google search yielded no mention as to whether or not the plant has actually come on-line. No news of the project’s completion appears on among the news releases on Phoenix Solar’s website.

PROJECT UPDATE: A Phoenix Solar representative updated us on the status on the project via our comments section – Many thanks…Construction of the 3.5-MW solar PV system is under way, having been delayed. The solar PV power plant has had to be relocated twice. A lack of solar PV-grid interconnection standards caused further delays.

KAUST: Saudi’s Solar Focal Point

The focal point of Saudi Arabia’s investment in solar energy appears to be in the King Abdullah University of Science and Technology (KAUST). Generously endowed by King Abdullah and the Saudi government, KAUST has attracted talented, promising postgraduate students specializing in solar and renewable energy from around the world.

In late September, KAUST and the University of Toronto signed a first-of-its-kind licensing agreement for the rights to the latter’s quantum dot solar cell technology, which has been developed by Dr. Edward Sargent, Canada Research Chair in Nanotechnology. KAUST has been partially funding Dr. Sargent’s research and development work since 2008 as part of its Global Collaborative Research Program. The exclusive license conveys the rights to the University of Toronto and Dr. Sargent’s quantum solar dot technology across 38 countries in the Middle East, western Asia, Russia and India.

Earlier in September, KAUST announced that a collaborative effort conducted by KAUST, University of Toronto and Penn State researchers had produced the most efficient colloidal quantum dot (CQD) solar cell ever, with an energy conversion efficiency as high as 6%. Reported in the journal Nature Materials, the nanoscale semiconductors can be sprayed on to almost any surface, including plastics.

Impressive as such high-tech achievements are, they completely miss the boat in terms of the potential for solar energy to help address Saudi Arabia’s most vexing challenges starting today. An aggressive government strategy to import and install cheap silicon solar panels across the country could create thousands of jobs, employ thousands of young Saudi nationals, diversify the economy and do a vast amount of good in terms of benefiting the environment. It would also conserve Saudi’s petroleum and natural gas reserves, extending the life of its proven reserves for generations to come.

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About the Author

I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.

  • Japan’s FiT in July is among the highest in the world. It’s clear that Japan’s FiT will shake the solar market. Saudi Arabia has the same options. Now, they’re using it. What about your country? New solar technology will show with these nations. This is it!
    As you know, earthquake in japan is happening frequently. Floating solar panels installation is one of the best solutions for power crisis in Japan. So you have to reduce the vibration to install Floating solar panels. Because, it makes many kinds of problems! The vibrations caused by wind, waves and external forces. New Floating Body Stabilizer for Floating solar panels installation has been created in South Korea. The Floating Body Stabilizers generate drag force immediately when Floating solar panels are being rolled and pitched on the water. Recently, this Floating Body Stabilizers using to reduce the Vibration of Floating Solar Panels in South Korea. You can see New Floating Body Stabilizer videos in YouTube. http://www.youtube.com/watch?v=moO–q5B92k, http://www.youtube.com/watch?v=nA_xFp5ktbU&feature=youtu.be.

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  • To realise something on the ground with a lot of sand and sun for the solar energy is much more demanding in terms of a sharp vision than just writing reports like this.

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  • Ian

    While oil dominates the energy supply the price of goods and services will always be tied to the price of oil. For example the price of a litre of milk will always be roughly the price of a litre of petrol. Once renewables make a sizable contribution to total energy supply and transportation is no longer reliant on oil but there is a reliable electric alternative then the relative price of oil can rise above the price of other commodities. Those with oil reserves such as the Saudis can see their earnings rise faster than their expenses. They would do very well to promote renewable energy.

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  • Anonymous

    It’s not the cost in terms of dollars of extracting the fuel. It’s the cost in terms of energy. Saudi like all other oil producing nations has now realised that it costs as much or more in terms of energy to get the oil out of the ground, refine it, transport it and sell it than the oil will provide.

    This single factor means they are consuming more oil every day in order to keep having oil to provide energy for their furnaces. Hence as this issue is only going to get worse not better they are going to consume more and more of their internal reserves in order to provide energy to their people.

    As the price of oil climbs higher and higher in the coming decade it will be fiscally irresponsible for the Saudis to continuing consuming the precious source of revenue just for electricity so they will be best served by having solar energy infrastructure instead.

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  • Eltorovive

    Even if it’s just a sand desert, we need to stop covering open land areas when there are millions of square feet of roof space and parking lots. These buildings and cars would be under shade.
    And the power users are right where the power is generated.

  • Dear Andrew,

    thank you for your interesting update on Saudi solar initiatives. I represent Phoenix Solar in the Middle East and just wanted to comment that the 3.5 MWp PV system at KAPSARC is still under construction. Since the location for this power plant was relocated twice and the lack of PV standards in Saudi Arabia for grid connection its completion was delayed as well. But there is still momentum in the (hopefuly) upcoming solar market in Saudi.

    Best regards

    Klaus F.

    • Akbweb2

      Thank you for the update, Klaus…Will update the article text shortly…

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