Saudi Arabia plans to invest up to US$50 billion to help meet its target of producing enough electricity from renewables to power the equivalent of 3 million homes within six years, the country’s oil minister said yesterday.
The world’s biggest oil exporter could invest between $30bn and $50bn, mainly in solar and wind projects, as well as some geothermal and waste projects, in the first phase of a multi-year programme, Khalid Al Falih said at the World Future Energy Summit in Abu Dhabi.
The government has set a target of generating 9.5 gigawatts of electricity from renewables by 2023 as it reduces its reliance on burning oil to produce power. Saudi Arabia will eventually generate 70 per cent of its electricity from gas – up from about 40 per cent in 2014 – and the remainder from renewables and other sources, Mr Falih said.
“We will be launching in the next few weeks in Saudi Arabia the first bid round of our massive programme to introduce renewables,” said Mr Al Falih. “We invite the global industry to come and participate.”
The country is also looking at building two nuclear reactors with the combined capacity to generate up to 2.8GW of electricity.
“We are in the feed phase, the early feasibility and design phase for our first two nuclear reactors,” said Mr Al Falih. “We are doing site selection. We are doing technology development. So, Saudi Arabia is also serious about nuclear and you will see signifiant investment in nuclear for civilian purposes.”
Saudi Arabia, which pumps about 10 million barrels of oil a day, wants to free up oil used in power generation for export.
“The oil industry has grown in size, sophistication and value creation, but it is no longer sufficient to drive a G20 economy of the size of Saudi Arabia,” said Mr Al Falih.
Saudi Arabia is also interested in trading any electricity produced from renewable energy sources in the future. It is already connected to the GCC grid and plans to interconnect with Jordan, Yemen and Egypt, expanding into Africa and eventually Europe.
“We will be able to exchange renewables… and hopefully through Africa we can reach Europe and take advantage of arbitrage, peak time and electricity trading,” said Mr Al Falih.
Lowering Saudi Arabia’s reliance on oil for power generation is part of the country’s Vision 2030, which aims to wean off the kingdom from reliance on oil revenue.
The vision calls for diversifying sources of income and creating new industries with the help of the private sector.
The renewables sector will also be a source of new industries for Saudi Arabia.
“It [the renewables sector] is going to be based on a localisation pathway. We would require all bidders to invest in the supply chain of goods and services to the kingdom,” said Mr Al Falih.
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