SILVER LINING'S - SAUDI ARABIA'S SUSTAINABILITY HORIZON
Saudi Arabia basks in sunlight for much of the year. India’s monsoon season just barely reaches the Arabian Peninsula; at most the country sees about 300 millimetres of rain a year. It follows then then Saudi Arabia is poised to reap the benefits of solar energy. Indeed, all indicators point to solar power being the driving force in Saudi Arabia’s transition to renewable energy. If there may be a silver lining found in this year’s pandemic it is that renewable energy is not subject to the same market pressures that has seen the value of oil fall this year. The oil market has forever been fragile and the pandemic’s shock to global supply chains meant another rollercoaster for the price of oil. At present, the price of oil has recovered from the spring fall, but estimates indicate pandemic scars will remain until 2023. Renewable energy, on the other hand, has proved remarkably resilient to the difficulties the pandemic has presented. The International Energy Agency expects the majority of electricity supply to be provided by renewable energy by 2025. With the 2020s set to be the decade in which renewables become the dominant force in the energy market Saudi Arabia is contributing handsomely to this process.
Keen to take advantage of this new direction, Saudi Arabia has, over the last two years, accelerated its efforts in launching its renewable energy development programme. The logic behind this push is evident. Saudi Arabia’s prosperity is intimately tied to its natural resources. The wealth generated from oil and all oil derivatives has led to social provisions being provided to the country’s citizens. From a cradle to grave public healthcare system, to generous pension schemes for those working in the public sector, Saudi Arabians are not blind as to how this prosperity came about. Moreover, oil also ensured that geopolitically, Saudi Arabia remained an important player on the world stage. With oil reserves estimated to run dry sometime over the next few decades, Saudi Arabia is redirecting its energies and expertise in the energy sector to renewables. With China and the USA set to lead the energy transition, Saudi Arabia is in prime position to carve a niche in the Middle East, setting an example in transitioning its energy dependency.
Already, diversification has been made a central tenet of Saudi Arabia’s 2030 Vision. Wind and Solar are considered top priorities for the country, with a target of 9.5 gigawatts of energy to be generated by these renewables. To oversee this grand strategy the government has launched several new institutions and initiatives from the Saudi Industrial Development Fund, and the Renewable Energy Project Development Office. Some $28 billion will be invested in the form of loans for clean energy projects and the manufacture of renewable components. Additionally, Saudi Arabi’s finance ministry has, in the last two years, invested over $3bn in the next rounds of the National Renewable Energy Programme. The plans for energy diversification go further and are to be underpinned by an adapted regulatory framework that will lay the groundwork for private buying and investing in the renewable energy sector.
Saudi Arabia’s talent, human capital and energy expertise will all gather under the auspices of the King Salman Renewable Energy Initiative which continues to oversee the launching of several solar projects, including Qurrayat, Madinah, Rafha, Rabigh, Alfaisaliah, Jeddha and Mahad Duhab. Collectively these projects will generate over 1500 megawatts of power. The tendering of further projects is in process and coupled with record low costs for the construction of solar and wind augurs well for the future.
The prospect of becoming energy dependent is an exciting one. Oil and its derivatives are crucial tools for Saudi Arabia’s domestic needs. Desalination and keeping the country cool in the summer months are key demands that will diminish with new, renewable energy sources. The potential is for more oil and gas to be exported abroad, thereby ensuring greater control in regulating the volatile oil market.
For Saudi Arabia to succeed it needs to make good on its claims of commitment to renewable energy. The projects listed above show signs of promise. However, the rhythm has been stop-start at time. Yet with the arrival of the pandemic the is a renewed and genuine appetite for radical change. The world sorely needs it. The job creation forecasted to be created by a burgeoning renewables sector is estimated by the US-Saudi business council to be as high as 750,000. As recovery from the pandemic begins to take shape, there appears to be an obvious intersection between the 2030 national directive and reviving the job market towards a more sustainable future.