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Saudi Oil Sheiks See the Light and Renew their Commitment to Solar


rollsThe future of solar power is as brighter than ever. Chief Executive Officer Khalid Al-Falih of Saudi Arabian Oil Co. (or Aramco) says that they are “looking at solar investments with great interest.” No small words from the head of the world’s biggest oil company.

The Kingdom announced an ambitious US $109Bn program two years ago to install 41,000MW of solar power, comprising a third of the KSA’s energy requirements in 2032. The agency in charge of this plan was the King Abdullah City for Atomic and Renewable Energy (K.A. Care). In 2013, K.A. Care released a white paper that said that three tenders to install 7GW of solar capacity were to be awarded by 2015. Unfortunately, progress has been slow and plans seem to have been put in the back burner since. The future participation of K.A. Care in the solar program has been put into further doubt with the exit of their Vice President in charge of the program, Khalid Al Sulaiman, earlier this year.

Picking up the slack, Saudi Aramco announced plans of putting up 300MW of solar power plants in remote areas around the Kingdom. It already put up a small solar power plant in Farasan Island, along the coast of Saudi Arabia facing the Red Sea. It makes much economic sense for the company to do so as first, the cost of transporting diesel to remote areas is expensive. Second, using diesel for power generation has come “to the point where volumes meant for exports may fall to unacceptably low levels in the coming two decades,” says Saudi Aramco in its annual review released in May this year. Clearly the shift is in the company’s best interest as it reduces logistics costs and maximizes oil revenues.

However, Al-Falih cautions that they plan to do things slowly and carefully in order to avoid mistakes like those done in Europe. Generous incentives in Germany and Spain resulted in an uncontrolled boom in solar panel installation that resulted in these countries backtracking on the subsidies.

Just the same, this announcement is significant because although K.A. Care is said to still pursuing its program, Saudi Aramco is known for taking over large programs that have gone wayward. Surely the company has the expertise, the resources and the money to do so. It may even be necessary given persistent rumors about peak oil for the Kingdom.

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